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Lisk is a decentralized network such as Bitcoin, Nxt, or BitShares. It doesn’t utilize Proof of Work like Bitcoin, or Proof of Stake like Nxt. Lisk uses a simplified implementation of BitShares’ original consensus algorithm called Delegated Proof of Stake. That means every LSK holder can vote for mainchain delegates which are securing the network. There are only a maximum of 101 active mainchain delegates which always got the most votes on the whole network, and only they can earn block generation rewards, that means there is a financial incentive to become an active delegate. Every other delegate is on standby awaiting to become elected, or alternatively, securing a Lisk sidechain.

A cryptocurrency

Lisk is a cryptocurrency and its token is called LSK. To send LSK from one account to another takes 10 seconds, after about 1–2 minutes the transaction can be deemed immutable.

A framework

The Lisk App SDK is a framework to deploy your own sidechains and develop blockchain applications on top of them. Everything is written in JavaScript. That means you can develop platform independent social networks, messengers, games, financial applications, prediction markets, exchanges, storage platforms, contract execution platforms, sharing economies, online shops, IoT applications, and much more on your own blockchain, fully decentralized, and without the hassle of complicated consensus protocols or P2P networking algorithms.

A sidechain platform

In the previous section, you read that the Lisk App SDK enables you to deploy a sidechain to Lisk. This sidechain is a fully customisable blockchain, free of pollution or spam on the mainchain or other sidechains. All specifications, parameters, and transaction types can be changed to fit perfectly to your blockchain application.

In order to prevent spam on a blockchain there is always a token of value which is required to save any data on the blockchain, e.g. a fee to send transactions. In your Lisk sidechain you can either use the LSK tokens from the mainchain or an entirely new custom token.

In the case you want to use mainchain LSK tokens within your sidechain you have one limitation. You can’t simply transfer tokens between different blockchains. Remember, a sidechain is a completely new and independent blockchain! You also can’t send Litecoin to the Bitcoin network.

That’s why there is a special transaction type to transfer LSK tokens from the mainchain to a sidechain. Practically, the LSK tokens never leave the mainchain. They simply get transfered to the sidechain owners Lisk account (on the mainchain!). At the same time, the equal number of LSK tokens will be replicated on the sidechain and can be used by yourself as normally.

That means in the case of a badly written sidechain or blockchain application, all LSK tokens are safe and can be retrieved easily by the sidechain owner. However, this also means that you have to trust the sidechain owner. This doesn’t make sense for all types of blockchain applications, only for some owned by startups or reputable individuals.