IOHK, the development group responsible for Cardano, has published a paper detailing a new type of sidechain. This sidechain will enable blockchains to interact and communicate with each other in a trustless manner that features mathematically-proven security features.
Blockchain Interoperability on Cardano
IOHK’s paper, which was authored by Aggelos Kiayias and Dionysis Zindros, outlines the functions of the new sidechain. As the abstract explains, the sidechain allows a “source” blockchain (which uses a POW mechanism) to be interlinked with a “destination” blockchain (which uses another consensus mechanism).
The resulting link can be used to transfer value and perform events across two different blockchains. This has several applications: for example, the sidechain could be used to create “remote ICOs,” allowing tokens to be purchased on a blockchain they were not created on. The sidechain would also allow assets to be moved back and forth between blockchains via a two-way peg. It could also facilitate atomic swaps between untrusted parties.
Comparison to Other Platforms
Although the above applications are already possible to some extent, IOHK’s proposal is a maximally decentralized approach. IOHK acknowledges several other interoperability efforts, such as Polkadot, Tendermint, the Liquid Network, and Interledger, but these mostly rely on federated or trusted networks. IOHK’s proposal removes the need for trust when it comes to interoperability.
This is also a relatively new application of sidechains. At the moment, sidechains are primarily used to solve scalability problems — platforms like Plasma can unburden blockchains by allowing activity to take place off of a main chain, thereby improving scalability. Although this improves transaction speeds and lowers the costs of transactions, there is quite a lot of potential for sidechains that focus on interoperability as well.
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Future of the Project
If it is successful, IOHK’s new sidechain could attract developers to Cardano. However, it is not clear when the sidechain will be introduced to the platform. The efforts of IOHK’s sidechain developers are ongoing, and Cardano’s official roadmap indicates that a sidechain is 85% complete and is in review. However, there is no precise release date, and it is not clear whether the features outlined in this recent paper will be part of Cardano’s first sidechain.
Charles Hoskinson, the founder and CEO of IOHK, has also noted that the sidechain will eventually be applicable to blockchains that do not rely on proof-of-work. After praising the paper as “a major step forward in interoperability,” he indicated that a similar paper concerning proof-of-stake blockchains will be published soon. In other words, Cardano’s sidechain project will probably continue to grow in scope.
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