A sidechain is a separate blockchain that is linked to the mainchain through a special mechanism that allows assets and data to move securely between the two networks. It is designed to extend the capabilities of the main blockchain, providing higher performance, lower fees and specialized features without burdening the mainnet.
A few years after its launch, the bitcoin network faced scalability limitations: against this backdrop, cryptoprojects began to emerge that could offer significantly faster transaction processing speeds and significantly lower fees.
The concept of sidechains was described back in 2014 by Blockstream developers. They proposed the concept of an additional, independent blockchain that maintains two-way communication with the native network and allows assets to be securely transferred between them.
How do bridges in blockchain help interoperate with the sidechain?
Bridges allow users to transfer assets and data from the main blockchain to the sidechain and back, maintaining overall balance and security. This is accomplished through a two-way peg mechanism, where assets in the core network are locked and their equivalent is created or unlocked in the sidechain.
Two-Way Peg
Two-Way Peg is based on the principle of locking and unlocking assets: when tokens are transferred from the main blockchain, they are “frozen” in the main network, and an equivalent number of tokens are created or unlocked in the sidechain. Smart contracts control this process, they automatically record the blocked assets and initiate their creation in the other network. The reverse process works the same way – tokens are “burned” or blocked again in the sidechain, and smart contracts unlock their equivalent in the core network. This approach ensures transparency, security and decentralization of the whole procedure.
Sidechain security
The security of sidechains depends largely on their architecture and consensus mechanism. Unlike the main network, sidechains can use their own consensus algorithms such as Proof-of-Stake or Delegated Proof-of-Stake, which are sometimes less decentralized and vulnerable to attacks, the 51% attack being an example. Also an important security element is the two-way binding mechanism we discussed above. Despite all precautions, bridges between networks can be the target of attacks, so their implementation should be thoroughly tested and secured.