The blockchain ecosystem has evolved a great deal since Bitcoin was first mined in 2009. Over a decade old, this upcoming digital ecosystem is gradually changing the landscape of native industries, including finance, healthcare and logistics, amongst others. Today, stakeholders ranging from private sectors to governmental agencies are either in the research phase or have considered integrating blockchain in the near future. This trend will likely pick up as more people understand the technology’s value proposition.
While this nascent innovation stands a chance in the future of digital ecosystems, a lot needs to be done before it can be fully integrated with existing systems or centralized networks. Currently, most blockchain networks operate independently, which means that users are limited to one blockchain network. Well, the narrative is set to change following the innovation of cross-chains. This type of blockchain architecture is designed to facilitate communication between different blockchain networks - private, consortium, or public.
Though a new concept in blockchain development, cross-chain networks have been gaining popularity in recent years. Savvy crypto market participants finally realize that cross-chain blockchain ecosystems have the potential of building a fully distributed global world.
The Underpinnings of Cross-Chain Networks
Bitcoin’s blockchain was the pioneer crypto network and set the stage for other blockchains like Ethereum and EOS. The latter examples brought new developments to the crypto ecosystem, with Ethereum taking the crown on developmental aspects. This blockchain network hosts a wide range of decentralized applications, popularly referred to as DeFi (decentralized finance).
Despite the innovations, blockchain networks were still limited to their ecosystems until the introduction of cross-chain solutions. This new blockchain infrastructure seeks to enable data sharing and communication between various blockchain networks. In doing so, the blockchain ecosystem will operate as a wholesome network where users can leverage multiple products across the entire digital asset market.
Unlike typical blockchain networks, projects with a fundamental cross-chain architecture are built on interoperability protocols. This form of infrastructure allows blockchain ecosystems to connect seamlessly. Cross-chains enable private blockchains to integrate with fellow private ecosystems and public blockchains as well.
Cross-Chain Technology in Action
A couple of cross-chain networks currently exist; however, most are still in the early stages or yet to launch on the mainnet. The few that have shown potential include the likes of Wanchain and Spores Network. Let’s take a deeper dive into how they work to understand better cross-chain technology and the progress made so far.
Wanchain is one of the leading cross-chain protocols with a vision of building a bridge network with other ecosystems. The project leverages a decentralized cross-chain technology to integrate blockchain networks, including Bitcoin, EOS, Wanchain, Ethereum, XRP Ledger and Binance Smart Chain (BSC).
Wanchain’s decentralized bridges enable blockchain networks to connect and exchange value amongst the networks. This cross-chain protocol supports smart contracts and provides token exchange privacy protection. Notably, the Wanchain protocol records intra-chain and cross-chain transactions, hence its value proposition in connecting multiple blockchains.
With a decentralized architecture, Wanchain allows users to build a distributed ‘bank’ to access multiple blockchain networks and products. Ideally, anyone can integrate the Wanchain protocol to connect a private, consortium or public blockchain. This cross-chain protocol introduces a distributed super-financial market built on blockchain tech.
Unlike most existing cross-chain solutions, Wanchain is a fully decentralized protocol where no third-party custodians are involved. Some of the popular DApps building on Wanchain include Wanswap (cross-chain DEX) and ZooKeeper (NFT gaming with yield farming). The protocol is also set to launch an Ethereum Layer 2 solution, X-Rollup.
Spores is an interesting project whose fundamentals are based on the Non-fungible token (NFT) niche. NFTs are crypto tokens representing digital ownership, with the main feature being their distinguishable nature - in essence, each NFT is unique.
Spores leverages the NFT technology to design a suitable digital ecosystem for creators to share and protect their work. This project has pioneered a full-stack NFT platform where creators can mint NFT tokens to represent their work. Furthermore, Spores features additional in-built functions such as account management tools, an auction engine and a cross-chain exchange.
The Spores NFT exchange is another example of the cross-chain protocol in action. NFT owners on Spores can use the cross-chain exchange to swap and wrap their tokens across prominent blockchains, including Bitcoin, Ethereum and Polkadot. This eliminates market fragmentation barriers, which are a significant challenge in the growth of blockchain ecosystems.
Consequently, Spores NFT creators and marketplace participants can also access other DeFi products and incentives. The platform’s T-DeFi feature allows users to fractionalize multiple NFTs, utilize LP mining on DEXes and lend or stake for liquidity provision.
Setting the Stage for Distributed Ecosystems
Though still a nascent technology, blockchain has proven to be a fundamental pillar in building distributed ecosystems. This technology is now being used in billion-dollar industries such as logistics, healthcare and finance. The trend seems to be picking up as tech giants like IBM file for more blockchain patents while rolling out industry-specific solutions.
Blockchain’s value proposition can be seen in its potential to streamline processes through distributed ledgers. Take, for instance, the logistics industry where goods move from one destination to another; blockchain can track this movement through a shared ledger. In doing so, the distributed technology offers a birds-eye view of the goods while in transit.
As the world evolves into a digital hub, more industries will likely embrace blockchain technology. These ecosystems will need to communicate with each other for maximum efficiency - a possibility set to come to life through cross-chain protocols.
Blockchain ecosystems are still in the growth and discovery phase, although some appear to be moving faster than others. The rate at which innovation is taking place in blockchain continues to be a fascinating trend. Unsurprisingly, innovators have taken developments a notch higher by providing integration solutions. Cross-chains will likely define the next era of blockchain development as mainstream industries build their ecosystems.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.