I just finished IOHK’s whiteboard video about sidechains.


I felt like I absorbed much of the information like NiPoPow’s and the problems that sidechains can solve. However, I am left with a few burning questions:

1.) Do all sidechains require their own token, consensus, node operators, etc? 2.) How does the receiving chain mint the newly transferred coin? How is this even possible? I thought minting was only allowed based on a monetary policy. Is this a special exemption? I understand chain a will burn the token, and chain b will validate bc of the NiPoPow, but I don’t understand how chain b can mint a new token on request.

1 Answer 1


Sidechains do require their own tokens, consensus protocols, and operators, but there's no reason why all three of those have to be different than the tokens, protocols, and operators of the main chain.

They can be different, which is why sidechains are so flexible and versatile, it really just depends on the needs/purposes of the specific sidechain.

For example, a sidechain (or Hydra Head) whose sole purpose is to scale ADA or native token transactions can use sidechain-ADA on a 1:1 basis to mainchain-ADA, a modified version of Ouroboros that prioritizes speed over security, and a node operator that has already built a solid track record of distributed systems administration (i.e. established SPO's).

On the other hand, a side chain can have its own monetary policy with a (locally) global accounting style and arbitrary tokenomics, or any combination of services.

Sky's the limit!

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