Plasma chain vs side chain
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This is not financial advice.
Plasma chains are child chains
What is Plasma chain?
The main idea of Plasma is to establish a structure of secondary chains that will communicate and interact with the main chain (in this case, the Ethereum blockchain). This structure is designed to operate like a blockchain tree, which hierarchically arranged in a way that many shorter chains are linked to the main chain. These shorter chains are called Plasma or child chains.
Example: Think of having a shortcut button on your phone. The app is still running on your phone (iOS, Android). This button has a dedicated function to access the specific app.
Plasma’s features are highly scalable, capable of up to millions of transactions per second. The block generation process can be faster as there is no need for full consensus to proceed. Besides, the multiple chains, the blockchain tree feature, can be used to parallel transactions to achieve very high scalability.
How does Plasma chain work?
The Plasma architecture is built upon the adoption of smart contracts and the Merkle tree, allowing for the creation of a multitude of child chains. In essence, they are shorter copies of the original Ethereum blockchain. From the top of each substring, many shorter child chains can be created, thus forming a tree structure.
Basically, each Plasma child chain is a customisable smart contract that can be designed to work in a particular way to cater to different needs. This means that chains can co-exist and operate independently. Businesses and companies can use it to implement scalable solutions in various ways, depending on their specific context and needs.
For example, you participate by sending your tokens to Plasma chain. You make transactions for your use case in there. When necessary, you transfer the tokens from Plasma back to the main chain.
The plasma is a child chain, it has all the properties of the child chain. Plasmas start with the main chain and use proof of fraud to validate transitions with the main chain. Besides, a rather interesting feature that plasma can have is incentives that motivate the progress of itself and the main chain by token issues.
The Plasma tree of blockchain
The Plasma tree of blockchains uses a mechanism similar to the court system and Ethereum blockchain which is the root of the tree of blockchains similar to the supreme court.
The fraud proofs in the higher-level child chains act like the court that enforces correctness in the child chains. As in real-world courts were crime must be reported for justice to be enforced, participants of child chains must monitor the chain at intervals to detect and challenge fraud by reporting to the higher-level child chain and main chain which will enforce correctness.
Besides, the MapReduce mechanism is solving by recursively dividing into the tree of components, solving each component to get component results, summing all the component results repeatedly from children to parent all the way to the root of the tree to arrive at the final result.
Proof of fraud
Communication between child chains and main chains are secured by proof of fraud, so the main chains are responsible for keeping the network secure and punishing malicious actors.
Each child chain has its own mechanism for validating blocks and has its own way of enforcing the proof of fraud, which can be built base on different consensus algorithms. The most common are Proof of Work, Proof of Stake and Proof of Authority.
Fraud proof ensures that in the event of malicious activity, users can report untruthful nodes, protect their funds, and exit the transaction (this includes interacting with the main chain). In order, the proof of fraud is used as a mechanism by which a Plasma child chain sends a complaint to its parent chain or the main chain.
Each Plasma chain can have its own native token or use the main chain token. To encourage correctness, it might ideally be a native token for each Plasma chain. This token represents the network effects of the Plasma chain and creates an incentive to maximise the security of the chain. If validators act fraudulently, the native token will make sure that they incur costs via the loss of part or all of the token quantity.
Proof of Stake validators can receive transaction fees and bounties for correctly operating the network and will be penalised of their staked token for fraudulent activity. This encourages them to operate the network correctly and creates long term value for the token. Since stakers are motivated to continue running the network to collect transaction fees, they will persevere in running the chain.
Plasma chain and side chain
The context of Ethereum scaling is a new and exciting one. There are many layer 2 scaling solutions to choose from — each with its own unique trade-offs and optimisations.
The easiest way to differentiate Plasma chain from side chain is the security aspect.
Plasma chain is anchored to Ethereum and its security is based on Ethereum smart contracts. The plasma chains use different mechanisms to validate transactions and the verification is performed by validators.
A side chain is attached to Ethereum blockchain using a peg that enables one or two-way transfer of assets. You can create multiple side chains to allow different cryptocurrencies to interact with each other. Each side chain is independent (bugs from one chain don’t affect the other) and relies on its own security mechanisms.
The difference in architecture means that both Layer-2 scaling solutions come with different trade-offs.
Plasma chains participants must control their private keys and funds at all times because it uses a UTXO model for value transfer. It is a non-custodial Layer-2 scaling solution which allows honest users to withdraw funds from the Plasma chain to Ethereum blockchain at any time, even if plasma chains go offline.
Therefore, plasma chains prioritise a participant’s fund security and recoverability over general flexibility.
The ability to create different side chains with their own tokens and a consensus mechanism allows for testing. For example, a side chain could be created with much larger block size, allowing for more transactions per timeframe. Furthermore, since side chains are independent, features can only be transferred into the main chain when they are proven to work in practice.
However, side chains are independent of the Ethereum blockchain and rely on their own security mechanisms to ensure the safety of the fund. Participants must trust a consensus mechanism like PoW or PoA to mine and validate transactions. In other words, if the side chain fails (meaning the consensus mechanism is compromised), you could lose all of your money.
Therefore, side chains prioritise general flexibility over a user’s fund security and recoverability.
The main objective of the Plasma chain is to reduce Ethereum congestion, which is why it is optimised for payment settlements and transactions. Because of the Plasma chain’s higher throughput and security, it allows for faster transactions at less cost while maintaining the same level of security as the main chain.
Side chains are built for flexibility and are optimised to allow cryptocurrencies to interact with one another. They also support smart contracts, helping developers experiment with a wider variety of use-cases before pushing them to the main chain. However, the security guarantees of a side chain may hinder users from using it as a value transfer network.
TLDR: Plasma is, essentially, an off-chain solution that strives to significantly increase the overall performance of the Ethereum network, by creating a tree-like structure of numerous smaller chains. These chains would alleviate the work of the main chain, which would be able to handle more transactions per second.
With proper development, Plasma will likely increase the efficiency of the blockchain and provide a better framework for the deployment of decentralized applications.