July 26, 2024
Is 2023 the year genuine cross-chain interoperability takes off?
Is 2023 the year genuine cross-chain interoperability takes off?

With the demise of “chain tribalism,” the proliferation of “hundreds of chains,” and the end of cross-chain bridge hacks, the future of blockchain will be an interoperable zone, executives at South Korea Blockchain Week said Blockchain.

Supporting this claim are several products planned to be released before the end of the year that could lead to blockchain interoperability efforts moving away from current solutions that executives say make no sense and are the work of hackers. honey jar”.

Vance Spencer, co-founder of cryptocurrency-focused venture capital firm Framework Ventures, told KBW’s Cointelegraph that he believes many of the solutions on the horizon include Chainlink’s Cross-Chain Interoperability Protocol (CCIP) — —Soon, it won’t matter what blockchain project is used for.

Most startups start with a Layer 2 solution like Optimism or Arbitrum, but soon start wanting their own rollup, he said. “It’s like everyone is trying to set standards,” he said.

In a future of cross-chain interoperability, the paradigm will shift and “it won’t matter which reel you use,” Spencer said.

“In the future, it might just be: ‘Can your contract talk to my contract?'”

Spencer gave the example of CCIP, which he explained allows users to own assets on one chain and interact with a contract on another chain that uses cross-chain messages instead of a blockchain bridge.

ZetaChain core contributor Brandon Truong told Cointelegraph that it operates similarly to CCIP — the main difference being that it is sent from the ZetaChain network.

Truong added that it believes interoperability will become the standard for new app builders and that there will be less “chain tribalism” and a greater focus on practicality.

He added that many older blockchain bridge solutions are “fragmented and often insecure.”

Another product is the upcoming MetaMask Snaps, which will allow developers to launch feature-extending applications for crypto wallets – allowing for use with other blockchains including Bitcoin, Solana, Avalanche and Starknet.

hundreds of chain stores

Speaking on a panel at KBW, Georgios Vlachos, co-founder of cross-chain protocol Axelar, believes that at some point there will be “hundreds of chains” all handling “significant economic activity.”

“At this point, I think it’s indisputable given how many people and important companies in this space are building cross-chains and are motivated to launch their own Layer 1.”

Vlachos added that multiple blockchains are needed because he believes that a single blockchain will not handle more than 10 million transactions per day, which is far lower than payments giant Visa’s average daily transaction volume of nearly 530 million transactions. deal with 2022.

“If we want to be the infrastructure for Web2, we need to scale it by an order of magnitude, which is really, really hard,” he said.

“The answer is to scale horizontally and create many, many different blockchains.”

Cross-chain bridges: Eliminating hacker “honeypots”

Currently, users who want to send assets between networks mainly use blockchain bridges, which Router Protocol founder and CEO Ramani “Ram” Ramachandran believes are vulnerable to hackers and will soon be Other cross-chain solutions have superseded it – including the one adopted by his protocol.

Ramachandran explained to KBW’s Cointelegraph that cross-chain bridges rely on locking value so that it can be represented on another blockchain, which makes them an attractive target and why “so many bridges have been hacked.” .

“It’s very inefficient and there’s a lot of honeypot risk because you have a billion dollars locked up in the bridge and hackers all over the world are salivating to try to break in and take some of it out.”

One solution to this problem, Ramachandran said, is to source liquidity from multiple wallets — a solution Router plans to roll out in the coming weeks.

Those who want to move funds between chains will use a tool more akin to peer-to-peer transfers, where middlemen will assume the role of fulfilling cross-chain exchange orders and collect fees.

“This middleman acts as a courier. (They) do the work on the destination side and then submit a certificate saying ‘Okay, I’ve done this. Now give me the money,'” Ramachandran explained road.

“There is no locked, stable liquidity on the bridge or semi-centralized bridge, it all remains in the intermediary wallet.”

adapt or perish

However, Chainlink co-founder Sergey Nazarov said during KBW’s keynote that the need for immediate cross-chain interoperability is not only for the benefit of users, but also for the industry by providing real-world use cases. to solidify its legitimacy.

He believes that successful Web3 applications must be able to easily connect to all blockchains, and users can seamlessly use applications across chains “without any worries.”

He said the idea of ​​choosing one blockchain and being “trapped” by its market and infrastructure “really doesn’t make sense because that’s not how the internet works.”

“Our industry will be built on the ability to provide reliable use of systems that do not exist today,” Nazarov said. He added that if users put value into an app, they should have safe and secure access to the app when it is moved elsewhere.

“If we don’t meet the minimum standards, then we’re going to continue to be in a position where it looks like a toy to people, or it looks like a confusing idea.”

Nazarov believes that due to the value of Web3, banking systems will take the use and adoption of Web3 to the next level.

“Frankly, our industry needs to find a way to move the value of banks into blockchain.”

He said that banks and the global financial system see huge value in blockchain and digital assets, and Chainlink is looking at how to connect banks to each other and to public blockchains so that the value of banks “flows into the public blockchain world.”

related: ‘Pure’ DeFi has little chance of being used in the real world due to the need for oracles: BIS

The problem Nazarov sees is the technical and legal barriers between banks and blockchain, which both want to come together.

“It’s clear, at least to me, that the banking industry and the public blockchain world want to connect, but they can’t do so for two reasons: there’s no legal clarity on how they connect, and the technical processes for connecting are unclear. exist.”

“Frankly,” he added, “the more value that flows into our industry, the more it benefits us all.”

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