Sidechains from the English sidechain is a term that literally translates as "side chain". This is nothing more than an auxiliary blockchain with a two-way binding to the main one, its "branch". At the same time, assets in this chain can move in any direction - from the main to the auxiliary and vice versa.
How did the idea of sidechains and the principle of their work come about
A few years after its launch, the bitcoin network reached the limit in scaling, but its competitors noticeably increased - and they offered not only lower transaction fees, but also higher transaction speeds. Therefore, in 2014, the developers of Blockstream introduced the concept of sidechains to the world for the first time, which were designed to smooth out the increasingly obvious disadvantages of bitcoin and help it cope with the increasing pressure from other projects.
They proposed to create an additional blockchain with two-way binding to the "parent" network and the ability to run assets in both directions. The principle of operation at the same time was simple and clear. It was required to send coins to the outgoing address. There they were blocked for some time to check and exclude the possibility of double spending. And then, after receiving confirmation, they entered the sidechain and became available for active use. If desired, they could be returned in a similar way. The technology has been successfully implemented and is currently used mainly for Bitcoin and Ethereum projects, which, due to their huge popularity, are experiencing problems with bandwidth. For example, in the case of bitcoin, one of the most famous sidechains is the Liquid Network from Blockstream, and Ethereum is the Polygon Proof of Stake (PoS).
Sidechains - advantages and disadvantages
Let's start with the good, that is, with the advantages, and sidechains have a lot of them. In addition to the above-mentioned increase in transaction speed, they make the use of cryptocurrencies more flexible and convenient - they open up opportunities for mixing and testing them, bring cryptocurrencies closer to each other and allow them to use their advantages more freely in a given situation. There are also advantages for the parent network - sidechains are able to unload it, perform some of the work, thereby increasing the efficiency of the main blockchain. The developers did not stand aside either - sidechains open up a huge field for them to experiment, help them conduct software tests and beta coins before their release on the main blockchain.
The main disadvantage of sidechains, as a rule, is their lower security compared to the parent blockchains. And speaking purely formally, this is actually the case, since the limited decentralization necessary for greater scalability makes hacking of key participants of sidechains more likely. And although there were precedents, for example, as in the case of the Ronin sidechain, it is impossible to say that the system is unreliable. Each sidechain relies on its own security system, and is also autonomous and independent of its blockchain in this regard. That is, when the sidechain is hacked, the blockchain will not suffer in any way. If the opposite situation happens and the blockchain is compromised, then the sidechain will continue its work, but its binding to the parent network will be devalued. Thus, there are still certain risks. On the other hand, where are they not? Your bank card can also be hacked at any time, but this does not mean that you would prefer to keep money under your pillow.
