Blockchain has already made its mark in the world of finance, law, scientific research, and many business applications like sales, marketing, and software development. But as with all digital technologies, the functionality of a single blockchain is greatly enhanced when it can interoperate with another.
This poses a problem, however, because the key value proposition for blockchain is trust – basically, that the data within any given chain is accurate and has not been tampered with.
Once one chain is linked to another, and another and another, how can that trust be maintained?
When talking about blockchain interoperability, the two key functions are the ability to exchange or replicate data between separate chains and the ability to execute functions on one using data culled from another. Martin Westerkamp, a blockchain researcher at Technische Universität Berlin and T-Labs’ Telekom Innovation Laboratories says both of these functions can be done using techniques like locking and verification operations on internal network chains, or so-called peer-to-peer “atomic swaps” between distinct chains that can be done without a trusted third-party.
In both instances, however, the receiving chain must be able to verify the correctness of the information being exchanged, and here is where the difficulties arise. For one thing, many popular blockchain platforms, such as Ethereum, provide only probabilistic finality for blocks added to the chain. This means a certain amount of time must pass before its inclusion is validated on the original chain, allowing it to be reliably shared with another.
As well, there is always the possibility that one blockchain may fail, which means that any interoperability scheme must have the ability to isolate the failure so it does not compromise the security or integrity of others.
There are also some aspects of interoperability that are simply not possible under current blockchain architectures. Direct messaging, for one, cannot be done without an intermediary, nor can blockchains query external information, as this would compromise their ability to verify its accuracy.
Part of the problem, says Alex Lielacher, founder & CEO of Rise Up Media, is that most blockchains are built on Layer-1 networking technology, which essentially covers basic network functionality, consensus, and security. Interoperability is not one of these features, however, which means that a wide range of add-on solutions must be employed in order to facilitate the many ways data can be exchanged.
Oracles, for one, are used to engage with off-chain data, while token bridges allow assets to be exchanged between chains. Other approaches allow individual chains to be linked under a parent or to facilitate the transfer of payments, contract information, or other specialized data.
Each of these approaches has its advantages and disadvantages, however. Greater interoperability allows public and private chains to work together, increasing collaboration and performance for many Web3 applications. But usually, there are penalties to security, speed, efficiency, and development, as many blockchains must share some level of common functionality if they are to work together properly.
Where there’s a will, there’s a way, however, and multiple projects are already working out ways to enhance blockchain interoperability while keeping the negative consequences to a minimum. Tech newsletter Make Use Of recently listed some of the more popular:
- Cosmos: The “Internet of Blockchains” uses the inter-blockchain protocol (IBC) to support a wide range of cross-chain applications.
- Chainlink: A Web3 platform that combines oracle services with APIs to create a universal gateway to any blockchain;
- Polkadot: Creator of the Relay Chain that links customizable parachains through a central hub.
- Hybrix: An open-source, borderless platform that allows tokens to be stored, swapped, and exchanged.
- Loom Network: A developer-focused platform that enables high-performance decentralized applications (dApps).
- Wanchain: An inter-chain bridging solution for the transfer of tokens and assets.
- Harmony: A bridge architecture that reduces transactions to two seconds.
One newcomer on the scene that shows a lot of promise is LayerZero, a cross-chain protocol that enables direct, trustless communications between blockchains without the need for an intermediary. Make Use Of’s Ukeje Goodness points out that LayerZero uses Ultra Light Nodes (ULNs) to create lightweight blockchain clients that can validate another chain’s data without downloading its entire state. This provides high-throughput, low-latency communications, even for chains with different architectures and consensus mechanisms.
Again, though, this is not a penalty-free solution. Not only are there the usual security and cost trade-offs, but questions remain as to whether LayerZero can be centralized despite its modular architecture, particularly if developers find it easier to employ standardized solutions with built-in security tools.
The level of interoperability between blockchains will most likely be subject to careful consideration by their developers and members. To be sure, any level of interoperability must be subject to detailed policy management and governance to ensure that all agreed-upon modes of operation are strictly enforced.
As the old saying goes, trust is hard to build but easy to destroy. Should interoperability start to erode the trust of a given blockchain, or the technology in general, the world could lose a valuable tool in the drive to create a more efficient digital ecosystem. And that could have material consequences for people the world over.