6 min read

Crypto Tribalism is Dead; Long Live Multi-Chain

Crypto Tribalism is Dead; Long Live Multi-Chain

[ - by DigitalSoulx]

When I say crypto tribalism is dead, I don’t mean non-existent of course. I just think it has no future. One has to simply lurk in crypto Twitter or Reddit r/cryptocurrency for a few minutes to see how divisive and close-minded people can be. I guess it makes sense when you stop and think about it: people were initially drawn to their favorite protocol due to the tech or future potential, invested as much of their hard-earned cash as they could, and then… something changed. At some point the focus shifted from the tech and benefitting society to “pamp my bags” and “my coin is better than yours.” This really is a shame because this technology has the potential to drastically change the world for the better, yet we are so focussed on the financial aspect that we can’t see for the forest for the trees.

Traditionally, the way that blockchain and DLT frameworks were developed made them standalone protocols with their own closed networks, isolated islands operating for their own residents alone. This probably added to the crypto tribalism quite a bit. However, once DeFi summer hit, all of a sudden there was a need to bridge assets from one protocol to another to take advantage. People holding Bitcoin wanted to earn yield, but couldn’t easily convert to Ethereum to do so. To understand why, consider that each network has its own consensus mechanism, its own history and its own address system, so new ledger entries are needed to account for new assets properly. This is when cross-chain bridges became popular. A bridge allows a user to deposit tokens from protocol A into a smart contract and withdraw an equivalent amount of a different token on protocol B, effectively enabling residents of isolated islands a means of traveling to other islands to conduct their business. However, as we know these bridges are not always built by trusted third parties. Some developers might cut corners or build back doors into the bridge. Also, since these centralized bridges represent a single point of failure, they are prime targets for the unscrupulous. This explains why so many of them have been hacked. Bridges may still have their uses, but one must be careful and use them with caution until technology eliminates these security concerns.

Multi-chain technology is a much safer, improved means of utilizing the individual strengths of different DLTs. Since these frameworks exist across multiple chains, communication and the transfer of assets can be done seamlessly. The base consensus layer provides shared security while the application layer allows the different protocols to interact. Also, the multi-chain approach really lends itself to scalability, since a congested network can easily be abandoned for a less-utilized chain in real-time. This promotes decentralization and eliminates single points of failure while improving efficiency. Using the analogy above, the citizens of these isolated islands now have fleets of seaplanes at their disposal — ready to transport them to any other island by sea or by air! They are no longer bound by the single point of failure. They are free to choose the best path and destination for themselves.

In order to achieve the functionality that multi-chain promises, a protocol must plan ahead and incorporate the appropriate design considerations from the start. While it still might be possible for a protocol to attempt to offer this functionality after a siloed network has been launched, it would be quite the undertaking! That being said, a number of well-known protocols have already gazed into their crystal balls to see the multi-chain future, and have built their protocols with this in mind.

Polkadot (DOT) — This network consists of parachains: many interoperable, individual blockchains running parallel to the base layer. These parachains may each generate their own tokens and data, but information, value, identity, etc. can easily be shared between chains. And, since the security is outsourced to Polkadot’s Relay Chain, the large pool of DOT stakers validate the transactions. Currently, over 100 parachains can be interfaced with the Relay Chain, and slots are auctioned off as they become available.

Quant (QNT) — In this case, software is used to offer the multi-chain capability. Overledger is an API gateway developed by the team at Quant. This gateway offers a connection point to any other blockchain or DLT, public or private. Overledger promotes communication between isolated DLTs through the use of a single API that allows for applications to cherry-pick the best features of different DLTs. Quant also offers Multi-Ledger Tokens (MLTs) that can be used as stablecoins, vouchers, loyalty points etc. These are utilized by banks, marketplaces, and financial companies for fast cross-border payments since the underlying asset is backed by fiat funds held in escrow.

Cosmos (ATOM) — This network is similar to Polkadot but instead of one hub chain, Cosmos has several in their Inter-Blockchain Communication (IBC) framework. This framework functions like a post office, organizing, sorting, batching information for use between different blockchains. Each blockchain is considered a zone and runs its own validators through one of the hubs rather than through a single common hub (like Polkadot). This improves decentralization and scalability, but validator security is the responsibility of each zone.

Shimmer (SMR) — IOTA’s new staging network was also built with interoperability in mind. The feeless, parallelized DAG structure enables novel use cases and is highly scalable. Security is shared with the base layer and the extended UTXO-based design promotes interoperability and composability. NFTs and custom tokens can be minted on Layer 1, allowing for feeless minting, burning and cross-chain transfers for full flexibility. The multi-chain capability will be enabled through the soon-to-be-released ShimmerEVM. By allowing smart contract chains to access information about the state changes of any other chain anchored to the base layer, universal bridging is achieved even across completely different smart contract chains. This eliminates the need for L2 cross-chain bridges. As soon as the technology is fully tested on the Shimmer network, it will be implemented on the IOTA network as well.

Inherently, we all understand that inclusion and diversity not only make the world a more interesting place, but that our survival as a species depends on it. Today we know that we cannot continue pillaging our rainforests for natural resources without threatening the Earth’s biodiversity. By doing so, we lose access to crucial knowledge about how life has evolved on this planet when we consider that over half of all plant and animal life exist in the rainforests. We would also lose access to many potential life-saving treatments since over one quarter of all natural medications have come from the rainforests. Taken to an extreme, we have seen how xenophobia can lead to genocide and ethnic cleansing, threatening our very existence. Personally, I believe that every person I come in contact with has knowledge about something that I don’t, and that their unique perspective on life can inform me about my own life if I am willing to listen and to learn. Why shouldn’t this concept be applied to crypto as well?

This is the heart of the multi-chain approach: each protocol may have some unique property that should be celebrated and embraced, through a framework that is inter-operable and agnostic. By leveraging the strengths of different protocols we can customize our experience to meet our own personal needs. In the end we may not even be aware of the individual protocols that we are using; the multi-chain platforms may choose the best protocols for different use cases after considering network congestion, fees, speed, utility, etc. And once this happens maybe we can finally leave the crypto tribalism behind and finally focus our collective energy on the future.