Advantages and disadvantages of Cross Chain technology
Increased interactivity: Cross Chain makes it possible for blockchains to interact with each other. This interaction can help combine the strengths of each platform to deliver a complete blockchain solution.
Effective: Bitcoin can be widely used in Ethereum Defi protocols without any barriers. This means that a large amount of liquidity can be easily created and moved in different blockchain platforms.
Increase practical application: When blockchains can interact with each other easily, the exchange between coins will become simpler than ever.
The biggest downside to the present time is probably the problem of technology. Cross Chain seems to be still too new. The Cross Chain solutions created have not yet been able to effectively communicate. Furthermore, the individual blockchains themselves are still a work in progress. Therefore, it will probably take more time to develop and perfect in order to achieve optimal performance.
Thus, from a personal point of view, Cross Chain will probably be the trend in the future. We can divide the blockchain into several stages. If we consider phase 1 as the formation of ideas and foundational blockchain solutions. Then in phase 2 will be the combination and create interaction between these blockchains together. In other words, blockchain with multi-chain interoperability can be seen as a Layer 2 blockchain.
Based on technology factors, Cross Chain can be divided into two forms: Isomorphic Cross Chain and Heterogeneous Cross Chain.
For Isomorphic Cross Chain, the security mechanism, consensus algorithm, network topology, and block generation verification logic are consistent, and cross-chain interaction between them is relatively simple. Tendermint-based chains like Cosmos can adopt Isomorphic Cross Chain. You can understand its simple mechanism like this.
Suppose we have two strings A and B. To be able to transfer assets back and forth between these two chains, the first thing is that they need to be registered with each other first. They do this by sending the genesis block and Chain ID to each other for confirmation. The user then sends a Cross-Chain packages transaction to A to request it to be sent to B. Thread A will receive the request and notify thread B of this event.
Heterogenous Cross Chain will be more complex than Isomorphic. Because, it has heterogeneity in security mechanism, consensus algorithm between chains. The transfer mechanism is similar to the isomorphic Cross Chain. However, to solve that inconsistency problem, the solution of using a third-party service platform is applied to store transactions.
Suppose in the case of Cosmos, with heterogeneous chains like this, PegZone or Peggy is the third service I just talked about. This one PegZone will consist of five parts: Smart Contract, Witness, PegZone, Signer, Relayer. It will do the conversion between the strings here.
In general, it is the differences between the chains that create the different types of Cross Chains. Perhaps this is precisely why Cross Chain technology has become more difficult to develop. Each project itself, each Cross Chain technology needs to handle both of these cases simultaneously. Most of the problem lies in the inconsistency between chains and Cross-Chain needs to work to be able to accommodate them all.
The need for interoperability between Blockchains will become more and more necessary. Especially when Defi applications are increasingly expanding like today. Blockchain in general and Defi in particular, are changing the way life operates today. Or rather, it brings the entire current centralized operating model (banks, applications...) to the blockchain platform. From there, it helps to solve the weaknesses of other centralized models (centralization, high costs, long transaction times...).
However, without establishing Cross Chain interoperability, Defi will probably forever remain in its infancy. Think of every single blockchain as a separate economy. If these economies cannot work together, the entire ecosystem cannot grow and take over the traditional financial world.
The world of Defi is heating up day by day as shown by the increasing amount of money pouring into Defi protocols. When WETH was born, up to now more than 1 billion USD worth of ETH is locked in Defi protocols. Imagine if Cross Chain technology develops, communication between blockchains becomes simpler, this number will certainly not stop there.
Many projects pursuing Cross Chain technology have also really formed based on this vision. It can be said that they will help revolutionize the world of Defi. At the same time, it will accelerate development and adoption, paving the way for a new financial system with easy communication between existing blockchain platforms. That's the reason, Maxchain with the desire to create a completely new platform that overcomes the current solutions to promote trust in Defi, with the mission of building and Perfecting as a missing piece in the market share. current cross-chain.