Federated sidechains are auxiliary blockchain networks linked to a main blockchain, where a predefined group of entities collectively manage the transfer of assets between chains. These sidechains operate with a permissioned group of functionaries or signatories who validate transactions and maintain the pegging mechanism. Their security and operational integrity depend on the trustworthiness and cooperation of this specific federation. They offer a balance between the speed and scalability of a separate chain and the security assurances of the main chain.
Context
Discussions around federated sidechains often focus on their application in enterprise blockchain solutions or specific use cases requiring controlled participation. News articles may report on their deployment for faster, cheaper transactions for particular digital assets, or for experimental features before wider mainnet adoption. The primary debate concerns the level of centralization introduced by the federation and its implications for trust and censorship resistance. Future developments might seek hybrid models that gradually decentralize federation control.
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