State channel and sidechain technology are two expansion technologies of the Ethereum community, but many people often stupidly distinguish it, which leads to a lot of confusion.
Today, this article is trying to explain the truth, hoping that everyone can understand. The main purpose of this article is to make it clear:
• What is state channel technology?
• What is side chain technology?
Then try to compare these two technologies:
• What problem are they trying to solve?
• Which of the two is the better solution for capacity expansion?
Don't waste too much time, let's get started quickly.
What is state channel technology?The state channel is a very broad and simple way to expand its capacity on the blockchain, but this is done under the blockchain and does not significantly increase the risk of blockchain participants. The most famous case of this scheme is the Bitcoin payment channel, which allows fast and low-fee payments to be sent directly between the two.
The state channel is a general term for payment channels. This technology can be applied to any state change operation, in most cases it is carried out on the blockchain.
Moving calculations off-chain eliminates the need for redundant trust, which can lead to a reduction in costs and a great increase in speed. The state channel is an important part of the blockchain expansion technology, which can support higher-level use.
The basic components of the state channel are as follows:
1. Part of the state of the blockchain is locked by multiple signatures and some smart contracts, so this part of the participants must fully agree with the other party to update it.
2. Participants update their status by generating and signing transfers, which will eventually be uploaded to the blockchain instead of being calculated directly on the chain. Each new update will refresh the previous update.
3. Finally, the participant transmits the state back to the blockchain, then closes the state channel, and locks the state again (usually according to different settings from the beginning).
If the "status" updated between participants is the digital currency balance, then we will have a payment channel. In the first and third steps, this channel will be opened and closed, including blockchain operations. But in the second step, unlimited updates will be carried out quickly and without the intervention of the blockchain-this is the power of the state channel, because only the first and third steps need to be exposed to the network, pay a fee, or wait confirm. In fact, with careful planning and design, the state channel can be kept open almost infinitely, and it can be used as a center and branch system to help the entire economy and ecosystem.
Although we describe it very briefly, the status/payment channel is actually very complicated. There are several reasons for this, one of which is that there are complex decentralized steps behind these three steps. Let's take a closer look at what these are, let's start with the following:
Can be submitted to the blockchain.
In order for the state channel to work, participants must ensure that they can disclose the current state of the channel at any time. This leads to many important restrictions, such as someone must be online to protect each participant until the channel is closed.
Imagine that when we open the payment channel, I start with 100 bitcoins, but you start with 10 bitcoins. If we start to sign an update, transfer 10 bitcoins to me, and then sign an update, transfer 50 bitcoins to you, then the subsequent update is obviously more profitable than the earlier one. If you unfortunately have no internet connection, assuming the second update will never happen, then I can update the first transfer to the blockchain and steal 50 bitcoins from you! What you need to do is that someone is online and has a copy of the subsequent transfer so that they can "overwrite" the previous transfer and ensure that your Bitcoin is protected. It doesn't have to be you-you can send this backup to many random servers, all of which are agreed through smart contracts, and can be transferred publicly as long as needed (of course, a small fee is required). But no matter what you do, you need to ensure that the latest signature update can cover all others. This brings us to our second step:
Each new state "overwrites" the previous updateIn order to complete this part of the state channel work, the locking and unlocking mechanism must be reasonably designed so that the old state updates submitted to the blockchain have a chance to be corrected by the updated state that replaces them. The easiest way is to start the timer for any unlock. During this time, any updated update can replace the old update (and restart the timer at the same time). When the timer is complete, the channel will be closed and the status will reflect the last update received. The length of the timer will be specifically selected for each state channel, thereby balancing the closing time of a long channel, while also enhancing security, which will prevent network connection or blockchain problems. In addition, you can build a channel through financial punishment, so that anyone who discloses inaccurate updates to the blockchain can make these people lose more by assuming that subsequent transfers will not occur.
But this mechanism is not very important, because (returning to the point I said before) game theory in this situation can make things worse. This mechanism may just sound fine in theory, but it may never be used. In fact, through the timer/penalty process, it may cause extra costs, delays or other inconveniences; if someone enters this mechanism, it will not give you any benefit. The state channel may only be changed through manual agreement. Status channel, thereby closing the channel. The final closing operation needs to be different from the normal "intermediary" update (because it will bypass the above "overwrite" mechanism), so once the state of a certain channel is locked, the participant will just sign the final transfer.
These "details" are not particularly important. It is finally broken down. It can be understood that participants set up a "judge" smart contract to open the channel and sign agreements with each other. If necessary, the referee can enforce it, and then close the channel by reaching a consensus in it, then the judge's judgment No need. As long as the "judge" mechanism is reliable, these commitments can be considered as instant transfers, and the judge will only do so under special circumstances, such as the disappearance of one participant.
Of course, these details are just one of the wishes that people think the state/payment channel is complicated. More, Bitcoin payment channels are very complicated. The establishment of a "judge" mechanism in Bitcoin is very complicated. But once you have a clear understanding of the state channel, you can see that this only comes from implementing the idea in a restricted context. Basic smart contract mechanisms, such as a timer mechanism and choosing two different paths based on uploaded signature information, are actually more difficult to do in Bitcoin. Certain functions are gradually added and established. By seeing that the payment channel is just a sub-case of the special and broad concept of "state channel", we found that this is a faster and broad technology, and this state channel can be applied to any smart contract, and they can communicate with the defined participants. Frequent updates. You can foresee that this approach will appear in many distributed applications.
Now, we should be more clear about what a "state channel" is. Next, let's take a look at the side chain technology.
What is side chain technology?Side chain technology is a separate and independent blockchain that uses a two-way anchor to attach to the main chain.
In other words, you can move assets to the side chain or back to the main chain.
This two-way anchoring allows internal exchange of assets between the main chain and the side chain at a preset rate. The initial blockchain usually represents the main chain, and all newly added blockchains are defined as side chains.
Users on the main chain first need to transfer tokens to the output address, where the tokens will be locked so that users cannot consume them. Once the transfer is completed, the information will be transmitted on the chain after the safe time has passed. After the waiting time, the same number of tokens will be released on the side chain, allowing users to obtain and consume them. When shifting from the side chain to the main chain, the opposite will happen.
allianceAn alliance refers to a group that serves as an intermediate point between the main chain and one of the side chains. This group will be determined when users lock and release tokens. The creator of the side chain can choose the number of alliances. But a problem with the alliance structure is that it will add a hierarchy between the mainstream and the side chain.
Side chains are responsible for their own security. If there is not enough computing power to ensure the security of the side chain, it may be hacked. Because each side chain is independent, if it is invaded, the damage will be included in the side chain and will not affect the main chain.
Conversely, if the main chain is hacked, the side chain can still be allowed, but the anchoring will lose value.
Side chains need their own miners. These miners can obtain incentives through "joint mining", the same algorithm, simultaneous mining, and can obtain two different digital currencies.
Now, we also know something about side chains. So, let us compare the differences between them.
What problem are they trying to solve?Side chains and state channels are used to improve the scalability of the blockchain.
They all conform to similar models.
• Lock status/assets.
• Transfer funds off-chain
• Unlock state/asset in state channel/side chain
But despite this similarity, there are many differences, mainly in the state channel, we do not use a separate blockchain, but in the side chain, we use a separate blockchain. So let's take a look at the final result.
These two, who is the better expansion plan?
In order to get the answer, let's take a look at their respective strengths and weaknesses.
Benefits of state channelsThe state channel has a strong privacy performance: this is because everything happens in the channel, rather than publicly broadcast and recorded on the chain. Only opening and closing transfers must be public. But in the side chain system, every transfer is posted on the side chain, and then every participant on the side chain will receive it. However, in fact, you do not interact with all the participants on the side chain.
• The status channel has instant finality, which means that as long as the two parties sign the status update, the status can be considered to be over. Both parties have a high guarantee that if necessary, they can "force" put the state on the chain. But as discussed above, the state channel is closed, considering the security level of the transfer, it may take a variety of time. However, in a side chain, you have a blockchain on the other side. Therefore, the final result depends on the mining power of the side chain.
Defects of state channels• The state channel requires all participants to be 100% online: as we discussed, if any participant becomes offline, then the cost is high for them. Participants can use someone else as a representative if he is disconnected, but the possibility of the representative being attacked becomes a state channel problem. But in the side chain, you don't need to be online all the time.
• The state channel is best used for a series of participants: this is because the judge contract (the contract used to lock the state) must always know that the participant/individual (that is, the address) is part of this channel. We can add and remove participants, but we need to change the contract every time. But in the side chain, there are no such restrictions on the transfer of participants.
• The state channel is especially useful for participants who need to perform many state updates for a long time: this is because there is an initial cost to create the channel when the judge contract is deployed. But once deployed, every state update inside the channel is very cheap.
Benefits of side chains• The side chain is permanent. If you already have one, you don't need to create your own sidechain for a specific purpose: when the sidechain is completed, it is created and maintained. We will not close the side chain, but lock the assets on the side chain and then transfer to the main chain. This is very helpful for those who want to perform specific tasks off-chain (for example, Dogecoin transfers), because they will all end up on the same sidechain. Therefore, you don't have to create a different side chain for each new participant. But in the state channel, you always say that you need to create a new channel, and then add new participants. However, some projects also use other methods, without creating a new channel for each participant. You can establish a channel between you and the recipient indirectly through other participants.
• The side chain allows the digital currency to interact with each other: They will add flexibility and also allow developers to perform software testing before pushing data to the main chain. Traditional banking functions, such as issuing and tracking equity owners, can be tested on the side chain before transferring them to the main chain.
Disadvantages of side chains• Side chains require a lot of initial investment to get started: In order to create side chains, we need to have enough miners so that the network can prevent attackers and stay safe. At the same time, we must ensure that they are online and running. But in the state channel, there is no blockchain. Therefore, there is no need for such requirements.
• For side chains, alliances are needed: this will add another level between the main chain and the side chains. This is another vulnerable point for attackers, because they can attack alliances. So in the state channel, we only need smart contracts to do so.
In fact, the competition between these two expansion plans is very great. The dust has fallen, but the two are still developing very well. As research continues, it is difficult to decide who is the winner. Maybe they will cooperate to form another hybrid solution to solve the expansion problem. Now we can only wait and see what time will bring us.
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