Here’s How Much Bitcoin Is Currently Locked Up in Sidechains
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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.
Bitcoin sidechains: a nascent market
Data from block explorers confirms that as of Oct. 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.
Sidechains are separate blockchains tied to a cryptocurrency’s regular blockchain, i.e. mainchain. Users can interact with it via a pegging mechanism; they send funds to and from the sidechain, with security features ensuring coins are not available on both chains at once.
Sidechains have existed for several years and have various functions depending on developers’ aims.
Blockstream’s Liquid sidechain, or LBTC, for example, focuses on interexchange operability while giving traders enhanced features not yet available on the Bitcoin mainchain.
Binance Chain leads balances
Liquid, which launched in October 2018, currently includes a modest 89 BTC ($709,700). That figure is dwarfed by the largest sidechain, Binance Chain, which has 9,001 BTC ($71.74 million).
Even the Wrapped Bitcoin (WBTC) sidechain, which is in fact an Ethereum-based ERC-20 standard token, has 571 BTC ($4.55 million) — more than Liquid.
WBTC debuted in January this year, while Binance Chain — cryptocurrency exchange Binance’s in-house project — got its mainnet unveiling in April.
This week, wallet provider Blockchain and digital asset manager CoinShares launched a Bitcoin sidechain of their own in the form of a gold token network.