Sidechain vs layer 2

Question

I want to know what's the difference between "sidechain" and "layer 2".

Is it the same thing ?

Thanks

Answer 1

The definition of a sidechain is more universally agreed than the definition of Layer 2. Some people might argue that sidechains are a subset of Layer 2 scaling solutions. Lightning Network is definitely a Layer 2 scaling solution.

Personally I would say the difference between a sidechain and Layer 2 is that Layer 2 scaling solutions such as Lightning are trust minimized protocols. They are designed such that trust in your channel counterparty (or anybody else on the network) is minimized.

Whereas sidechains (e.g. Blockstream's Liquid) do not seek to minimize trust, they instead make the design decision to lock funds up into a multisignature (in Liquid's case, a 11-of-15) onchain where the parties in that multisignature are trusted or relied upon to get the funds out of that sidechain. Sidechains make this choice because it provides greater efficiency (less reliance on timelocks), greater flexibility (you don't need to set most of the rules at inception), reduced fees (you don't need to pay routing fees like you do on the Lightning Network) and reduced capital constraints (you aren't constrained by the capacity of Lightning channels).