A sidechain is a separate blockchain that operates independently but is connected to a parent chain (such as Ethereum or Bitcoin) through a two-way bridge. This bridge enables users to transfer assets between the main chain and the sidechain, taking advantage of the sidechain's different features, speed, or cost structure.
Unlike rollups, which derive their security from the main chain, sidechains have their own consensus mechanism and set of validators. This means they do not inherit the security of the parent chain, which is both their main advantage and their main limitation.
Well-known sidechains include:
- Polygon PoS — an Ethereum sidechain that offers fast, low-cost transactions using a Proof of Stake consensus.
- Gnosis Chain — formerly xDai, a stable-payment-focused sidechain.
- Ronin — a sidechain built specifically for the Axie Infinity gaming ecosystem.
- Liquid Network — a Bitcoin sidechain designed for faster settlements and confidential transactions.
Sidechains offer several benefits:
- Speed — faster block times and higher throughput than most Layer 1 networks.
- Low fees — significantly cheaper transactions.
- Flexibility — sidechains can implement different features and experiment with new technology without affecting the main chain.
The primary risk is that sidechain security depends on its own validator set, which is typically smaller and less decentralized than the main chain. If the sidechain's validators are compromised, user funds on that chain could be at risk. This is why some users prefer rollups backed by ZK-proofs for higher-value transactions that require stronger security guarantees.