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Sidechain

In simple terms

A sidechain is a different blockchain running alongside a main one, linked so assets can move between them. It has its own security rather than borrowing the main chain's.

Definition

A separate blockchain with its own consensus, connected to a main chain by a bridge.

In depth

A sidechain runs an independent consensus mechanism and validator set, connected by a two-way peg that locks assets on one chain and issues representations on the other. This is the decisive difference from a rollup: a rollup posts data or proofs to its settlement layer and inherits security from it, whereas a sidechain's users are protected only by the sidechain's own validators and the bridge contract. Sidechains typically offer higher throughput and lower fees, and the trust assumption is correspondingly weaker.

How does Sidechain work?

A user deposits an asset into a bridge contract on the main chain, which locks it and mints a representation on the sidechain. They transact there cheaply and quickly. Withdrawing burns the representation and releases the original. Both the sidechain's validator set and the bridge are separate points of failure, and bridges specifically have been the single largest source of losses in crypto.

An example

Moving an illustrative $500 to a sidechain to avoid main-chain fees means the funds are secured by that chain's validators and its bridge, not by the main chain. If either fails, the representation can lose its backing while the original stays locked.

Figures are illustrative only.

What beginners get wrong

  • Assuming a sidechain inherits the main chain's security. It does not, and that is the defining property.
  • Using the words sidechain and Layer 2 interchangeably. The security model is completely different.
  • Overlooking bridge risk when comparing fees. The saving is real and so is the added trust assumption.

Related terms

Part of

How does a blockchain transaction actually work? — the subject page for blockchain mechanics, with all 15 of its definitions in one place.

Educational only — not financial advice.