Undoubtedly, one of the prerequisites for mass adoption of blockchain technology is secure and seamless cross-chain interoperability. Many potential applications, especially in complex and regulated fields, cannot be deployed without common guidelines and interface definitions.
Without this, applications targeting cross-chain, as is currently the case, must rely on custom off-chain components, automatically inheriting the risks and trust assumptions that come with them. The only alternative is to be limited to a single, isolated network.
Today’s interoperability solutions (or “bridges”) have matured to the point where almost two blockchain networks can be connected. ~can do You will be connected. The problem is that each bridge is a temporary construction, which limits its scalability and usability.
This problem is amplified when dealing with networks with vastly different infrastructures, such as in the case of non-EVM blockchains. Limitations aside, bridges are clearly needed and demand remains high. Despite the decline during the bear market, the total value locked (TVL) on Ethereum’s major cross-chain bridges has taken a hit alone. $23.5 billion January 2024.
Despite these gaudy totals, there are still many hurdles to overcome before blockchain technology is ready for mass adoption. The three main challenges hindering the advancement of blockchain interoperability are security, UX, and compatibility.
security
The most obvious obstacle to blockchain interoperability is the ever-present security issue. Regardless of market performance and hype cycles, repeated failures of poorly designed cross-chain bridges have left the industry in the dark and discouraged people from engaging with solutions. Individuals harmed by bridge hacking will naturally have distrust of all cross-chain bridges. Fool me twice and all that.
And it’s hard to blame them. calculation $2.9 billion stolen Included in the top 10 cross-chain bridge hacks from 2021 to 2023. Orbit Bridge Hacked for $80 million During the New Year period. With the mainstream adoption of blockchain technology that relies on secure interoperability, this trend cannot continue. The remaining security issues are simple. necessary It will be resolved.
UX
A seamless user experience is paramount to driving user adoption and engagement, which directly contributes to the sustainability of digital products and services. This fact is as basic in Web2 as it is in Web3. Cross-chain bridges are no exception.
Today’s bridges are not smooth at all. Mature solutions have abstracted the user’s direct engagement into a single transaction, but the user journey is still too complex. Users do not prefer to trade using multiple assets while manually switching between multiple wallets and RPC servers.
This is primarily due to the limitations of current blockchain technology, but is further exacerbated by its immature interface. Many people may be shocked to learn that there is not even a unified system for cross-chain solutions that identifies unique blockchain networks!
Without seamless interoperability, UX can only improve incrementally unless unpleasant concessions related to security and decentralization are made. It requires a collaborative effort. Otherwise, blockchain interoperability solutions will remain fragmented and mainstream adoption will continue to be hindered. That means it will be dedicated to store of value and niche financial applications.
compatibility
Compatibility, or rather incompatibility between different blockchain interoperability protocols, is one of the greatest ironies of our industry. As of now, the majority of blockchain interoperability projects are focused on building proprietary products with custom relays, message definitions, and verification mechanisms. Too many people are focused. alone About growing your own products.
There are so many competing approaches with surprisingly little overlap that it is impractical, if not impossible, to properly examine the security of each. The fight to be the only solution is ultimately harmful and poses risks to the long-term prospects of the industry. Common infrastructure and shared interfaces are necessary so they can be properly inspected and tested. Blockchain interoperability requires core infrastructure first, products second.
solution
Underpinning security, UX, and compatibility issues is the lack of open, unified interoperability standards. These standards are essential because they provide a universally accepted framework for communication between blockchains and blockchain-like systems. This ensures secure interoperability and seamless global connectivity, preventing fragmentation between different projects.
Imagine a world without ERC-20, the de facto standard for issuing fungible tokens on the Ethereum blockchain. All projects issuing tokens on Ethereum follow that standard, and tokens from one project are not compatible with tokens from another project. Applications like decentralized exchanges could still be built in theory, but their growth would be hindered because they would have to follow standards-agnostic design principles.
Each token represents a temporary integration and users can only use applications that explicitly support their token. Without a standard that defines a set of rules and features, the development of the Ethereum ecosystem would have been greatly hindered. This is the current state of blockchain interoperability.
However, because the ERC-20 standard has been vetted and adopted, any application can interact with, manage, and trust unknown fungible tokens. Even tokens deployed after creating a specific application can be used without additional engineering work, and tokens can be compatible with multiple applications. This is the power of open, unified standards. This is where blockchain interoperability is sorely needed.
The benefits of an open, unified standard for blockchain interoperability can be even more profound.
A typical plug-and-play architecture that follows a proven and standardized framework can span three layers: messaging, function calls, and applications. This enables secure and seamless communication between EVM and non-EVM blockchains. Prioritizing interchangeable components will also accelerate the development of true blockchain interoperability from multiple providers.
Establishing these standards has the added benefit of helping companies and regulators understand technological complexities to develop fair and informed regulatory frameworks. When developed alongside technological advancements, a fair balance between innovation and regulation can be achieved.
Blockchain technology has the potential to change the world for the better. Secure and seamless blockchain interoperability between blockchains and blockchain-like systems is a prerequisite for mass adoption. Without open, unified interoperability standards, true mass adoption will not be possible.
