Blockchain Interoperability 2.0: Laying The Foundation For A Multi-Chain Ecosystem
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Blockchain technology has already demonstrated immense potential to revolutionize many fields, including the traditional financial (TradFi) ecosystem. Its capabilities already deliver multiple benefits and convey extraordinary potential to enhance our digital world's security, transparency, and decentralization.
Although blockchain harbors many advantages, this emerging technology is not without its challenges, such as the scalability issue and the lack of interoperability between different blockchains. As blockchain technology is becoming more widely adopted, the need for interoperability among blockchains becomes more apparent.
The future of blockchain interoperability is a topic that has been debated for a long time. But the question remains: what is the best way for blockchains to communicate with one another?
Interoperability Is Crucial For The Entire Blockchain Ecosystem
In recent years, several promising solutions have emerged, such as cross-chain technology, that have addressed the hurdle of interoperability to an extent. But existing solutions are limited and usually work for blockchains that share similar technologies.
In this context, it is critical to realize that blockchain interoperability is all about the ability to transfer data and value across individual chains. With interoperability, the hundreds of scattered blockchain networks will finally be able to seamlessly transfer digital assets, such as cryptocurrencies, NFTs, and smart contracts, between each other.
There are many use cases for blockchain interoperability. One of them is the possibility to create a decentralized exchange (DEX) that offers the same services that centralized exchanges offer but without any central authority and with a higher degree of security. Another use case is cross-chain atomic swaps which allow users to trade one cryptocurrency for another without trusting a third party and with no need to go through an exchange. However, before widespread blockchain interoperability is achievable, some problems must be resolved first, primarily related to scalability and privacy concerns when transferring data from one chain to another.
At present, blockchain interoperability can be achieved through three main methods: sidechains, off-chain networks, and oracles. Sidechains are a type of blockchain that runs parallel to another chain and can be leveraged to transfer assets between two blockchains without an intermediary currency. Off-chain networks are a type of network that connects with the blockchain but does not live on it. This allows for faster transactions and more scalability than most other options. Finally, oracles are third-party sources that provide external data to the blockchain to make decisions or trigger events on the network.
While the first generation of interoperable solutions has addressed the lingering problem, most of these projects are limited in speed, functionality, and scalability, leading to additional issues for developers and users alike.
Interoperability 2.0 And A Multi-Chain Ecosystem
Multi-chain technology is considered a potent workaround for the aforementioned hurdles. The rise of cross-chain DEX aggregators, wrapped assets (wBTC, wETH, etc.), and other similar solutions like side chains and atomic swaps have enabled better communication between disparate blockchain networks and between their tight-knit developer and user communities.
Spearheading the blockchain interoperability 2.0 movement while simultaneously paving the way for a multi-chain ecosystem is Ferrum Network. This Directed Acyclic Graph (DAG)-based blockchain offers the necessary infrastructure and tools to facilitate multi-chain solutions (dApps, DeFi projects, etc.). Ferrum’s mainnet nodes (Infinity Layer Mainnet) and related infrastructure are powered by the Quantum Portal, thus enabling multi-chain smart contracts while connecting all individual blockchain networks. As a result, developers can build a smart contract on one network and then deploy it on any other network.
Additionally, Ferrum Network is secured by the Multi-Chain Validator Staking (MPoS), and Value Constrained Proof of Stake (PoS) mechanisms, empowering it to deliver best-in-class security paired with extreme levels of interoperability. Ferrum also doubles up as a multi-chain blockchain-as-a-service (BaaS) platform, allowing projects to add deflationary mechanisms, token utilities, and advisory services across all networks.
The platform’s native utility token ($FRM) and governance token ($FRMx) lie at the heart of the Ferrum Network. $FRM is a deflationary token required for users to interact with the network. It is also used as the “routing” token for InfinitySwap. Meanwhile, FerrumX Network’s native token, $FRMx, pays the gas fees to interact with the network. Like $FRM, $FRMx is deflationary, but it is also used as the governance token of the Ferrum Network.
While the current range of interoperability solutions is yet to realize their full potential, Ferrum Network’s solution plays a crucial role in tackling the challenges, unlocking endless possibilities for developers and users alike.