The biggest of Blockchain’s challenges is scalability. This is often perceived as one of the most pressing issues in the space. It is one of the elements that hinder blockchain from achieving mainstream adoption and competing with payment systems such as Visa and PayPal. In this guide, we will delve deeper into a solution to the Layer 1 scalable issue called sidechains.
Different from payment or state channel, A Sidechain is independent of the Layer 1 blockchain since they run their own set of validator nodes. Sidechains often will run have fewer nodes than the Layer 1 mainchain, which allows them to achieve blockchain consensus much faster.
Developers might decide to adopt a sidechain over other channels if they need even more flexibility and control over their underlying infrastructure.
It could be for several reasons such as launching a custom token or decentralized application while still taking advantage of the low cost and faster speeds enabled by not deploying smart contracts directly on the Layer 1.
Sidechains usually will operate using their own consensus mechanism and protocols. This indicated that developers can optimize their network for scalability, security or decentralization, and can even choose to make their networks private and permissioned or public and permissionless if they wish so.
Sidechains are often not required to submit state data to the Layer 1 chain. Many still choose to do so in order to leverage the larger, more decentralized chain’s security.
These are a mechanism that enables tokens on one blockchain to be securely used within another separate Blockchain. This system is meant to improve the scalability, privacy, and functionality of the main Blockchain network - Layer 1.
The theory behind sidechains was first coined by Dr. Adam Back in his paper he wrote
Enabling Blockchain Innovations with Pegged Sidechains. As a separate blockchain linked to the main chain by employing a two-way bridge, a sidechain allows digital assets to be moved between the mainchain and the sidechain.
A big advantage of sidechains is that it addresses the scalability issue of the Layer 1 blockchain. It improves the transaction capacity and enhances the processing speed thereby reducing the chances of system failure due to congestion.
Plasma is another Layer 2 type of scalability solution for the Layer 1 blockchain such as Celo. It is much like a framework for creating a sidechain that interacts with the Layer 1 blockchain. The architecture of the Plasma solution is a hierarchical tree of sidechains, and since each sidechain operates independently and runs parallel to the mainchain and other sidechains, speed, and efficiency are optimized.
In addition, a sidechain can be used to process unique applications in the same secure ecosystem. A smart contract often containing rules, token rate, and hashes of the states of the sidechain is deployed on the mainchain at the time the sidechain was created.
Even though sidechains looks promising as a solution to scalability issue, they introduced complexities to the design of the blockchain and thus require extra efforts and investment for setting it up. Since sidechains are independent of the mainchain, their security is prone to compromise or attacks because often, they are not secured by the mainchain. Alternatively, if a sidechain is compromised, it poses no effects to the mainchain, hence it can be used to experiment with new blockchain protocols and for plans to improve the mainchain.
Again, a Sidechain could incur a severe permanent loss of users’ funds if a 51% attack is successfully launched, and if it chooses not to perform periodic data submission to the main chain.
To cap it all, the following are a few emphases we touched on in this piece
Sidechains are separate, independent blockchains linked to the mainchain called Layer 1 e.g. Celo Blockchain using a two-way bridge.
It allows tokens or other digital assets to be easily moved or transferred between the mainchain and the sidechain.
Sidechains can be public or private in scope where each Sidechain operates its token, protocol, consensus mechanism, and security pattern.
Sidechains can be used to run blockchain applications like decentralised applications (dApps), which therefore take some computational burdens off the Layer 1 chain while also helping to scale it.
By now, you should have good knowledge of how Sidechain works. If you’re a web3 developer, understanding the concept of Sidechain solutions will help you make the best decision to pick the best solution for your project. Applying what you have gained in your project. To learn how to deploy your dream project on the Celo blockchain, visit the Learn more how to deploy your dream projects.
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Isaac Jesse, aka Bobelr is a full-stack web3 developer with proficiency in smart contracts development. He was an ambassador and DevAm for several projects like Algorand etc.