September 20, 2023
Last updated: September 29, 2023
Table of Contents
Picture a bustling metropolis of transactions, where cryptocurrencies and decentralized applications (dApps) are at the heart of daily life. As this digital city expands, the need for a scalable infrastructure becomes paramount to accommodate the growing population of users and their demands.
And this is exactly where the sidechain comes into play. Sidechain and sidechain development revolutionize the way we build and scale blockchain networks & hold the key to achieving scalability in blockchain development.
Nonetheless, Calibraint, as a blockchain development company, firmly believes in the revolutionary potential of blockchain technology for the business world. While this technology holds immense promise, it faces notable challenges such as scalability and transaction finality that challenge its widespread adoption.
Thus, to address these challenges and cater to the evolving demands of the blockchain landscape, the Sidechain technology, alongside custom blockchain development, presents a dynamic solution that can provide scalability, interoperability, and customization, making it a crucial driver for the future of blockchain app development.
So right away, let’s first understand what exactly is “Custom Blockchain Development”!
Custom blockchain development entails the creation of a one-of-a-kind blockchain network suited to specific use cases or industry requirements. This method enables developers to create and deploy blockchain systems with specific features and functions that are appropriate for the target application.
Businesses may optimize blockchain technology for their specific needs by customizing consensus methods, token economics, scalability, and privacy features. This amount of customization improves productivity, data management, and security, making bespoke blockchains an effective tool for tackling specialized difficulties in a variety of industries such as Healthcare, Travel, Ecommerce, Retail, Real Estate and more.
With this as our focus, let’s now delve deeper into the world of sidechain technology and sidechain development.
As Blockstream puts it, “Sidechains are the bridge to scalability and innovation in blockchain.”
A sidechain is an innovative solution for enhancing blockchain scalability while preserving security. In simple terms, it functions as a separate blockchain operating in parallel with the mainnet, offering benefits such as flexibility, liquidity, and speed. Users can conduct transactions and computations on the sidechain, with validation and security provided by the mainchain through a parent-child linkage relationship.
Sounds a bit confusing? Don’t worry! Here’s a technical breakdown:
Generally, users send their cryptocurrency from the main blockchain to an output address, effectively locking them. Federations, acting as intermediaries between the mainnet and sidechain, determine how long these assets remain locked before unlocking. Importantly, sidechain creators can open federation membership to any user. Once the transaction is completed, both sides verify and confirm it, adding an extra layer of security. And that’s it! Once the confirmation period ends, the users will receive their cryptocurrency on the sidechain.
Statistics indicate that sidechains have gained traction rapidly, with over 20 active sidechains deployed across various blockchain ecosystems, providing scalability solutions for diverse applications.
Sidechain development refers to the process of creating and implementing sidechains within a blockchain ecosystem. A sidechain is a separate and parallel blockchain that is interoperable with the main blockchain, also known as the mainchain.
Sidechain development involves designing, building, and maintaining these secondary blockchains to address specific needs and use cases that the mainchain might not efficiently handle. This technique provides a flexible alternative for effectively managing different types of transactions by encouraging interoperability and security between the main chain and secondary chains.
Alongside our core blockchain development offerings, Calibraint also specializes in sidechain development services, enabling enhanced scalability and versatility for blockchain applications across varied industries, such as finance, healthcare, supply chain, and more.
Sidechains are separate blockchains that are interoperable with a main blockchain, allowing assets and data to be transferred between them. They work by using a two-way pegging mechanism, where assets are locked on the main chain and corresponding assets are issued on the sidechain. This enables scalability, customization, and experimentation while maintaining a connection to the security and consensus of the main blockchain.
The key aspects of sidechain development include:
Design and Architecture: Defining the purpose and functionality of the sidechain, including any custom features or consensus mechanisms it may require.
Interoperability: Establishing the necessary protocols and mechanisms to enable seamless communication and asset transfers between the sidechain and the mainchain.
Smart Contracts: Developing smart contract functionality, if needed, to support the desired operations and transactions on the sidechain is one of the most important aspect of sidechain development.
Security and Consensus: Sidechain development also includes implementing security measures and selecting an appropriate consensus algorithm to ensure the integrity of the sidechain.
Governance: Determining the governance model for the sidechain, including who has control over its rules and upgrades.
Testing and Deployment: Rigorous testing and deployment of the sidechain to ensure its stability, security, and compatibility with the mainchain.
Sidechain development is valuable for blockchain networks because it allows for the creation of specialized environments tailored to specific use cases while still benefiting from the security and liquidity of the mainchain. It plays a crucial role in enhancing blockchain scalability, enabling faster transaction processing, and facilitating innovative solutions within the blockchain ecosystem.
Sidechains primarily address a common issue faced by traditional blockchains: slow and limited transaction speeds. They achieve this by dividing a blockchain into multiple interconnected chains, eliminating the need for all network nodes to agree before adding a block.
In addition to boosting transaction throughput, sidechains enhance the functionality and scalability of existing blockchains. In a nutshell, regular blockchains tend to slow down when processing transactions, especially during peak network activity. Sidechains, on the other hand, circumvent this problem by executing transactions instantly and reconciling with the main blockchain later.
Enhancing Transaction Speed: Traditional blockchains often suffer from slow and limited transaction processing. Sidechains offer a solution by dividing a single chain into multiple interconnected blockchains. This eliminates the need to wait for consensus from all network nodes before adding a new block.
Lower Transaction Cost: Another benefit of sidechain logic is the potential for lower transaction costs on the mainnet. Rather than recording every transaction detail, sidechains resolve and complete large data chunks outside of the parent blockchain, reducing the overall cost.
Increased Functionality and Scalability: Sidechains not only boost transaction capacity but also introduce added functionality and scalability to existing blockchains. As a matter of fact, when the network activity surges, conventional blockchains tend to slow down. Sidechains alleviate this issue by executing transactions instantly and reconciling with the main blockchain later.
Flexibility for Custom Blockchain Apps: Sidechains empower developers to experiment with new software or upgrade existing solutions within a real-world environment. Even if an application becomes unstable during testing, it won’t affect the main blockchain. Instead, any issues are confined to the sidechain, preserving the integrity of the mainnet.
Improved Transaction Speed and Finality: Sidechain deployment ensures that network stakeholders no longer need to worry about time-consuming transactions. Despite the presence of a federation layer and a longer confirmation period, sidechains process transactions significantly faster, enhancing overall network efficiency.
Reduced Transaction Costs: Sidechain logic can substantially cut down on high transaction fees within the main blockchain. Rather than recording every single transaction detail, sidechains parse large data chunks and complete them outside of the parent blockchain, resulting in cost savings.
Applicability in Business Alliances and Consortiums: Sidechains are a suitable solution for business alliances and consortiums. Mainnet blockchains often lack robust “know your customer” processes and require substantial investments. Sidechain projects offer a viable alternative, fostering enhanced workflow, transparency, and confidential partnerships among consortium entities.
Loom Network: Loom Network is a versatile platform designed for developing applications compatible with various cryptocurrencies. At its core lies Basechain, a blockchain secured by a group of 21 validators. It supports smart contracts based on the Ethereum Virtual Machine, as well as its own smart contract engine using the Go language.
Each decentralized application created within the Loom Network operates as an independent sidechain connected to the Basechain. What sets Loom apart is its seamless integration with multiple blockchains, such as Ethereum and Tron through gateway oracles, and Binance Chain and Bitcoin via threshold-based multi-signature wallets.
POA Network: POA Network, on the other hand, serves as an Ethereum sidechain solution offering improved transaction throughput, reduced fees, and dependable block times. It employs a proof of authority consensus mechanism, with governance vested in a decentralized autonomous organization composed of licensed US notaries. The public identity of these notaries creates a strong incentive for them to act in the network’s best interests.
Rootstock: Rootstock, meanwhile, operates as a sidechain that enables faster transaction processing and the creation of smart contracts compatible with Bitcoin-like tokens. Its unique consensus mechanism combines merge-mining and a federated consensus protocol. Integration with Bitcoin is facilitated by specialized multi-signature wallets overseen by Rootstock’s federation.
Matic (now Polygon): Polygon provides a framework for building Ethereum-compatible blockchains. It includes various sidechains and tools to enhance the scalability and usability of the Ethereum network.
Binance Smart Chain (BSC): Binance Smart Chain is a blockchain network created by Binance. While not a traditional sidechain, it offers compatibility with Ethereum, allowing developers to port their Ethereum-based DApps to BSC with minimal effort.
Here are a few platforms that can help you build customized sidechain & blockchain solutions:
1. Bridging The Interoperability Gap With Cosmos
Cosmos, often known as the “Internet of Blockchains,” is a pioneering initiative that intends to tackle the blockchain space’s long-standing difficulties of interoperability and scalability. At its heart is the notion of interconnected blockchains, each operating as a sovereign entity while still being capable of interconnecting.
The Tendermint consensus algorithm, a Byzantine Fault Tolerant (BFT) consensus mechanism, serves as the cornerstone of the Cosmos Network. This technique offers excellent security and efficient consensus across the blockchains that are linked. The Cosmos Hub serves as a communication hub, allowing the exchange of assets and information across zones using the Inter-Blockchain Communication (IBC) protocol.
Within the Cosmos Network, developers have the flexibility to create customized blockchains known as “zones,” tailored to specific use cases. This modular approach not only facilitates scalability but also distributes the load on the main network among these interconnected zones. As a result, developers can harness the security features offered by Cosmos while taking advantage of the specialized functionalities offered by their unique zones.
2. Avalanche: Customizability & High Throughput
Avalanche stands out through its focus on rapid throughput, swift finality, and adaptability. The platform employs the innovative Avalanche consensus protocol, which blends elements from both Proof of Work (PoW) and Proof of Stake (PoS). This unique hybrid consensus architecture sets it apart in the blockchain space.
The Avalanche protocol is optimized for sub-second finality, making it suited for applications requiring near-instant transaction confirmation. Subnets are bespoke blockchain networks that developers may establish, each with its own consensus method, governance rules, and virtual machines. This adaptability allows developers to adjust their networks to individual needs while maintaining security and compatibility.
3. BNB Sidechains: Extending the Capabilities of the Binance Chain
Binance Coin (BNB) is more than a cryptocurrency; it is the engine that drives the Binance exchange ecosystem. BNB sidechains, such as Binance Smart Chain (BSC), extend the Binance Chain’s capabilities, allowing developers to create applications that make use of its speed and efficiency.
Binance Smart Chain, in particular, provides developers with a strong environment for developing and running decentralized apps (dApps). The BSC ecosystem benefits from the main Binance Chain’s security and stability, providing developers with a simple approach to designing and deploying blockchain-based products.
Sidechains offer significant potential for enhancing the functionalities of cryptocurrencies, driving cost efficiency, and facilitating cross-blockchain asset transfers. The integration of different blockchains can be approached in various ways, each with its own set of security considerations. Sidechain development is inherently intricate, but leveraging an existing solution can streamline the application’s architecture, enabling it to seamlessly handle multiple cryptocurrencies using a single codebase.
Nevertheless, as the blockchain landscape continues to evolve, the demand for tailored solutions has never been greater. Platforms like Cosmos, Avalanche, and BNB Sidechains empower developers with the resources necessary to construct bespoke blockchain networks and sidechains designed to address specific use cases and requirements. These platforms serve as pathways to innovation within the blockchain technology world, whether the objective is achieving interoperability, enhancing transaction throughput, or expanding the capabilities of an existing ecosystem.
Ultimately, the choice of platform hinges on factors such as consensus mechanisms, scalability demands, and the nature of the applications under development. Thus, with these tools at our disposal, developers can now shape the future of blockchain technology, one custom network at a time.
A sidechain is a separate blockchain that is interoperable with the main blockchain but operates independently. It allows for specific use cases, customizations, and scalability solutions without congesting the main blockchain.
Sidechain alleviate congestion on the main blockchain by processing specific transactions or smart contracts, thereby increasing overall scalability. They enable parallel processing of data and transactions.
Security depends on the design and implementation of the sidechain. While they can offer advantages like faster transaction times, sidechains must ensure proper security measures, consensus mechanisms, and governance to protect against potential vulnerabilities.
Yes, many sidechains are designed to enable the transfer of assets between the main blockchain and sidechains. This interoperability is crucial for maintaining liquidity and flexibility within the blockchain ecosystem.
Developers should consider factors like consensus mechanisms, scalability requirements, security features, and the specific use case of their project when selecting a sidechain. Conducting thorough research and understanding the trade-offs is essential in making the right choice.
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