Blockchains are one of the most important inventions since the inception of the internet. They allow for complete decentralization, meaning that nodes can interact with each other without going through a central server. But what if you could have more than one blockchain network existing simultaneously as one single unit? That is what cross-chain technology promises to make possible.
The blockchain economy continues to grow at an incredible pace with many emerging sectors such as GameFi, DeFi, NFTs, and more. In the same vein, it has become evidently apparent that the siloed nature of current existing blockchains is a stumbling block to utilizing maximum potential of the blockchain industry — hence, the reason for cross-chain technology fast becoming a buzzword.
But first….
What is Cross-chain interoperability?
Quite simply, cross-chain refers to any interaction between two or more blockchains. While this definition will suffice to explain the holistic goal of cross-chain technological solutions, it barely scratches the surface of what it means. Cross-chain really is about interoperability — an ideal situation where all existing blockchains can communicate and exchange information — a truly chain and layer-agnostic ecosystem.
Blockchains undoubtedly offer tremendous security benefits and it is fast becoming relevant in almost every traditional business sector, especially in finance. However, the isolated nature of blockchains, which makes them so secure, also stifles innovation and widespread adoption. The internet as we know it today is a vast network of computers exchanging information at incredible speeds amongst one another, enabling the fascinating possibilities we enjoy today. But the centralized nature of existing systems concentrates “power” to a small group of individuals and organizations — hence, the blockchain to power a decentralized internet.
But if blockchain technology is to attain global adoption and replace these existing systems, it is imperative that they also must be able to exchange information at incredible speeds as many believe the “internet of blockchains” remains the overarching goal to truly harness its benefits.
Ultimately, cross-chain technology aims to foster a free flow of information and value amongst various disparate blockchains today, opening up a wide range of possibilities across various blockchain sectors.
Comparing cross-chain solutions
Many cross-chain projects exist today proposing a suitable solution to foster blockchain interoperability. Blockchain interoperability spans across a range of cross-chain activities such as token transfers and asset swaps, smart contract calls between blockchains, decentralized applications (dApps) leveraging various blockchain for its functionalities and more.
In most cases, many leading projects focus on one or two aspects of interoperability, employing various models to achieve this goal. For example, Cosmos — one of the leading cross-chain projects — provides an ecosystem of individual and independent blockchains to connect and interact through a base protocol referred to as the Hub.
While leading projects (such as Polkadot, Cosmos, Wanchain, Multichain etc.) all share many similarities, the distinction largely lies in their method of implementation. As it stands, bridges are at the core of cross-chain innovation as they are commonly used to facilitate existing cross-chain use-cases, particularly across decentralized finance (DeFi). A common use-case in DeFi lies in providing liquidity to decentralized exchanges (DEX) across separate blockchain.
Although bridges are implemented in various ways within individual cross-chain projects, they generally fall into three main categories –
Asset-specific (or Wrapped Bridges):
These are arguably the simplest form of bridges to implement as they carry out one single function — create a representation of native assets on other connected chains. These representations are tokens referred to as wrapped assets, which are pegged to the value of the originating asset. Bitcoin — the largest cryptocurrency by market capitalization — is the most bridged asset given its immense liquidity. Typical examples of asset-specific bridges are tBTC, wBTC & Interlay.
Generalized cross-chain solutions
Ideally, these types of solutions are not bridges in its true nature but largely leverage specialized bridges to foster interoperability amongst blockchains. These projects take a holistic approach to attaining cross-chain communication, with the goal of transmitting data between several individual blockchains connected by a single source. This approach has tremendous network effects as a project’s integration provides it access to the entire ecosystem leveraging an underlying infrastructure of multi-chain bridges. A typical example of this type of cross-chain architecture is Cosmos — which leverages the IBC-protocol to ensure communication through its connector (the Cosmos Hub).
Chain-specific bridges:
These types of bridges often share an overlap with generalized cross-chain solutions. This is because generalized cross-chain solutions also develop bridges that foster cross-ecosystem communication and interoperability. For instance, the Gravity bridge is a purpose-built bride made openly available to all Cosmos chains to facilitate their bridging needs — hence, they are specific to Cosmos chains (also referred to as zones).
However, chain-specific bridges can also be independent bridges leveraging a project’s tech stack to facilitate communication across multiple chains beyond an ecosystem. They offer more flexibility as developers can integrate these bridges into new and existing applications.
A typical example of these type of bridges is the Teleport bridge — a protocol buit to foster seamless token-transfers across between both EVM and non-EVM chains.
Enter the Teleport Network
Teleport provides a robust infrastructure and framework, maintaining an alternative approach to seamless cross-chain communication amongst siloed blockchains networks and leverages a tech-stack that enables developers to create applications that are largely interoperable.
Teleport aims to usher in a generation of apps with unbounded communication across various blockchains, helping developers maximize core strengths of individual blockchains for utmost functionality.
To achieve all of this, the Teleport network offers three primary components:
Teleport chain — an Ethereum-compatible decentralized blockchain built using the Cosmos SDK which runs on top of Tendermint Core consensus engine, thus providing developers full blown interoperability across both ecosystems (i.e. Ethereum & Cosmos).
XIBC — an IBC-based protocol facilitating seamless cross-chain communication and data exchange, thus opening up a wide range of cross-chain applications such as DEXs, lending protocols, cross-chain NFT marketplaces and more. The XIBC is the cornerstone of the Teleport bridge.
SDK — developers’ gateway to build cross-chain solutions that leverage the Teleport infrastructure.
Takeaway: The future of cross-chain solutions
Ideally, the ultimate realization of cross-chain technology is to deliver a single interface, platform or protocol that allows various blockchains to interact seamlessly with one another, leveraging the strengths of individual blockchains to serve a functional part of the platform and abstract away all complexities as background processes.
Cross-chain technology has the potential to change the cryptocurrency scene in a massive way as it will usher in an era of true composability in the blockchain sector, with an unlimited potential for scaling and functionality.
