Pegged Sidechains
Web3 / cross chain
Pegged sidechains are parallel blockchains connected to a main blockchain (mainchain) through a two-way peg mechanism that allows assets to move between them while maintaining a fixed exchange rate. When users transfer assets to a sidechain, those assets are locked on the mainchain, and equivalent tokens are released on the sidechain. The peg ensures that one mainchain asset always equals one sidechain asset, preserving value across the bridge. This architecture enables faster transactions and experimentation on the sidechain while leveraging the security and finality of the mainchain for settlement. Example: Liquid Network is a sidechain pegged to Bitcoin that enables faster settlement and confidential transactions. Bitcoin is locked in a multi-signature vault when transferred to Liquid, and an equivalent amount of L-BTC is issued on the sidechain, creating a trustless bridge between the two networks. Why it matters for cross-chain interoperability: Pegged sidechains provide a proven mechanism for scaling and connecting blockchains without sacrificing security. They enable asset liquidity across multiple chains while maintaining cryptographic guarantees, making them essential infrastructure for multi-chain applications and reducing congestion on primary networks.
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