Sidechain scenario questions


I am here to ask questions regarding sidechains based on what I asked community members and my necessity to understand better about sidechains.

To facilitate I will introduce a scenario and explain: Let’s suppose that I want a sidechain to be responsible for restaurant transactions, I want the possibility to pay a meal with a sidechain token or LSK token.

First question: Should I use on the sidechain an LSK token or would be better a specific sidechain token? (I heard great ideas about it, e.g., each sidechain could have its own token or even restaurants could get together and create a specific sidechain token for them.)

Second question: If it is decided to use an LSK token on the restaurant sidechain then all transactions confirmed on the sidechain will be also registered on Mainnet as proof of existence, at least, its what I understood from the Lisk whitepaper. What could happen with the blockchain performance if many other sidechains decide to use LSK token instead of using its own token?

Third question: If the restaurant sidechain decided to use its own token how fast would it go to confirm the transaction and trade the token on an exchange? Will the exchange run a node of the sidechain that has its own token?

Hi davinet,

Thanks for your questions. I will try to give some answer and some information that can help the understanding of the sidechain concept. Keep in mind that the Lisk sidechain concept is still in the research phase. For this reason, we can discuss various sidechain possibilities but it is difficult to know how sidechain will precisely work and interact with the Lisk mainchain.

I will start with your second question: the aim of sidechains is to separate different tasks on different chains and not overload the mainchain. As such, using a sidechain should not make the mainchain less performant. How LSK tokens can safely be moved from chain to chain is a major point of research and no perfect solution exist in the blockchain space.

For your first question, you have to consider the following question “what gives your sidechain token value”? The restaurants accepting the token as payment will need to use those tokens to pay their employees, their rent (or other expenses). As such, if you just start a new sidechain with a new token, it will probably not be accepted by most restaurants. In this setup, it might be better to have a sidechain, responsible for those payments, using the LSK token. This way, the users can pay with the LSK that they already own, and the restaurants receive a valuable token.

Different solutions could of course exist and we are yet to see the different business uses that will be made with sidechains.

For your third question, it does not really matter if we talk about a sidechain, or any other chain. An exchange is an external entity and they decide which tokens they want to trade and “how fast” the trade happens. An exchange does not need to run a node to receive and send payments, it only needs an account on the chain.

I hope this helped :slight_smile:

1 Like

Hi maxime,

It is very good to receive an answer from a research scientist here, I really appreciate.

Use LSK for regular payments in a specific scenario its an idea, few times per week per example. Thanks for sharing the information.

When possible, I would like to know information that can help me write about sidechains in the future, information such as registration, owned tokens, LSK token interactions and more.

Best regards,