Scalability is a recurring problem in some blockchains, resulting in congestion, high gas fees, and slow transaction speeds. Scalability refers to how much a network can expand without sacrificing transaction output or speed.
Some blockchains, such as the formerly operational Ethereum 1.0, could not scale, implying that as network activity increases, the network’s operation lags. Instead of growing in tandem with transactional activity, network capacity remains static, causing congestion.
Developers often have to spend significant time deploying smart contracts onto networks and building decentralized apps. Users pay a lot in gas fees to execute transactions. The notion of widespread adoption of cryptocurrencies is fast becoming a myth, especially since traditional finance (TradFi) users do not see any benefit in using a slow and expensive network.
This is where the concept of scalability solutions comes into the equation. These solutions are intended to improve scalability and transaction speed and reduce gas fees either by being incorporated into the architecture of the network or by being built independently of the chain.
There are different scaling solutions, and they fall under two major categories: Layer 1 scaling solutions and Layer 2 scaling solutions.
Layer 1 scaling solutions are sharding, hard fork, and SEGWIT. Popular examples of Layer 2 scaling solutions are sidechains, state channels, Plasma, and the Lightning Network.
This article explores the concept of sidechains and discusses popular applications of this technology.
What is a sidechain?
Sidechains are smaller chains connected to the main blockchain through infrastructure similar to a bridge. This type of scaling solution employs an independent consensus mechanism from the main chain to verify transactions.
A sidechain is designed to validate transactions in near-real-time. The primary duties of the main chain are to provide security, resolve disputes, and ensure that public records are maintained.
Although sidechains and state channels have some similarities, they are not the same. The former is open to the public, while the latter is not. Sidechain transactions are not private among participants. Transaction details are kept private from the participants in a state channel.
Second, a sidechain is more difficult to construct than its counterpart. Developers have to build it from the ground up, which consumes considerable time, effort, and money.
Third, unlike state channels, when a sidechain is compromised, it does not affect the main chain’s functionality.
What are popular examples of sidechains?
These sidechains are designed to improve transaction speed and, in some cases, smart contract functionality.
Some sidechains, particularly those designed for the bitcoin network, improve the capacity of developers to build innovations and smart contracts on the primary chain. They typically cater to the two major blockchains, Ethereum and Bitcoin.
As always, it is crucial to carry out due diligence to mitigate the risks associated with using these sidechains.
Polygon
Polygon, formerly known as Matic Network, has established itself as a standard scaling solution in the blockchain space.
This Layer 2 platform started as a sidechain to Ethereum, but it has since evolved to offer much more.
Polygon, as a sidechain, runs alongside Ethereum and is entirely independent of the Ethereum network. Polygon provides near-instant transactions with low gas fees.
Users of Ethereum 1.0 have reported similar issues, including congestion, high gas fees, and slow transaction speeds.
While Ethereum can handle up to 17 transactions per second, Polygon can handle up to 65,000 transactions per second, implying that transaction speed increases with the addition of this sidechain.
Rootstock
The Rootstock sidechain (RSK) is a Layer 2 virtual machine designed to address some scalability issues in the Bitcoin network. When the Bitcoin blockchain was designed by Satoshi Nakamoto, it was meant to act as a digital means of sending money.
At the time of its conception, it did not have the capability of serving as a home for smart contracts and decentralized apps such as Ethereum.
The Bitcoin network has some limitations, such as the size of the blocks, which is limited to one megabyte, making it nearly impossible to create decentralized apps on it. The bitcoin network is plagued by scalability issues.
Rootstock serves the Bitcoin network by improving chain activity. Bitcoin transaction speed is slow, and sidechains like Rootstock are designed to improve transaction speed while reducing gas fees. RSK is expanding the network’s operations.
RSK also plans to integrate smart contracts into the Bitcoin network, allowing developers to deploy decentralized apps on the chain.
The Elements project
The Elements project is an open-source sidechain that improves the functionality of the Bitcoin network. It was created by the community and is intended to be either a stand-alone chain or a sidechain to a primary blockchain.
The Elements Project claims that it is “built upon and extending Bitcoin’s codebase, it lets developers familiar with the bitcoin API to quickly and cost-effectively create working blockchains and test proof-of-concept projects. Being built on the Bitcoin codebase also allows Elements to function as a testbed for changes to the Bitcoin protocol itself.”
It has two primary features: Confidential Transactions and Issued Assets.
The former feature ensures that only those participating in the transaction can access the transaction elements.
POA
The POA Network is one of the sidechains designed to improve Ethereum’s scalability. Scalability issues plagued Ethereum 1.0, causing transaction costs to skyrocket, sometimes into the hundreds or thousands of dollars.
Layer 2 solutions, such as POA Network, are intended to increase transaction speed. This sidechain, for example, has a block tune of five seconds. Proof of Authority is the consensus mechanism used by the open-source sidechain.
Loom Network
Like some of its counterparts above, the Loom Network was initially developed as a Layer 2 side chain solution for the Ethereum network to improve its scalability. As a result of its perks, this sidechain was heavily used in the development of blockchain games.
The Loom Network is popular among developers because it allows them to create high-performing decentralized apps while ensuring that high gas fees will not deter their users from using the dApps.
The Loom Network has evolved from being limited to Ethereum to becoming easily integrated into other chains such as Binance Smart Chain and Bitcoin.
In Conclusion,
- Sidechains are smaller chains connected to the main blockchain through infrastructure similar to a bridge. This type of scaling solution employs an independent consensus mechanism from the main chain to verify transactions.
- Polygon, as a sidechain, runs alongside Ethereum and is entirely independent of the Ethereum network. Polygon provides near-instant transactions with low gas fees.
- Rootstock (RSK) is a Layer 2 virtual machine designed to address some scalability issues in the Bitcoin network.
- RSK also intends to integrate smart contracts into the Bitcoin network, allowing developers to deploy decentralized apps on the blockchain.
- Elements is an open-source sidechain that improves the functionality of the Bitcoin network.
- POA Network is one of the sidechains designed to improve scalability on Ethereum.
- Loom Network was initially developed as a Layer 2 side chain solution for the Ethereum network to improve its scalability.
Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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