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2. Intermediate Course

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  1. 1. Ethereum 2.0 - What is it? 
  2. 2. What is cryptocurrency burning?
  3. 3. How to create your own cryptocurrency? 
  4. 4. Blockchain Oracle - what are oracles? 
  5. 5. How to make money with NFT?
  6. 6. What is an ERC20 token and how is it created?
  7. 7. The Metaverse – a new virtual world
  8. 8. Metaverse – TOP 15 virtual reality projects
  9. 9. Technical analysis – is it worth using?
  10. 10. What are DeFi liquidity pools?
  11. 11. Second layer (layer 2) - what is it? 
  12. 12. What are wrapped tokens 
  13. 13. What is the Lightning Network, and how does it work?
  14. 14. What are security tokens?
  15. 15. What is Play-to-Earn (P2E) and how does it work?
  16. 16. What are Social Tokens? 
  17. 17. Examples of the use of WEB3 on the blockchain
  18. 18. What is Web5? 
  19. 19. Ethereum London Hard Fork - what is it ? 
  20. 20. Segregated Witness - what is Segwit Bitcoin all about?
  21. 21. Polkadot - Decentralized blockchain and DOT cryptocurrency
  22. 22. Polkadot Parachain - Next-generation blockchain
  23. 23. Trading order types: stop loss, trailing stop loss, LIMIT
  24. 24. Set up of Stop Loss and Take Profit orders
  25. 25. What are Decentralized Cryptocurrency DEX Exchanges?
  26. 26. What is Curve Finance?
  27. 27. What is GameFi and how does it work?
  28. 28. Non-fungible tokens and NFT exchanges
  29. 29. Cryptocurrency steps - What is move to earn M2E?
  30. 30. What is Proof of Reserves (PoR)? How does it work?
  31. 31. Interoperability in the world of cryptocurrencies and blockchain
  32. 32. Blockchain and its layers - What is layer three in Blockchain (L3)?
  33. 33. What is Layer 0 in Blockchain technology?
  34. 34. What is layer 1 in Blockchain?
  35. 35. What is MakerDAO and DAI Stablecoin?
  36. 36. What is Blockchain sharding?
  37. 37. What is the NFT licence fee?
  38. 38. What is the SubDAO protocol, and how does it work?
  39. 39. The main differences between static NFT and dynamic NFT
  40. 40. What is minting an NFT?
  41. 41. Mainnet versus Testnet on the Blockchain. The complete guide!
  42. 42. What are NFT Ordinals? A guide to Bitcoin NFT.
  43. 43. Market Cap versus Fully Diluted Market Cap - the most important differences you should know!
  44. 44. MINA Protocol: the lightest blockchain in the world!
  45. 45. NFT Gas Fee - what is it? How can you reduce your gas fee?
  46. 46. Liquidity Provider Tokens (LPs). What are they, and why are they so important?
  47. 47. What is KnowOrigin NFT, and how does it work?
  48. 48. What is decentralized social media?
  49. 49. What is the Ethereum Name Service (ENS) and how does it work?
  50. 50. Arbitrum: Ethereum scaling solution - everything you need to know
  51. 51. Ethereum ERC-4337 - what is it and how does this standard work?
  52. 52. Sustainable Blockchain - Proof of Useful Work & Flux
  53. 53. Ethereum Proof-of-Stake (PoS) - what should you know?
  54. 54. Atomic Swap: What is an atomic swap, and how does it work with cryptocurrencies?
  55. 55. What Is Cryptocurrency Vesting? What Are Its Advantages?
  56. 56. What Is the Metaplex Candy Machine Protocol? How Does It Work?
  57. 57. What Is the BNB Greenfield Ecosystem?
  58. 58. Real Yield in DeFi - what is this trend? What does it consist of?
  59. 59. What Is Slashing in Cryptocurrencies?
  60. 60. How to Create Your Own Decentralized Autonomous Organization (DAO)?
  61. 61. The ERC-721X VS ERC-721 Standard – Key Differences!
  62. 62. Royalties – What Are They? How Does This Type of Licensing Fee Work?
  63. 63. Polygon 2.0 - the value layer for the Internet
  64. 64. ERC-6551 - the new NFT standard. What does it bring to the non-exchangeable token sector?
  65. 65. What is TradFi? The importance for cryptocurrencies!
  66. 66. What is the Real World Asset (RWA) trend in cryptocurrencies? Explanation and examples!
  67. 67. Pyth Network: a powerful oracle harnessing the power of Solana!
  68. 68. Vampire Attacks in Decentralized Finance (DeFi): Explanation and Examples
  69. 69. What are stables in the world of cryptocurrencies?
  70. 70. What Is Binance Oracle?
  71. 71. What is NFT Lending all about? An innovative solution in the world of cryptocurrencies!
  72. 72. Shibarium: A new era in the Shiba Inu ecosystem?
  73. 73. What is an ETF? How will an exchange-traded fund on bitcoin work?
  74. 74. Symmetric and asymmetric encryption - key cryptography techniques!
  75. 75. Cosmos SDK: Building the Blockchain Ecosystem
  76. 76. DAO Investment: A revolution in the world of finance and investment
  77. 77. What is cross-chain interoperability in Blockchain technology?
  78. 78. Blockchain trilemma - explanation of the problem. What is the impact on cryptocurrency payments?
Lesson 77 of 78
In Progress

77. What is cross-chain interoperability in Blockchain technology?

As cryptocurrencies grow in popularity, the concept of interoperability between chains takes on particular importance in the context of blockchain technology. 

Interoperability in the world of cryptocurrencies refers to the ability of different blockchains to collaborate and communicate with each other to create a more integrated and efficient infrastructure for the cryptocurrency ecosystem. 

In today’s lesson, we will discuss what interoperability between chains is, its impact on blockchain technology, and how it works. Get to it!

Cross-chain interoperability – definition

Interoperability in the context of blockchains refers to the ability of a given chain to freely exchange information with other blockchains. This allows smart contracts in different chains to communicate with each other without sending actual tokens between them. 

For example, assets, services, and transactions are registered on the blockchain as documentation. Any activity that takes place on one blockchain can be mirrored on another through appropriate interoperability solutions. This means that applications can interact with any resource or service regardless of which blockchain they are on.

The lack of interoperability and connectivity poses a significant challenge to the widespread adoption of blockchain technology, as it impedes the free flow of data and value between different networks. From a developer’s point of view, each implementation is a self-contained and isolated environment, resulting in backend contracts being isolated and unaware of each other. For example, a decentralized application (DEX) on Ethereum or Polygon would require a separate implementation, resulting in the isolation of different versions of the same application.

For the user, this multi-implementation approach creates a number of challenges, preventing the seamless transfer of tokens between different blockchains. Often the process requires destroying assets on the original blockchain and re-creating them on the target using a third-party bridge. This complex process can be time-consuming and confusing, leading to data fragmentation and a poor user experience. In addition, there are significant security risks when assets are stored on multiple blockchains, opening the door to potential hacking and loss of funds.

What are the benefits of cross-chain interoperability?

The benefits and limitations of interoperability in the context of blockchain are apparent. It allows users to freely transact across different blockchain networks without the need to involve centralized intermediaries. 

Additionally, this reduces fragmentation, improves interoperability within the wider blockchain ecosystem, and opens up new business opportunities and operating models. 

Nevertheless, there are some limitations to these solutions. Different blockchains may use different security solutions, consensus algorithms, and programming languages, which is potentially more technically complex. Such divergences may also increase the risk of attacks and pose new challenges in managing different blockchain networks.

Examples of protocols that address the problem of cross-chain interoperability

There are many approaches to improving cross-chain interoperability, and below are some examples, demonstrating the wide range of solutions available.

Chainlink

The Chainlink protocol develops the Cross-Chain Interoperability Protocol (CCIP), which is an open protocol that enables communication between different blockchain networks. It includes messaging and token transfer. 

The goal of CCIP is to enable universal connectivity between hundreds of blockchain networks using a standardized interface. This will potentially reduce the complexities of creating interchain applications and services.

Wormhole

The Wormhole protocol is a generic interoperability system that enables the transfer of tokens and messages between different blockchain networks. Messages on the source chain are monitored by a network of custodians who verify and facilitate transfers to the destination chains. Developers using Wormhole can create decentralized interchain applications called xDapps.

Avalanche Warp Messaging

Avalanche Warp Messaging (AWM) was created with flexibility in mind, allowing developers to customize messaging specifications according to their own communication needs. 

The AWM format itself requires a specification in the form of a byte array, a participant index in the BLS Multi-Signature, and the BLS Multi-Signature itself. With AWM, developers are facilitated to create powerful decentralized applications (DApps) on the Avalanche network.

Inter-Blockchain Communication (IBC)

Inter-Blockchain Communication (IBC) is a standard protocol for communication between blockchains in the Cosmos network. It was created with the intention of facilitating interoperability between different blockchains. IBC defines a minimum set of functions defined in the Interchain Standards (ICS), which specify how different blockchains can communicate and exchange data with each other.

An example of the use of IBC is Osmosis, a dextral exchange (DEX) that allows users to exchange tokens between different blockchains. Osmosis uses the IBC protocol to enable the seamless exchange of tokens from different blockchains, allowing token holders to benefit directly from the interoperability capabilities offered by IBCs.

Summary

Solutions for interchain interoperability have the potential to significantly increase the efficiency and functionality of blockchain networks, enabling seamless communication, data, and value transfer between different networks. 

Future advances in interchain interoperability are expected to bring greater innovation between different blockchain networks and open up new perspectives for blockchain applications. Such development could lead to a more decentralized and user-friendly blockchain ecosystem.

However, for interchain interoperability solutions to be widely adopted, they need to achieve greater stability and provide security. It is still unclear which solution will provide the most effective, stable, and secure tools in this area.

Complete today’s lesson!

  1. Second layer (Layer 2) what is it?
  2. Interoperability in the world of cryptocurrencies and blockchain.