Autor Cointelegraph By Gregory Gopman

By far, the innovation with the most impact in the Web3 world this year is the sidechain. The highest-volume blockchain providers in the world — Binance, Polygon, Ankr and Avalanche — have all recently released sidechain functionality. They are investing hundreds of millions into these new implementations — and with good reason.Sidechains are the most likely multichain solution to crypto’s scalability problem. Multiple projects have failed or stalled once they hit a certain level of traffic. Ethereum gas fees are notoriously expensive, while Solana is continually congested to the point where it needs to be turned off. Needless to say, Web3 cannot grow unless transactions are fast, low-cost and secure.Layer-2 (L2) solutions did not solve the problem despite much expectation and implementation. Sidechains are different and could prove to be the best answer as crypto enters mainstream adoption.Just what is a sidechain?A sidechain goes by many different names from various providers. Ankr calls them App Chains; Avalanche calls them a SubNet; Polygon refers to them as a SuperNet. You might also hear the terms parachains, nested blockchains, or application-specific blockchains, which Binance refers to as application sidechains. Like all things in the software development world, there are different features and implementations. For instance, some sidechains might be equal and interdependent, others in a parent-child relationship where the child takes attributes from the parent.Related: What are parachains: A guide to Polkadot & Kusama parachainsHowever, sidechains offer increased scalability because developers can launch a new blockchain or sidechain to cater to a specific function. For instance, Avalanche has dedicated chains (X-Chain, C-Chain, P-Chain) for specific purposes. So, blockchains can be designed specifically to deal with certain types of transactions or high-frequency applications. If one transaction type is causing all the issues, it won’t block up the entire blockchain, just a dedicated sidechain.The fact is that layer-1 blockchains (Ethereum, Bitcoin, Avalanche, Binance) are not designed for games. This is the single area where the scalability concerns are highlighted, with gaming being resource-intensive and requiring high daily transaction volumes. The Crabada game on Avalanche recently increased the cost to $11 per transaction. And changing the initial layer-1 blockchain to cater to Web3 games is not feasible.Sidechain shortcomingsSidechains have infinite applications and are likely the best option to move forward with Web3. But sidechains are all governed by their own set of rules, which aren’t infallible to bad architecture. Most decentralized applications (DApp) are not familiar enough with all the ins and outs of running their own Web3 infrastructure, node and validator networks. These are necessary to process transactions and ensure speed, security and reliability.Because each sidechain has to run its own infrastructure, sidechains are usually not as secure as the initial chain (a common misconception). The security features of a strong blockchain are not inherited on a given sidechain. The sidechain has its own consensus mechanism, its own validator fees and its own vulnerabilities based on each developer’s configuration.Ronin, an Axie Infinity sidechain, was hacked for $620 million in Ether (ETH) and USD Coin (USDC). While this is a clear and obvious failure in terms of network security, the sidechain processed 560% more transactions than Ethereum, meaning it did excel in terms of Web3 scalability despite its security vulnerabilities. Axie chose to only have nine validators, four of which ran everything. This was a clear attack vector that the Sky Mavis team overlooked.Related: The future of the internet: Inside the race for Web3’s infrastructureAnd this is the biggest pitfall associated with the sidechain: They rely on the DApp developers’ proficiency in running their own infrastructure. Companies such as Ankr have begun solving this by offering App-Chain-in-a-Box solutions. Other infrastructure companies will surely follow. The advantages of sidechains far outweigh the security vulnerabilities once the industry makes good standards.They are the best option for what is known as the blockchain trilemma; when you try to increase performance on the main chain, you do so at the expense of either security or decentralization (the triangle being performance, decentralization and security).How are sidechains different from layer-2 solutions?These are new technologies, and many people do not fully agree on the terms. Some people say that sidechains are a type of L2 solution. But this is not strictly true. An L2 is an additional “layer” on top of the layer 1. A sidechain is a near-identical implementation of a blockchain but with its own consensus protocols and node infrastructure. It is also tweaked for specific functions. By this definition, Ethereum’s Plasma Network is not really a sidechain, but an L2 (it inherits its security from the root chain and posts to it).Popular L2 solutions include Bitcoin’s Lightning Network and Ethereum’s Raiden Network. These are best described as state channels, a subcategory of L2s. They allow two network participants to conduct transactions off the blockchain without needing permission from miners or validator nodes. These are easier to implement and have a place in terms of increasing transaction speed. But they are not as flexible, customizable or fast as compared to sidechains.For example, a sidechain can allow developers to quickly and easily deploy their own chain for a specific purpose. Multiple test blockchains can be developed to see which ones work the best. Or different networks can be implemented depending on user feedback. This is not the case with L2s, which are essentially a bandaid to deal with a scalability problem.Related: Is there a secure future for cross-chain bridges?A sidechain is a new dedicated chain for a specific purpose. An L2 is often a patch applied on a failing layer 1, which does not have the bandwidth to support existing traffic. Scalability: The main topic in Web3Many might believe that scalability, security and decentralization are just developer problems that don’t matter. But they go to the core of global finance and have significant consequences for everybody. Sidechains and L2s are not just meaningless technical terms, but the architecture upon which Web3 will be built and the perfect vehicles for limitless scalability. And Web3 could be the key to global economic freedom with deep implications for growth across industries and geographical locations.Bitcoin and Ethereum were initially created with a focus on security and decentralization, not scalability. In this regard, they have been a huge success, but both are ultra slow at 7 transactions per second (TPS) and 15 TPS, respectively. Visa, meanwhile, handles around 24,000 TPS. In order for global crypto adoption and for Web3 to come to fruition, sidechains are needed. They will ultimately help to make 24,000 TPS look like a snail on the pavement, which is why some of the world’s biggest providers are actively working and promoting them. They might be the best Web3 innovation since smart contracts.Sidechains are the futureThe future of Web3 scalability lies with sidechains. This is why Ankr is actively promoting this technology and further providing the node infrastructure that supports it.Developers can get a dedicated sidechain for their specific application, potentially resolving the blockchain trilemma once and for all. Through ready-made frameworks, launching a dedicated blockchain for a specific application will be simple to achieve.Blockchain easily defeats centralized legacy institutions in terms of security and decentralization. The last remaining pillar is scalability, which can be potentially resolved by sidechains. This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Gregory Gopman is a tech entrepreneur working in the blockchain space where he serves as the chief marketing officer of Ankr and runs a blockchain consultancy called Mewn that helps launch projects and grow their valuation. Greg has worked in startups for 15 years — 10 years with Silicon Valley tech companies and five years building crypto projects. He’s best known for co-founding the Akash Network and AngelHack and helping Kadena grow from $80 million to over $4 billion in 100 days.

People interact with open-source applications like MetaMask, Web3 games, the metaverse and DeFi protocols every day but don’t often stop to think about what happens in the background for it all to work. If we think of Web3 as a burgeoning new city, node infrastructure providers are the underlying power grid that makes operations possible.All DApps need to communicate with blockchains, and full nodes serve billions of requests from DApps to read and write data to chains every day. We need a huge node infrastructure to keep up with vastly expanding DApp ecosystems and serve all of the requests. However, running nodes is very time and capital intensive, so DApp builders turn to providers for remote access to nodes. There is a massive monetary incentive for infrastructure providers to power as many of these Web3 ecosystems as possible, but who is winning this race so far?The centralization problemThe fastest way to provide reliable infrastructure to power DApp ecosystems is for centralized companies to set up a fleet of blockchain nodes, commonly housed in Amazon Web Services (AWS) data centers, and allow developers to access it from anywhere for a subscription. That is exactly what a few players in the space did, but it came at the price of centralization. This is a major issue for the Web3 economy, as it leaves the ecosystem vulnerable to attacks and at the mercy of a few powerful players.Consider that over 80% of Ethereum nodes are located in the United States and Germany, and that the three largest mining pools could come together to 51% attack the network. In many ways, today’s blockchains are a lot more centralized than we’d like them to be, in stark contrast to the ethos originally set out in Satoshi Nakamoto’s Bitcoin (BTC) white paper.If large node providers collude, Web3 would lose all the advantages it has over Web2, from censorship-resistance to trustworthiness, and be stuck with only its disadvantages, from relatively high fees to low transactional throughput.Not only that, but reliance on centralized providers also leaves the door open to outages. For example, anInfura outage actually forced crypto exchanges and wallets, like Coinbase Wallet, Binance and MetaMask, to suspend Ethereum and ERC-20 token withdrawals, since they couldn’t fully rely on their nodes.It’s also worth noting that Amazon, which is the backbone of many of these centralized providers, has suffered a number of outages in the past, creating another layer of vulnerability. Ethereum’s Infura outage isn’t the only one. More recently, Ethereum’s move to Ethereum 2.0 was set back with a 7-hour outage due to the hardware failure of a single node on the network. This is a risk that truly decentralized networks don’t have to worry about.Decentralization is a key tenet of the Web3 economy, and centralized blockchain infrastructure threatens to undermine it. For instance, Solana has suffered multiple outages due to a lack of sufficient, decentralized nodes that could handle spiking traffic. This is a common problem for blockchain protocols that are trying to scale.Related: Scalability or stability? Solana network outages show work still neededAnd it’s not just Solana. Many of the top blockchain protocols are struggling to find a way to scale and become more decentralized. In fact, while large blockchains like Ethereum and Bitcoin have remained steadfast in the war for decentralization, smaller blockchains have lost the battle, suffering 51% attacks at the hand of overly-centralized node providers.For instance, on June 8, 2013, Feathercoin (FTC) suffered a 51% attack. This means that a single entity was able to control more than half of the total processing power of the FTC network. This allowed them to reverse confirmed transactions and even halt new transactions from going through.At the same time as the FTC attack, the website suffered a DDoS attack. This made it difficult for users to access information about the attack or to try and get their money out of the network. Since then, FTC has fallen into obscurity. Its price has plummeted and it is no longer listed on any major exchanges.This historical centralization owes to the over-reliance on Web2 cloud providers, like AWS and Infura, which have been the primary providers of infrastructure for the Web3 economy so far. But now, to avoid centralization and blockchain’s proverbial “single point of failure,” decentralized infrastructure providers are gaining a great deal of steam. This is good news for the prospect of Web3 ecosystems remaining healthy and decentralized.Decentralized infrastructure provides better solutionsThankfully, recent innovations are giving rise to a new breed of provider that is much more decentralized. These providers run nodes on-premises, or even in users’ homes, rather than relying on centralized cloud providers.While centralized providers have a head start, decentralized providers are emerging as an extremely viable alternative. Their key advantage is that they can’t be taken down by a single point of failure, and in many cases provide faster connections to global users. Also, decentralized node infrastructure providers create new economies where independent providers serve requests for data and earn rewards in their native tokens. This new type of provider is quickly gaining market share, and may even eventually supplant the current incumbents of Web3 infrastructure. Related: Decentralization, DAOs and the current Web3 concerns Competition is heating upThere are a number of different providers in the space, such as Ankr, Flux and QuickNode, that are competing for market share. This competitive environment is good for the Web3 economy, as it leads to innovation and drives down prices. It also ensures that providers are constantly striving to improve their services and provide the best possible experience to their customers.Even more importantly, decentralized infrastructure competition results in greater decentralization of the Web3 economy. This is a good thing, as it makes the economy more resilient against attacks and censorship. The 51% attacks of the past should stay in the past, with infrastructure providers spread out among different geographies.Related: Web3 relies on participatory economics, and that is what is missing — ParticipationThis competition among providers will be vital to maintaining a healthy and decentralized ecosystem.Realizing the promise of Web3The promise of Web3 isn’t just to build a better internet, but to build a better world. Decentralized infrastructure providers are building the foundation for a new internet, one that is more equitable, secure and censorship-resistant.By maintaining the status quo, centralized hosting providers fail to provide true innovation and are susceptible to censorship. Decentralized infrastructure providers, on the other hand, are incentivized to push the envelope and provide the best possible service with a democratic structure, which ensures that they are more resistant to censorship and attacks.This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Gregory Gopman is a tech entrepreneur working in the blockchain space, where he serves as chief marketing officer at Ankr, and runs a blockchain consultancy called Mewn that helps launch projects and grow their valuation. Greg has worked in startups for 15 years — 10 years with Silicon Valley tech companies, and 5 years building crypto projects. He’s best known for co-founding the Akash Network and AngelHack, and helping Kadena grow from $80 million to over $4 billion in 100 days.