Preparing for a Multichain Future with UniLayer Network
Disclaimer: The text below is a press release is not part of Cryptonews.com editorial content.
Despite a cooled market, June 2022 was a great month for events and news in the crypto space. Consensus 2022 and NFT NYC hosted some of the biggest names in Web3, DeFi, and NFTs, and we were lucky enough to attend some fascinating panels and hear about the best new developments from industry leaders. While the bear market has indeed set in, these events showed us that there is a lot to look forward to for cryptocurrencies in the near future.
Web3, DeFi, and NFTs may have been the focus of discussions, but some of the most exciting conversations revolved around the multichain future that is being built. At Consensus 2022, speakers from blockchain scalability solutions such as Polygon, Cosmos Network and Moonbeam spoke during the four-part panel series, "Scaling the Multichain Future."
The discussions made it clear that interoperability will be central to the success of the blockchain space in the coming years as hundreds, if not hundreds of thousands, of additional blockchains come on the scene. It is clear that interoperability has positioned itself as one of the most important keys to growth and innovation in the blockchain space.
While panelists from established scalability and cross-chain solutions like Axelar and Boba Network discussed the urgent need to make this multichain future interoperable and user-friendly, several newcomers to the space also caught our eye during the week. UniLayer Network, an emerging Layer-1 (L1) blockchain, presented itself as one of the most interesting problem solvers in the race for interoperability.
Why is interoperability so important to the multichain future, and why have some claimed that the survival of cryptocurrencies depends on it? In this article, we take a closer look at what interoperability is, what a future with cross-chain functionality between thousands of chains would look like, and how emerging solutions like UniLayer Network could finally crack the code for seamless multichain interoperability.
Why no blockchain will be the universal chain
Put simply, interoperability means the free exchange of data, digital assets, and information between blockchains. Since each blockchain operates independently with its own structure and logic, it's a major challenge to synchronize them with each other.
Decentralization requires that distributed ledger technology (DLT) can operate independently of other networks to ensure immutability, security, and autonomy. These are important principles for any decentralized network. As a result, hundreds (if not thousands) of isolated blockchain networks have emerged, each with their own strengths and weaknesses.
The difficulty of creating a universal network that's perfect for all is best expressed in the "blockchain trilemma," the belief that a blockchain must sacrifice either decentralization, security, or scalability. The result is that we simply don't have a blockchain that's fully decentralized, offers Bitcoin-level security, and is scalable enough to serve millions of simultaneous users with applications.
Hundreds of new blockchains enter the market every year, creating an increasingly isolated ecosystem. Networks like Ethereum are decentralized and secure but scale poorly, while others like Solana are scalable and decentralized but not secure enough due to network failures. The blockchain trilemma ultimately prevents a single L1 blockchain from becoming the universal chain for all, leading users and developers to switch from one blockchain to another depending on their needs.
Peng Zhong, CEO of Ignite (formerly Tendermint), stated that "Web3 will inevitably come to a similar conclusion as Web2 in terms of scalability and number of users, and that won't happen on one blockchain or even a thousand blockchains. The upper limit on the number of chains in the world is the number of companies in the world."
Of course, in a multichain world made up of potentially millions of decentralized networks, there's a tradeoff to be made. According to Zhong, that trade-off is interoperability. The Cosmos ecosystem, for example, now has more than 50 chains (called "zones") with unique use cases. When Cosmos was developed, the assumption was that there should be as many chains as there are applications to allow for unlimited scalability while ensuring decentralization and security.
Although Cosmos and other interoperable networks such as Polkadot have made important steps toward laying a foundation for Web3, both protocols have consensus mechanisms and logic that aren't directly compatible with other leading blockchains such as Ethereum and Solana.
EVMs (Ethereum Virtual Machines) on Cosmos and Polkadot allow developers to deploy Ethereum-based smart contracts and dApps, but the host networks aren't interoperable. In other words, liquidity and assets cannot be shared across these networks without using cross-chain bridges. As Vitalik Buterin noted, cross-chain bridges are difficult, risky, and vulnerable targets for hackers.
A multichain future is critical to the success of the blockchain space and Web3. It's clear that we're moving toward a world with thousands, if not millions, of different chains. Whether L1, L2, enterprise- or application-based, the ultimate goal is to find ways to integrate these networks into a seamless ecosystem.
We still have a long way to go, but if Web3 is to replace Web2, it must be as scalable, user-friendly and secure. Interoperability is key to creating a decentralized Internet where people don't even know they're using multiple chains or ecosystems.
Building towards a multichain future
One of the most exciting aspects of the cryptocurrency movement is watching how unexpected innovations reshape what we think is possible. In less than 20 years, Bitcoin, smart contracts, DeFi, and NFTs have spawned novel financial and creative economies that were previously unimaginable. Among crypto enthusiasts, few would bet against another disruptive innovation being just around the corner.
One highlight during Consensus week was UniLayer Network, an omnichain interoperability platform that takes a different approach to solving the dilemma of isolated data and ecosystems. UniLayer Network is a L1 blockchain that connects heterogeneous blockchains by embedding their nodes into the host chain.
UniLayer Network's Cross-Chain Transport Control Protocol (CTCP) acts as a universal transport bus to transfer data between addresses on each connected blockchain. This creates opportunities for seamless transfer of information, liquidity and digital assets across any connected chain. It is a unique approach that opens up some interesting possibilities for inter-chain communication without the need for third-party bridges and oracles.
One major obstacle to interoperability is blockchain logic, which differs from network to network. Like nations with different languages, they cannot understand each other. However, UniLayer Network's cross-chain logic removes this barrier. As a result, UniLayer Network smart contracts can deploy cross-chain applications that leverage different functions of the connected chains. For example, a cross-chain dApp could use Ethereum for revenue optimization, source liquidity from Solana, and perform settlement on Algorand.
The cross-chain technology is still in development, but it opens up a whole new world of possibilities for developers and investors alike. There's a lot that still needs to happen before the technology gains widespread adoption, but UniLayer Network is certainly on the right track to creating a more streamlined, interconnected digital future.
Creating new economies
While some members of the crypto space claim there is little need for more than one chain - particularly Bitcoin maximalists - in reality much depends on fostering a multi-chain ecosystem. "This is a socioeconomic movement that is reinventing more than just economic infrastructure," says Violent Abtahi, COO of Boba Network. "We can create a borderless economy and enable everyone in the world to participate in the global economy. Multichain seems to be the right way to expand exponentially."
In addition to creators, enterprises and NGOs can also benefit greatly from interoperability by having the ability to freely relay and validate information from their private chains with open source DLTs. Cross-chain data transfer can help these entities ensure accurate data in supply chains, auditing records, citizenship information and more.
Blockchain still has high barriers to entry for many people in the world. However, a multichain ecosystem can accelerate adoption by reducing network congestion, transaction fees, and technical learning curves. For Web3 to achieve the scalability, accessibility, and security of Web2, a multichain ecosystem must emerge to support millions, if not billions, of new users. In addition, interoperability enables users to own and control their own Web3 data by aggregating it across multiple chains.
In the multichain world, there are no inherent limits to how many blockchains can be part of the overall ecosystem. While we are still in the early stages of Web3 and its components, having multiple options for building has tremendous benefits for developers who want to explore limitless possibilities for decentralized applications and infrastructure.
The dawn of interoperability
Interoperability has the potential to improve every corner of the crypto space, especially in a multichain ecosystem consisting of thousands or even millions of chains. Currently, however, the blockchain space suffers from technical shortcomings that prevent cross-pollination of communities, developers, and protocol liquidity. In fact, most L1 chains are socially and economically isolated.
"There is a bubble in Cosmos and a bubble in Ethereum. Each chain has its own bubble," said Reynand Otida of UniLayer Network. "We need to pop all these bubbles and create a single ecosystem for the entire blockchain industry."
On the foundation of technology like Cosmos IBC and Unilayer Network, we may see a new wave of decentralized networks and applications emerge. Where we are now, we are at the very dawn of the Web3 era, but there is no doubt that it is coming and the transition is near. When this evolution takes place and Web3 grows in adoption, many developers, entrepreneurs, and startups will be drawn to all that it has to offer. By then there will be more choices for building dApps with multichain support than we can currently imagine.