Input Output Global (IOG) has built a toolkit for creating custom sidechains on Cardano, allowing developers to create blockchains for specific use cases based on Cardano’s security and decentralization. Think of Cardano as a solid foundation, like a house, and the sidechains are like rooms in the house. These sidechains make Cardano more flexible and able to handle more things at once, without making the foundation (main chain) less stable or secure.
What is a Sidechain?
A sidechain is like a smaller version of a blockchain that is connected to a bigger one. The toolkit makes it possible for the sidechain to have its own way of making sure transactions are valid and have its own special features. Assets can be transferred between the main chain and the sidechain through a bridge. A consensus mechanism based on the security of the main chain determines the finality of blocks.
The toolkit is made up of:
Main chain Plutus scripts: These are special instructions that run on Cardano's main chain and make sure that transactions and token movement between the main chain and sidechain are secure. It's like a security guard checking ID's before allowing someone to enter a building.
Chain follower: A chain follower is like a spy, it keeps track of important information and events happening on the main chain that might affect the sidechain. In the first version of the toolkit, this will be done using a program called Cardano db-sync.
Sidechain module: This is a part of the software that helps the sidechain understand and use information from the main chain. It's like a translator who can speak different languages, it translates the main-chain's information into a form that the sidechain can use. The sidechain module is part of the sidechain client.
Who Benefits from Custom Sidechains?
For Blockchain Developers
Custom sidechains offer an opportunity for developers to create blockchains for specific use cases based on Cardano’s security and decentralization. They can leverage the support of the existing stake pool (SPO) community and benefit from the enthusiastic community of Cardano followers. This is like a team working together to build a custom-made bike built on a sturdy and reliable mainframe, Cardano.
For DApp Developers
Custom sidechains can help make it easier for different blockchains to work together, handle more transactions, test new ideas safely, and work with existing systems.. Interoperability allows the main chain and sidechain to communicate and exchange assets easily and securely, like two friends passing a basketball back and forth. Scalability allows for faster transactions without compromising security or decentralization, like adding more rooms to a house without making it less stable or secure. Testability allows for pilot DApps to be tested on dedicated sidechains, like a dress rehearsal before the big performance. Compatibility allows for the same application program interface (API) as an existing chain and the use of Cardano’s consensus protocols, like a store offering more products to its customers.
For SPOs
Sidechains give the opportunity for SPOs to give out more types of tokens than just ADA if they choose to run a sidechain node. These new tokens can be used for different things and this can make more people want to join the network. The way rewards are set up on the sidechain can also give rewards to people who create new blocks, make sure they are correct, and help keep the network safe. This is like getting paid for building a new room in a house. Additionally, if an SPO chooses to validate sidechain blocks, they may benefit from the extra revenue for providing additional services and using more resources, like being paid for being a security guard of a new building.
For DApp Users
Custom sidechains can increase the number and variety of DApps, like having more restaurants to choose from in a city. This can result in greater interoperability between chains, simplified development processes, more development platforms, and reduced transaction fees. This can attract more SPOs and delegators, and ensure enhanced security and greater decentralization. This is like a city with more things to do, making it more appealing to more people.
Conclusion
The sidechain toolkit is the latest step in Cardano's plan to make the blockchain more flexible, able to work with other chains and handle more transactions. With this toolkit, Cardano can become more popular and widely used by allowing more transactions while still keeping the network secure and decentralized.
In January 2023, the public will be able to test a new version of the sidechain that is compatible with the Ethereum Virtual Machine (EVM) which will allow people to create and use their own digital programs and move virtual coins between different testing chains. The toolkit being released in January is not a complete solution, but IOG will work with the community to make it better.
Even though there is still a lot of room for improvement and many different ways to use sidechains, the toolkit developed by IOG provides a solid foundation for building new tools and making the sidechains even better. They hope to work with the community to continue making improvements and exploring new possibilities.