BA-11 · LESSON 06

Federations and sidechains

KEY DEFINITIONS

Terms used in this lesson

BTC: The common market ticker for bitcoin.
Validator: Software or a participant that independently checks state transitions under a system's rules. The exact role depends on the protocol being discussed.

Pegged systems trade different custody, consensus, and exit assumptions for additional functionality.

45 min Difficulty 3/5 Not started

VISUAL MODEL

See the whole mechanism before going step by step

Use the diagrams to orient yourself. Then the guided explanation below teaches every part in depth.

4 explanatory views

CONCEPT-SPECIFIC MAP · state machineOne valid action transforms a known stateSelect any state to inspect its exact role.

RELATIONSHIP MAPOrdered mechanism flow

01
BEFOREKnown state
Identify the facts and objects that exist before the action.
02
ACTIONFederations and sidechains
The Federations and sidechains lesson isolates the event that proposes a change.
03
RULEDeterministic check
The enforcing rule accepts or rejects the proposed transition.
04
AFTERSuccessor state
Accepted work creates a new state without silently changing the prior facts.
05
FAILUREState unchanged
A failed condition must not produce a partially accepted successor.

Rule shown: A valid transition names the prior state, action, enforcing rule, and successor state.

STAGE 1 OF 5BEFORE: Known state

Identify the facts and objects that exist before the action.

Governing relationship: A valid transition names the prior state, action, enforcing rule, and successor state. Complete path: 1. BEFORE, Known state. Identify the facts and objects that exist before the action. 2. ACTION, Federations and sidechains. The Federations and sidechains lesson isolates the event that proposes a change. 3. RULE, Deterministic check. The enforcing rule accepts or rejects the proposed transition. 4. AFTER, Successor state. Accepted work creates a new state without silently changing the prior facts. 5. FAILURE, State unchanged. A failed condition must not produce a partially accepted successor.

1. State transitionWhat exists, what changes, and what results

BEFORE

A user pegs in 2,000,000 sats with a 2,000-sat main-chain fee and later requests a 750,000-unit peg-out with an 800-sat fee under a 4-of-7 federation.

MECHANISM

A peg-in sends BTC to a script controlled by federation keys or another specified mechanism. Main-chain nodes do not automatically understand sidechain balances.

AFTER

The representation's redeemability depends on bridge control, reversible indexing, and sidechain correctness, not only the original Bitcoin lock.

Text equivalent: Starting from A user pegs in 2,000,000 sats with a 2,000-sat main-chain fee and later requests a 750,000-unit peg-out with an 800-sat fee under a 4-of-7 federation. The mechanism begins when A peg-in sends BTC to a script controlled by federation keys or another specified mechanism. Main-chain nodes do not automatically understand sidechain balances. The resulting lesson is The representation's redeemability depends on bridge control, reversible indexing, and sidechain correctness, not only the original Bitcoin lock.

2. Mechanism pathSelect a stage to inspect its job

STAGE 1 OF 5

Lock or assign main-chain bitcoin

A peg-in sends BTC to a script controlled by federation keys or another specified mechanism. Main-chain nodes do not automatically understand sidechain balances.

Complete path: 1. Lock or assign main-chain bitcoin: A peg-in sends BTC to a script controlled by federation keys or another specified mechanism. Main-chain nodes do not automatically understand sidechain balances. 2. Recognize sidechain issuance: After required evidence and delay, sidechain consensus credits a corresponding asset under its own rules. 3. Transact under sidechain rules: Users gain different block timing, privacy, or programmability while relying on sidechain validators, data availability, and software. 4. Request a peg-out: The sidechain destroys or locks the representation and produces an authorization request for main-chain BTC. 5. Release under custody policy: Federation quorum or another bridge mechanism signs a main-chain spend after its checks. Failure, collusion, censorship, and emergency recovery define the trust model.

3. Rule and failure boundaryWhat accepts the result and where it can stop

ACCEPTED PATH

A unique peg-in transaction, matching sidechain burn commitment, distinct registered quorum signatures, reserve and issued-supply conservation, and a conserving release transaction must all agree.

CHANGED CONDITION

A signature count below the displayed threshold, duplicate chain evidence, a substituted burn, overdraw, or a disconnected peg-in blocks release or atomically rolls back both derived ledgers.

Important distinction: A sidechain inherits Bitcoin consensus because its token is backed by locked BTC. Bitcoin enforces the main-chain lock and release script. Sidechain state, censorship, peg accounting, and validator behavior use additional rules and trust.

Text equivalent: The accepted path is enforced by A unique peg-in transaction, matching sidechain burn commitment, distinct registered quorum signatures, reserve and issued-supply conservation, and a conserving release transaction must all agree. If the required condition changes, A signature count below the displayed threshold, duplicate chain evidence, a substituted burn, overdraw, or a disconnected peg-in blocks release or atomically rolls back both derived ledgers.

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Learn the idea

A sidechain is a separate ledger whose asset is intended to represent bitcoin moved through a peg. A federation is a known or permissioned group that collectively controls peg or consensus functions. A two-way peg aims to lock bitcoin on the main chain and issue a corresponding sidechain asset, then reverse the process, but custody and validation assumptions depend on the design.

GUIDED EXPLANATION1/5 ideas inspected

Lock or assign main-chain bitcoin

A peg-in sends BTC to a script controlled by federation keys or another specified mechanism. Main-chain nodes do not automatically understand sidechain balances.

The worked example follows the explanation

Inspect every idea above to open it.

Important distinction“A sidechain inherits Bitcoin consensus because its token is backed by locked BTC.”

Bitcoin enforces the main-chain lock and release script. Sidechain state, censorship, peg accounting, and validator behavior use additional rules and trust.

FINISH LEARNING FIRST

The questions unlock after every required learning activity

Inspect every guided idea, open the worked example, rebuild its mechanism, and complete the deterministic lesson tool. Your progress is saved automatically.