The decentralized finance projects that have caught the most attention from the cryptocurrency community are side chains that seek to augment or compete against the Ethereum network, but the dynamic nature of DeFi is now giving way to a new type of project called para chain. The DeFi platform known as Polka Dot is ready to roll out a new project that will run on the Kusama blockchain, and it will mainly consist of hosting para chains.

In anticipation of the para chains rollout on the Kusama network, the native Polka Dot token, which trades under the DOT symbol, has been trading near $40. Trading volume is also picking up for DOT, and Twitter mentions have also increased significantly. To better understand this ongoing trend, it is important to grasp the difference between side chains and para chains as they relate to DeFi.

A para chain is an application-specific data structure that is globally coherent and subject to validation on a Relay Chain. Most commonly, a para chain will take the form of a blockchain, but there is no specific need for them to be actual blockchains. Para chain is the only distributed resource that does not use CPU power to enforce blockchains. Because its value is so much higher than the blocks that are generated with the blockchain, it allows decentralized applications to run in a network. Thus all validators must agree on the definition of the primary blockchain.

One can see how a para chain can help Ethereum and other distributed ledger networks operate, especially if development teams have a strong community and agree on the right definition of what the para chain should accomplish.

An important feature of a blockchain-based application is to be able to enforce transactions. A blockchain can enforce a set of validations with the validation method defined on the blockchain. These can include, but are not limited to: a consensus method; a transaction hash (known as "root"); or the "time-locked transaction" (TSTM) for timestamped transactions. A transaction can be created through one of the aforementioned validations. If the transaction is verified, para chains can take over.