On Blockchain Scalability: What are Sidechains and Rollups?

Scalability on the blockchain refers to its ability to successfully cope with the ever increasing computing demand as more users adopt the service.

When it comes to scaling up a chain, the discussion narrows down to two approaches, which are not necessarily mutually exclusive: Sidechains and Roll-ups.

What are Sidechains?

Sidechains are compatible versions of the base chain, where transactions may be sent for processing off-chain and, if needed, they can be sent back to the base chain. Sidechains are connected to the mainnet by a two-way bridge, but they operate as independent blockchains with their own consensus mechanism. So the mainnet can operate on Proof-of-work and a sidechain use Proof-of-stake and communicate with each other.

How do sidechains work?

In order to support with the processing of transactions between chains, sidechains maintain a two-way peg with the main chain that they are connected to.

This allows users to send, for instance Ethereum from the mainnet onto the Polygon sidechain. However, the transfer never really…