One of the prerequisites for the mass adoption of blockchain technology is undoubtedly secure and seamless cross-chain interoperability. Many potential applications, especially in complex and regulated industries, simply cannot be deployed without common guidelines and interface definitions.
Without these, applications that want to go cross-chain, as is currently the case, must rely on custom off-chain components and automatically inherit the associated risks and trust assumptions. The only alternative is to be limited to a single, isolated network.
Today’s interoperability solutions – or ‘bridges’ – have matured to the point where virtually every two blockchain networks can be connected. The problem is that each bridge is an ad hoc construction, which limits scalability and usability.
This problem is further amplified when it comes to networks with drastically different infrastructures, as is the case with non-EVM blockchains. Limitations aside, bridges are clearly needed and remain in high demand. Even after declines during the bear market, Total Value Locked (TVL) got into major cross-chain bridges on Ethereum alone $23.5 billion in January 2024.
Despite these gaudy numbers, there are still many hurdles to overcome before blockchain technology is ready for mass adoption. Three major challenges remain hindering the progress of blockchain interoperability: security, UX, and compatibility.
Security
The most obvious obstacle to blockchain interoperability is the ever-present security issues. Indifferent to market performance and hype cycles, the repeated failures of poorly designed cross-chain bridges have left a black mark on the industry and discouraged people from pursuing solutions. Individuals who have suffered losses due to a bridge hack naturally develop a distrust of all cross-chain bridges. Fool me twice and all that.
And it’s hard to blame them. An approximate one $2.9 billion was stolen in the top 10 cross-chain bridge hacks between 2021 – 2023. It wasn’t long before 2024 started the same way, with Orbit Bridge as hacked for $80 million during the New Year period. With mainstream adoption of blockchain technology dependent on secure interoperability, these trends cannot continue. Any remaining security issues simply need to solve.
UX
A seamless user experience is critical in driving user adoption and engagement, which directly contributes to the sustainability of digital products and services. This fact is as fundamental in Web2 as it is in Web3. Cross-chain bridges are no exception.
Today’s bridges are anything but seamless. Although mature solutions have abstracted direct user involvement into a single transaction, the user journey is still too complex. Users prefer not to transact with multiple assets while manually switching between multiple wallets and RPC servers.
This is largely caused by the current limitations of blockchain technology, but is exacerbated by immature interfaces. Many may be shocked to learn that there isn’t even a unified system for cross-chain solutions to identify a unique blockchain network!
Without seamless interoperability, UX can only be improved incrementally unless certain unpalatable security and decentralization concessions are made. Collaborative efforts are needed, otherwise blockchain interoperability solutions will remain fragmented and mainstream adoption will remain stymied – relying on stores of value and niche financial applications.
Compatibility
Compatibility, or rather, the incompatibility between different blockchain interoperability protocols is one of the great ironies of our industry. As it stands now, the vast majority of blockchain interoperability projects are focused on building proprietary products with custom relayers, message definitions, and verification mechanisms. Too many people are focused exclusively about growing their own produce.
With so many competing approaches with shockingly little overlap, it becomes impractical, if not impossible, to properly investigate the safety of each approach. The struggle to become the one and only solution is ultimately harmful and poses a risk to the long-term prospects of the sector. Common infrastructure and shared interfaces are needed because these can be properly vetted and tested. Blockchain interoperability should be the core infrastructure first, and the product second.
The solution
At the root of security, UX, and compatibility challenges is the lack of an open, unified interoperability standard. Such a standard is essential because it would provide a universally accepted framework for communication between blockchains and blockchain-like systems. This would ensure secure interoperability and seamless global connectivity, preventing fragmentation across projects.
Imagine a world without ERC-20, the de facto standard for issuing fungible tokens on the Ethereum blockchain. Every project issuing a token on Ethereum would follow its standard and one project’s token would be incompatible with another’s. Applications such as decentralized exchanges could theoretically still be built, but their growth would be hampered by the need to follow standard-agnostic design principles.
Each token would represent an ad hoc integration and users could only use applications that explicitly support their token. Without a standard that defines a set of rules and functions, the development of Ethereum’s ecosystem would be greatly hindered. This is the current state of blockchain interoperability.
However, because the ERC-20 standard has been vetted and adopted, all applications can interact with, manage, and trust unknown fungible tokens. Even tokens deployed after a specific application has been created can be used without any additional technical work, and tokens can be compatible with multiple applications. This is the power of an open, uniform standard. This is what blockchain interoperability so desperately needs.
The benefits of an open, uniform standard for blockchain interoperability could be even greater.
A common plug-and-play architecture that follows a vetted, standardized framework could include three layers: messaging, function calls, and applications. This would enable secure and seamless communication between EVM and non-EVM blockchains. Prioritizing interchangeable components will also accelerate the development of true blockchain interoperability, enabled by multiple providers.
Establishing such a standard has the added benefit of helping companies and regulators understand the technical intricacies of developing a fair, informed regulatory framework. If this is developed together with technical progress, a fair balance between innovation and regulation can then be achieved.
Blockchain technology has the potential to change the world for the better. Secure and seamless blockchain interoperability between blockchains and blockchain-like systems is a prerequisite for mass adoption. Without an open, uniform interoperability standard, true mass adoption will remain out of reach.