Today, with the booming development of blockchain technology, public chains such as Bitcoin, Ethereum, and Solana have formed their own independent "digital islands". Assets and data cannot be directly interconnected, which seriously restricts the coordinated development of the blockchain ecosystem. The emergence of Cross-Chain Protocol, like the TCP/IP protocol of the Internet, has built a "value highway" between different blockchains, allowing digital assets and smart contract data to flow freely between heterogeneous chains. How does this breakthrough technology achieve "chain-chain interoperability"? In which scenarios will it reshape the underlying architecture of the decentralized economy?
Core concept: "Digital overpass" connecting heterogeneous blockchains.
Cross-chain protocol is Middleware that realizes asset transfer and data exchange between different blockchain networks. The core is to complete cross-chain operations without changing the original chain architecture through cryptography, consensus mechanism and smart contracts. Its core functions include:
- Asset cross-chain : Convert native assets such as Bitcoin (BTC) and Ethereum (ETH) into cross-chain versions (such as wBTC, xBTC) for use on the target chain. For example, by transferring BTC to the Ethereum ecosystem through a cross-chain protocol, users can participate in transactions with BTC on Uniswap.
- Data interoperability : Support smart contracts to call real-time data from other chains, such as DeFi protocol to obtain cross-chain price feeding, NFT platform to verify cross-chain asset ownership;
- Consensus Collaboration : Coordinate the differences in consensus mechanisms among different chains to ensure the atomicity of cross-chain operations (either all succeed or all fail).
According to technical principles, cross-chain protocols are mainly divided into four categories.
- Hash-Locking (Hash-Locking) : Through Time Lock and hash verification to achieve temporary storage and release of assets, such as the Bitcoin Lightning Network;
- Notary mechanism (Notary Scheme) : Relying on trusted third parties to verify cross-chain data, gradually evolving towards decentralization;
- Relay Chain (Relay Chain) : Transfer cross-chain messages through intermediate chains, such as Polkadot relay chain connecting parallel chains;
- Sidechain/child chain (Sidechain) : Bidirectional anchoring with the main chain, such as Ethereum's Layer 2 solution Optimism.
Technical Architecture: Cross-chain Collaboration System Driven by Multi-layer Protocols
The Technology Implementation of Cross-chain Protocol is centered on "Cross-chain Communication-Asset Mapping-Security Verification", constructing a three-layer architecture for interoperability between heterogeneous chains.
- Cross-chain communication layer: the core hub of message passing
- Cross-chain message format : Define standards for data interaction between different chains, such as the "data packet + signature" format developed by the IBC (Inter-Blockchain Communication) protocol, supporting communication between Cosmos ecosystems.
- Cross-chain adapter : Develop adapters for API interfaces of different chains, such as adapting Ethereum's ERC-20 assets to Solana's SPL tokens to achieve protocol layer compatibility.
- Asset Mapping and Liquidity Pool
- Synthetic asset publish : publish cross-chain assets through smart contracts, such as Wrapped Bitcoin (wBTC), which is hosted by institutions such as BitGo and published on Ethereum, anchoring native assets at a 1:1 ratio.
- Liquidity Cross-chain Pool : Build a cross-chain liquidity pool on a decentralized exchange (DEX), such as Synapse Protocol, which supports direct trading of ETH and Solana's SOL, without the need for users to transit through stablecoins.
- Security verification and consensus mechanism
- Light node verification : Cross-chain protocol deploys light nodes of the target chain to verify the block header information to confirm the existence of transactions, such as Avalanche subnet quickly verifies the main chain state through light nodes;
- Multi-signature and game theory design : Decentralized cross-chain protocols use multi-signature mechanisms (such as 5/9 node signatures taking effect), combined with economic incentives (staking tokens to punish malicious nodes), such as ThorChain ensuring cross-chain security through BCH staking nodes.
Compliance platforms such as [HashKey Exchange] audit the asset anchoring ratio of cross-chain protocols through smart contracts in cross-chain asset transactions, ensuring a 1:1 reserve between cross-chain tokens such as wBTC and native assets, and providing users with secure cross-chain asset custody services.
Application scenario: Cross-chain technology reshapes the digital economy ecosystem
Cross-chain protocols are transforming from a technical concept to a core infrastructure for diverse scenarios.
- The Liquidity Revolution of DeFi Ecology
- Asset cross-chain release of global liquidity: Users mortgage ETH on Aave to borrow USDC, transfer USDC to Solana through cross-chain protocol to participate in Serum liquidity mining, achieving "one coin for multiple uses".
- Cross-chain derivative innovation: protocols such as dYdX support cross-chain perpetual contracts, and users can trade the price index of Bitcoin on multiple chains such as Ethereum and Solana. In 2023, the trading volume of cross-chain derivatives will exceed $1.20 trillion.
- Cross-chain circulation and rights confirmation of NFT
- Blue chip NFT cross-chain migration: Bored Ape Yacht Club (BAYC) holders can transfer NFTs from Ethereum to Aptos through cross-chain protocols for use in different chain metaverse.
- Cross-chain copyright registration: Creators store their work hashes on Arweave and publish NFTs on Ethereum through cross-chain protocols, achieving cross-chain copyright protection of "off-chain certification + on-chain confirmation".
- Enterprise-level cross-chain collaboration and compliance
- Cross-chain collaboration in the supply chain: Multinational companies synchronize inventory data of subsidiaries in different countries through alliance chain cross-chain protocols. A certain car manufacturer improves the traceability efficiency of parts by 40% through cross-chain technology.
- Compliance cross-chain asset trading: [HashKey Exchange] supports compliance trading of mainstream cross-chain tokens (such as wBTC, stETH), verifies the legitimacy of cross-chain assets through the on-chain KYC module, and meets regulatory requirements for asset penetration supervision.
Although cross-chain protocols face challenges such as smart contract vulnerabilities (such as cross-chain bridge attacks) and regulatory compliance (such as defining the legal attributes of cross-chain assets), as a key infrastructure for blockchain to move from "island" to "interconnection", it is driving the decentralized economy into the era of "cross-chain collaboration". With technological iteration (such as zk-rollup cross-chain verification) and ecological improvement, cross-chain protocols will become the core hub connecting various Web3.0 chains, allowing digital assets and data to flow freely between different blockchains, and building a true "value internet".