{"id":434991,"date":"2022-04-20T20:00:00","date_gmt":"2022-04-20T17:00:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/what-is-a-sidechain-in-crypto\/"},"modified":"2022-04-20T20:00:00","modified_gmt":"2022-04-20T17:00:00","slug":"what-is-a-sidechain-in-crypto","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/what-is-a-sidechain-in-crypto\/","title":{"rendered":"#What Is a Sidechain in Crypto?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a295dceaaaf4\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a295dceaaaf4\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-a-sidechain-in-crypto\/#%E2%80%9CWhat_Is_a_Sidechain_in_Crypto%E2%80%9D\" >&#8220;What Is a Sidechain in Crypto?&#8221;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-a-sidechain-in-crypto\/#Layer_1s_Need_Help\" >Layer 1\u2019s Need Help<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-a-sidechain-in-crypto\/#Sidechains_Bridge_the_Gap\" >Sidechains Bridge the Gap<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-a-sidechain-in-crypto\/#Why_Blockchains_Need_Sidechains\" >Why Blockchains Need Sidechains<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/what-is-a-sidechain-in-crypto\/#Exponential_Growth\" >Exponential Growth<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CWhat_Is_a_Sidechain_in_Crypto%E2%80%9D\"><\/span>&#8220;What Is a Sidechain in Crypto?&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div>\n<figure style=\"width: 1200px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"type:primaryImage wp-image-797213 size-full\" data-pagespeed-lazy-srcset=\"https:\/\/www.howtogeek.com\/wp-content\/uploads\/2022\/04\/shutterstock_1061069282.png?width=398&amp;trim=1,1&amp;bg-color=000&amp;pad=1,1 400w, https:\/\/www.howtogeek.com\/wp-content\/uploads\/2022\/04\/shutterstock_1061069282.png?width=1198&amp;trim=1,1&amp;bg-color=000&amp;pad=1,1 1200w\" sizes=\"auto, 400w, 1200w\" data-pagespeed-lazy-src=\"https:\/\/www.howtogeek.com\/wp-content\/uploads\/2022\/04\/shutterstock_1061069282.png?width=1198&amp;trim=1,1&amp;bg-color=000&amp;pad=1,1\" alt=\"A concept image of two blockchains connecting.\" width=\"1200\" height=\"675\" data-crediturl=\"https:\/\/www.shutterstock.com\/image-illustration\/global-network-blockchain-3d-illustration-neural-1061069282\" data-credittext=\"Yurchanka Siarhei\/Shutterstock.com\" src=\"\/pagespeed_static\/1.JiBnMqyl6S.gif\" onload=\"pagespeed.lazyLoadImages.loadIfVisibleAndMaybeBeacon(this);\" onerror=\"this.onerror=null;pagespeed.lazyLoadImages.loadIfVisibleAndMaybeBeacon(this);\"\/><figcaption class=\"wp-caption-text\"><span class=\"type:primaryImage imagecredit\"><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.shutterstock.com\/image-illustration\/global-network-blockchain-3d-illustration-neural-1061069282\">Yurchanka Siarhei\/Shutterstock.com<\/a><\/span><\/figcaption><\/figure>\n<p>Some blockchains have shortcomings\u2014for example, Bitcoin and Ethereum\u2019s blockchains are not adept at handling a large number of transactions at a low cost. Sidechains are a way to minimize inefficiencies in these Layer 1 blockchains.<\/p>\n<h2 role=\"heading\" aria-level=\"2\"><span class=\"ez-toc-section\" id=\"Layer_1s_Need_Help\"><\/span>Layer 1\u2019s Need Help<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The most decentralized and secure blockchains tend to lack the ability to process large amounts of transactions cheaply without a little help. Sidechains are a type of Layer 2 protocol that helps lighten the load of congested Layer 1 blockchains like Bitcoin and Ethereum.<\/p>\n<p>There are other Layer 2 solutions like channels and rollups. Sidechains have risen in popularity compared to the other methods because they are difficult to alter. When money is involved, users prefer systems that are difficult to change so as not to incentivize financial malpractice.<\/p>\n<h2 role=\"heading\" aria-level=\"2\"><span class=\"ez-toc-section\" id=\"Sidechains_Bridge_the_Gap\"><\/span>Sidechains Bridge the Gap<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A sidechain is an entirely separate blockchain that communicates with the Layer 1 blockchain it supports, like Bitcoin or Ethereum. Data is relayed between the two via a \u201cpeg.\u201d A peg is similar to a bridge with two directions of traffic.<\/p>\n<p>The peg operates behind the scenes. It is the underlying <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> that helps maintain communication between the sidechain and the Layer 1 blockchain. The two key processes that facilitate transactions are known as locking and releasing. Locking is the first step. Whatever amount of cryptocurrency is used on the sidechain is collateralized and locked on the main blockchain. This keeps the sidechain and the main blockchain in balance. When the transaction is complete on the sidechain, funds are then released from the sidechain and the collateralized amount from the main blockchain is reimbursed to the user.<\/p>\n<p>An inter<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>ry is needed to keep the bridge of communication flowing between the sidechain and main blockchain. This intermediary is known as a federation. The federation can be a group of developers or smart contracts that enforce rules to ensure a balance of funds is maintained between the sidechain and Layer 1 blockchain. While not likely, this intermediary could technically manipulate transactions as funds pass from the main blockchain to the sidechain.<\/p>\n<p><strong>RELATED:<\/strong> <strong><em>What Is a &#8220;Blockchain&#8221;?<\/em><\/strong><\/p>\n<figure style=\"width: 650px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-797215 size-full\" data-pagespeed-lazy-src=\"https:\/\/www.howtogeek.com\/wp-content\/uploads\/2022\/04\/bridge.jpg?trim=1,1&amp;bg-color=000&amp;pad=1,1\" alt=\"A highway bridge at night.\" width=\"650\" height=\"433\" data-crediturl=\"https:\/\/www.shutterstock.com\/image-photo\/highway-bridge-night-376134517\" data-credittext=\"Dan Bri\u0161ki\/Shutterstock.com\" src=\"\/pagespeed_static\/1.JiBnMqyl6S.gif\" onload=\"pagespeed.lazyLoadImages.loadIfVisibleAndMaybeBeacon(this);\" onerror=\"this.onerror=null;pagespeed.lazyLoadImages.loadIfVisibleAndMaybeBeacon(this);\"\/><figcaption class=\"wp-caption-text\"><span class=\"imagecredit\"><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.shutterstock.com\/image-photo\/highway-bridge-night-376134517\">Dan Bri\u0161ki\/Shutterstock.com<\/a><\/span><\/figcaption><\/figure>\n<h2 role=\"heading\" aria-level=\"2\"><span class=\"ez-toc-section\" id=\"Why_Blockchains_Need_Sidechains\"><\/span>Why Blockchains Need Sidechains<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The beauty of sidechains is that they process transactions efficiently and cheaply. If you have purchased or used Ethereum since mid-2020, you will know that gas fees can be costly. This was not always the case. Ethereum has many more users now than when it was originally launched. The congestion on the network causes slow processing times and high fees.<\/p>\n<p>Sidechains offer an effective way to increase the capacity of the network. However, there are some tradeoffs. One of the main reasons users flock to Layer 1\u2019s is because of their decentralization and security. This feature inhibits a Layer 1 blockchain\u2019s ability to scale. Sidechains help scale but sacrifice some of the decentralization and security inherent to Layer 1\u2019s.<\/p>\n<h2 role=\"heading\" aria-level=\"2\"><span class=\"ez-toc-section\" id=\"Exponential_Growth\"><\/span>Exponential Growth<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Sidechains have grown along with Bitcoin and Ethereum. One sidechain, in particular, has experienced massive growth in the last year as Ethereum\u2019s gas fees have risen. <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/polygon.technology\/\">Polygon<\/a> was launched in 2019 and has benefited from Ethereum becoming the preferred blockchain of NFTs, DeFi, and other <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lications. On its own Ethereum can process roughly 12 to 30 transactions per second. The Polygon blockchain increases throughput to nearly 10,000 transactions per second.<\/p>\n<p>To help quantify the increased utility of Polygon, it can help to look at the price of Polygon\u2019s blockchain token, MATIC. One MATIC token was only worth tenths of a penny when first launched. Since, then the price has increased to $1.68 at time of writing and hit a high of $2.87 in December of 2021. That is nearly a 14,000% increase.<\/p>\n<p>There are a plethora of sidechains out there other than just Polygon. Each one has unique qualities that differ from the other. Some help facilitate the rising application of blockchains in gaming and social media utility like <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/loomx.io\/\">Loom<\/a>. <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.rsk.co\/\">Rootstock<\/a> is the main sidechain that helps scale Bitcoin. <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/plasma.io\/\">Plasma<\/a> has become a favorite of developers in the world of decentralized finance apps (dApps). They all aim to accomplish the scaling issue of Layer 1\u2019s, just in slightly different ways.<\/p>\n<\/div>\n<p><script>\n setTimeout(function(){\n  !function(f,b,e,v,n,t,s)\n  {if(f.fbq)return;n=f.fbq=function(){n.callMethod?\n  n.callMethod.apply(n,arguments):n.queue.push(arguments)};\n  if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0';\n  n.queue=[];t=b.createElement(e);t.async=!0;\n  t.src=v;s=b.getElementsByTagName(e)[0];\n  s.parentNode.insertBefore(t,s) } (window, document,'script',\n  'https:\/\/connect.facebook.net\/en_US\/fbevents.js');\n   fbq('init', '335401813750447');\n   fbq('track', 'PageView');\n  },3000);\n<\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more like this article, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/technology\/\" target=\"_blank\" rel=\"noopener\">Technology category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/www.howtogeek.com\/795589\/what-is-a-sidechain-in-crypto\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;What Is a Sidechain in Crypto?&#8221; Yurchanka Siarhei\/Shutterstock.com Some blockchains have shortcomings\u2014for example, Bitcoin and Ethereum\u2019s blockchains are not adept at handling a large number of transactions at a low cost. Sidechains are a way to minimize inefficiencies in these Layer 1 blockchains. Layer 1\u2019s Need Help The most decentralized and secure blockchains tend to&#8230;<\/p>\n","protected":false},"author":1,"featured_media":434992,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/www.howtogeek.com\/wp-content\/uploads\/2022\/04\/shutterstock_1061069282.png?height=200p&trim=2,2,2,2","fifu_image_alt":"","footnotes":""},"categories":[18],"tags":[],"class_list":["post-434991","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/434991","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=434991"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/434991\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/434992"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=434991"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=434991"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=434991"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}