Sidechains and Hubs
Sidechains are largely layer-2 protocols that are compatible with a single mainnet. Each sidechain can have its own consensus mechanism, use case, tokens, and security parameters. Cosmos and Polkadot are two major protocols that use this model to offer interoperability. In a Cosmos ecosystem, many independent chains—called zones—can transfer value with each other via inter-blockchain communication (IBC) protocol.
Users can transfer tokens from one zone to another through the Cosmos Hub, which tracks the total value of coins held by each zone. Polkadot has a similar structure to Cosmos, albeit with slight differences. Sovereign chains—also called parachains—use bridges to connect to the Relay Chain. Parachains can also communicate through a cross-chain messaging communication protocol (XCMP).
However, despite these functionalities, both Cosmos and Polkadot networks are largely centralized platforms because users cannot seamlessly transfer assets outside of their ecosystems. For example, transferring an asset from a non-Cosmos-based or Polkadot-based network still requires a smart contract-based bridge mechanism.
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