Sidechain
A separate blockchain that runs in parallel to a main blockchain and is connected to it by a two-way bridge. Sidechains can have their own consensus rules and are used to offload transactions and enable features not possible on the main chain.
Why It Matters
Sidechains allow for more flexibility in blockchain technology by enabling transactions and features that are separate from the main blockchain. This is important for scalability and can help reduce congestion, making crypto transactions faster and cheaper for users.
Example
For instance, imagine a main blockchain handling digital currency transactions, while a sidechain is used specifically for smart contracts. This separation helps ensure that the main blockchain remains efficient while still supporting innovative features.
Beginner Context
For beginners, understanding sidechains is crucial as they reveal how different blockchains can work together. This innovative technology expands the capabilities of cryptocurrencies and allows users to participate in specialized applications without burdening the main network.
Mike Starr
Founder, CryptoWizardTools · M.S. Organizational Management
Last reviewed: August 2026
Related Terms
TVL
Total Value Locked. The total amount of assets deposited in a DeFi protocol, used as a key metric to measure the protocol's adoption and health.
EIP-1559
An Ethereum upgrade that changed how transaction fees work: it introduced a base fee that is burned (permanently removed from supply) plus an optional tip to validators. During high network usage, more ETH is burned than created, making ETH potentially deflationary.
Depeg
When a stablecoin loses its target value — for example, a USD-pegged stablecoin trading at $0.90 instead of $1.00. Depegs can be brief (caused by liquidity stress) or permanent (caused by a broken mechanism or lost reserves).
Initial Exchange Offering
A token launch conducted through a centralized exchange rather than directly to the public. The exchange lists and sells the token, typically after some review of the project, giving buyers a curated alternative to open ICOs.
USDT
Tether — the largest US-dollar-pegged stablecoin by market cap, issued by Tether Limited. USDT is backed by reserves of cash, cash equivalents, and other assets. Its reserve transparency has historically drawn scrutiny.