Side Protocol takes modular approach to scaling bitcoin with upcoming sidechain

Side Labs, the crypto startup behind Side Protocol, has unveiled plans to enhance Bitcoin scalability using a modular tech stack.

Side Protocol was established as a cross-chain liquidity solution. However, the team said it was now pivoting to focus on Bitcoin initially, introducing a Bitcoin sidechain, dubbed SIDE Chain, designed to serve as a settlement layer for modular rollups.

The move follows the emergence of inscriptions and Layer 2 solutions for Bitcoin. While these developments may improve its applications ecosystem, Side Labs argues it has the drawback of fragmenting liquidity and interoperability, and presents challenges for dapp developers attempting to deploy their own rollup for application deployment.

Side Labs aims to address these challenges by integrating a modular stack with Bitcoin, leveraging previous work in mesh liquidity, chain abstraction and zk-proving system optimization to offer services to rollups and unify the fragmented Bitcoin rollup ecosystem. 

SIDE Chain will provide proof verification, liquidity unification, value exchange and rollup interoperability, secured by bitcoin as a staked asset in partnership with Bitcoin staking protocol Babylon. Furthermore, the solution will also leverage the Cosmos tech stack, the IBC Protocol, to facilitate value transfer between the two ecosystems, the team said.

‘In Bitcoin we trust; in modularity, we believe’

"Our mission has always been to facilitate value flow and exchange for web3, and as we progress, we've decided to focus initially on Bitcoin — a coin with the largest market cap but lacking a mature ecosystem," Side Protocol co-founder Shane Qiu said in a statement shared with The Block. “We believe that if there were to be an ecosystem for Bitcoin, it would scale similarly to Ethereum today, which is also following a modular path. In Bitcoin we trust; in modularity, we believe.”

Side Labs has already initiated the first testnet. It plans to release an incentivized testnet soon, with a mainnet launch anticipated later this year.

In July 2023, Side Labs announced it had raised $1.5 million in seed funding via a simple agreement for future tokens (SAFT) sale. Participants included Hashkey Capital, KR1 and Symbolic Capital, among others.