I have read around some stuff on the idea of side-chains and the Ethereum Plasma project, so from what I understand, the side-chain idea basically works as follows: someone can deposit ether to a Plasma contract for a side-chain, and they will receive the corresponding assets in the side-chain. Then why they want to exit the side-chain, they will need to send the side-chain assets to a certain address in the side-chain, and get corresponding ether back from the Plasma contract. So apart from some complexities in the details like bounties and exit challenges, have I understood the side-chain idea correctly?
Now a couple questions:
1) the Plasma contract only deals with how to securely deposit and redeem ethers, but how does the real conversion from ether to side-chain assets occur? Do we need some off-chain centralized system/oracle to handle it?
For example, if I create a private Ethereum network (let's call it pNet with the official token being pEther) as a side-chain to the main Ethereum network, and want to enable people to convert ether from the mainnet to pEther in the pNet, so I will deploy a Plasma contract on the mainnet to let people deposit their ether, and a nodejs app will need listen to the deposit event via web3, then another contract on the pNet to hold a lot of pEther. Each time the nodejs app receives an event that someone deposited ether to the plasma contract, it will call the contract on the pNet to distribute pEther to the corresponding address.
So the transfer of digital assets between the main chain and side-chain still requires some centralized/semi-centralized system right?
2) As the side-chain's assets and economy system completely depends on the main chain, that means the side-chain should be forbidden from generating new assets independently right? For example, if I implement a PoW consensus in the side-chain, then there must not be any block mining reward for the miners, (apart from transaction gas fees) as block reward from the side-chain will interfere with the main chain's economy system. In that sense, I guess it is best to adopt the PoA consensus for the side-chain implementation if I were to use a private Ethereum network as a side-chain, right?