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Imagine: you are about to deposit your savings at a new bank. But as you fill out the forms, you come across a news story about a $624 million theft caused by a devastating exploit in the bank’s computer system.
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You start looking at other banks to find a safer alternative, but it’s not that simple. You see, you have no way to properly distinguish or evaluate each bank’s backing systems, and thefts are commonplace. Between 2021 and 2023 alone, a whopping $2.9 billion was stolen from banks due to similar backup system issues.
You’d be forgiven if you were a little hesitant about your next step!
It’s hard to believe, but the above is true. Only it’s not the banks that have suffered these high-profile, embarrassing breaches… it’s cross-chain bridges.
We’ve seen breaches caused by just about everything you can think of: from unforeseen outcomes due to overly complex design, to unexpected backdoors and outright fraud. The one common thread between all these incidents is that they are devastating for the people who rely on cross-chain solutions and damaging to the reputation of blockchain as a whole.
However, if you look past the headlines, a powerful truth emerges: cross-chain infrastructure is core infrastructure. As long as you continue to believe that blockchain has the potential to change the world for the better – and that mainstream adoption remains the goal – cross-chain solutions will continue to exist. So let’s take a candid and honest look at the current state of blockchain interoperability.
For the uninitiated, blockchain interoperability is the key to overcoming the fragmented and siled nature of blockchains. You see, blockchains, as reliable systems, are unable to communicate with other blockchains without some intervention. This is where cross-chain solutions come into the picture. Cross-chain solutions allow data on one blockchain to flow seamlessly to another. For users of dApps and defi protocols, interacting with cross-chain solutions is almost a necessity, as many of the most exciting and consequential projects are now being built outside of that of the Ethereum L1 blockchain.
Today, the state of blockchain interoperability is one of broken incompatibility. Numerous competing interoperability projects each vie for dominance, creating customized cross-chain products with differing security and reputations that ultimately do nothing more than straighten out the blockchain landscape. This incompatibility between different cross-chain solutions remains one of the great ironies of blockchain. Worse, this incompatibility hinders the ability of users, enterprises and regulators to assess the security of each alternative, jeopardizing the widespread adoption of blockchain technology as a whole.
The solution to this is a shared framework for interoperability.
Blockchain interoperability cannot be the responsibility of a single project. It must be an industry-wide effort. Instead of adopting an “every man for himself” mentality, we need to come together and decide once and for all how we want to send, receive, and verify data from another blockchain.
While some may object, adopting a shared interoperability framework need not jeopardize the business models of existing interoperability projects. Instead, it would simply provide the foundation for a maximally secure layer of core infrastructure on which projects can build unique products that make different tradeoffs tailored to different use cases. This is the distinction that matters.
Returning to the original scenario, the world of traditional finance has seen tens of thousands of banks build thriving businesses with loyal customer bases while relying on a secure, shared infrastructure. Likewise, Web2 companies around the world all rely on the Internet Protocol suite: a shared framework that enables end-to-end data communications between different network devices on the Internet. A shared framework for interoperability, one that clearly outlines architectural guidelines and interface definitions, is the clear path forward. Blockchain interoperability should be the core infrastructure first, and the product second.
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Temujin Louie
Temujin Louie is a communications specialist with more than ten years of experience in driving the adoption of transformative digital technologies. His introduction to blockchain began in 2012 while studying at the London School of Economics and Political Science, where he studied Bitcoin’s impact on established power structures. Temujin is a subject matter expert in blockchain interoperability. He has the rare talent for simplifying complicated technological concepts into compelling stories. He has served as the essential bridge between the tech world and the broader public, offering his unique insights and strategic insight to tech startups and global multinational corporations alike. Temujin joined Wanchain in March 2021 and is CEO of Wanchain.
