This limits the transactions that can be processed per second, restricting the utility of blockchain-based technologies.
What Are Sidechains?
A sidechain is a blockchain connection that functions parallel to a primary blockchain.
Sidechains initiate the transfer of digital assets between multiple blockchains.
Thisblockchain technologywas designed to improve the efficiency and speed of transactions and boost the security of mainchains.
Sidechain technology was initiated by Adam Back and eight other authors in an academic paper published onBlockstreamin 2014.
Back then, to transfer tokens, bitcoins would be destroyed publicly to allow the creation of new bitcoins.
The authors proposed sidechains to transfer bitcoins from Bitcoin to other blockchains and back.
Sidechains can duplicate their mainchain’s protocol or modify the transaction rules and consensus algorithm.
They also have validators, histories, and regulations separate from their mainchain.
In these cases, the sidechains are charged with maintaining scarcity for the native tokens.
How Do They Work?
The typical sidechain is connected to its mainchain through a bridge, also called a two-way peg.
There are different combinations of connections between sidechains and mainchains.
This is immediately followed by the creation of another transaction on the sidechain.
Depending on the algorithm used, proof of locked assets on both chains is provided to confirm the transfer.
Because the digital assets to be transferred are held on mainchains, sidechains may generate proxy assets.
It ensures that the locked tokens are unavailable to either party until the transaction is completed.
There are different projects for every blockchain.
As a result, you have a large variety to pick from when you want to use a sidechain.
This platform allows you to create autonomousdecentralized applicationswhile providing them with utility.
Transactions on this sidechain incur much lower transaction fees than the Ethereum mainnet.
Polygon is regarded as a combination of two sidechains.
This allows the platform to be easily compatible with different blockchains apart from the Ethereum mainnet.
It helps establish a connection between Bitcoin and other blockchains, such as Ethereum and Binance Coin chains.
These automated smart contracts also reduce the need for personal trust between transacting parties as it is self-executing.
Compared to Bitcoin, the RSK smart contract platform delivers an improved payment experience with near-instant confirmations.
What Are the Potentials of Sidechains?
Sidechains have great potential to be a lasting solution to the problem of scaling in the blockchain ecosystem.
Sidechains provide a platform for transactions using the most suitable consensus protocols.
The mechanism behind sidechains is a good promoter of interactions between different blockchains in the ecosystem.
It enables the exchange, borrowing, andlending of crypto assetsacross various networks.
Additionally, assets from other blockchains can be made available to a broader audience.
These are some of them:
Are Sidechains the Next Best Thing?
This also gives a significant boost to the global growth of cryptocurrency.
