Crypto Dictionary
Sidechain
Definition
A separate blockchain that is attached to its parent blockchain using a two-way peg.
Deep Dive
A sidechain is a separate, independent blockchain that runs in parallel to a main blockchain (often called the "parent chain" or "mainnet") and is connected to it via a two-way peg. This two-way peg mechanism allows assets to be transferred securely between the main chain and the sidechain. When assets are moved from the main chain to the sidechain, they are "locked" on the main chain and an equivalent amount is "unlocked" or minted on the sidechain. The process is reversed when moving assets back to the main chain.
Examples & Use Cases
- 1Liquid Network, a Bitcoin sidechain designed for faster, more confidential transactions and the issuance of tokenized assets for financial institutions
- 2RSK (Rootstock), a smart contract platform implemented as a sidechain to Bitcoin, enabling decentralized applications (dApps) to run on the Bitcoin network
- 3Polygon PoS Chain, which functions as an EVM-compatible sidechain to Ethereum, offering faster transaction times and lower fees with its own validator set
Related Terms
Layer 2Two-Way PegCross-Chain