Almost $77 million of Bitcoin (BTC) is currently unavailable to use on the network — not because it is lost, but because it is locked up in sidechains.
Data from block explorers confirms that as of October 17, a total of 9,661 BTC ($76.96 million) or a tiny 0.054% of today’s Bitcoin supply resides in three major sidechain projects.
However, sidechains are separate blockchains tied to a cryptocurrency’s regular blockchain, i.e. mainchain. Users can interact with it through a pegging mechanism; they send funds to and from the sidechain, with security features ensuring coins are not available on both chains at once.
Likewise, sidechains have existed for several years and have various functions depending on developers’ aims.
For example, blockstream’s Liquid sidechain, or LBTC, focuses on interexchange operability while giving traders enhanced features not yet available on the Bitcoin mainchain.
Binance Chain leads balances
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Liquid, which launched in October 2018, currently includes a modest 89 BTC ($709,700). That figure is overlooked by the largest sidechain, Binance Chain, which has 9,001 BTC ($71.74 million).
Even the Wrapped Bitcoin (WBTC) sidechain, which is an Ethereum-based ERC-20 standard token, has 571 BTC ($4.55 million), more than Liquid.
However, WBTC debuted in January this year, while Binance Chain, the cryptocurrency exchange, Binance’s in-house project — got its mainnet unveiling in April.
Thus, CoinShares, the wallet provider Blockchain and digital asset manager launched a Bitcoin sidechain of their own in the form of a gold token network, this week.