Sidechain Meaning

Jun 28, 2024 | Updated Jun 28, 2024

A sidechain is a secondary blockchain that works alongside a Layer 1 blockchain to improve scalability and functionality by reducing congestion on the main network.

What is a Sidechain?

Sidechains address the scalability issues of popular blockchains like Bitcoin and Ethereum, which can become congested and slow as they gain users. A sidechain is an independent blockchain connected to a main blockchain via a two-way bridge, allowing assets to be transferred between them seamlessly.

This connection enables the sidechain to handle additional transactions, reducing the load on the main blockchain and improving its overall efficiency. Not to mention sidechains enable faster and cheaper transactions for users, and provide developers with a network to test new features on, all while retaining the security and stability of the main blockchain.

Sidechains vs Layer 2 solutions

Sidechains and Layer 2 (L2) solutions both aim to enhance blockchain scalability but differ in their approaches.

Sidechains are independent blockchains and have their own consensus mechanisms and security, separate from the main chain. In other words, they can continue to function even if the main blockchain faces issues. L2 solutions, however, are built on top of the main blockchain and rely on its consensus mechanism for security.

It is important to note that blockchains do not need to operate specifically as one or the other. For example, Polygon can be seen as both a sidechain and a Layer 2 solution (L2). Specifically, Polygon PoS (Proof of Stake) combines elements of both sidechains and L2s, as it has its own consensus mechanism, but its consensus mechanism partly relies on Ethereum to enhance its security.
It’s important to note that sidechains generally offer less security than the L1, so using a secure storage solution like a Ledger device is highly recommended.