- According to whether it is homogeneous or not, it is divided into: Heterogeneous cross-chain and Isomorphic cross-chain
- According to the content of cross-chain transmission, it is divided into: message cross-chain and asset cross-chain
- According to the degree of trust, it is divided into: Centralization, Multi-center, Decentralization
Isomorphic assets Cross-chain
Ethereum Layer 2
Ethereum’s current mainstream Layer 2 technology is Rollup. Rollups are divided into two categories.
- Optimistic Rollups: A technical point called “fraud proof” is used. Simply put, Optimistic Rollups do not do any calculations, because they only run concurrently with the Ethereum main chain. After the transaction is executed and processed, they just publish the data to the main chain and assume it is correct, so they are called optimistic (meaning “ optimistic”). Verifying the accuracy of the data without the participation of the third referee intermediary is somewhat similar to the logic of the Lightning Network. It takes a period of time to ensure that any party can question the data submitted to the chain. If the submitted data is wrong, you can Penalties for previously pledged locked assets are imposed on the party that submits incorrect data. The defect of this logic is that the interaction between chains is very slow, because it takes a period of time for questioning to ensure that any anti-counterfeiting party can have sufficient time to reveal that the submitted data is wrong. Representative projects are: Optimism and Arbitrum.
- ZK-Rollups: ZK-rollups use a technical point called “ZK Proof”. It works by doing calculations and data storage processes off the main chain and sending batches to layer 1 where they are immediately validated or rejected. In simple terms, think of the data that needs to be verified as a “secret message”, and ZK proofs as a tool that allows you to prove a “secret message” without revealing what this “secret message” is (and thus also used by developers become zero-knowledge). It is a way to prove that you know some “secret message” without having to reveal it, while further reducing the amount of data sent to the main chain. This zero-knowledge proof system allows instant verification or rejection of transactions. The difficulty of ZK-rollup is that it needs to be compatible with EVM, or compatible with other contract programming, and the development is difficult. The representative project is: zkSync. This development cycle must be long, just like VB has been calling for the conversion of Ethereum to POS since 2016. After 6 years, the conversion to POS was successful in 2022. Everyone has been waiting for this zkRollup.
Polkadot Parallel Chain
Substrate must be used for development, and the Slot needs to be auctioned with Dot, and then the Slot is used to run the parachain. Transactions in the parallel chain are uniformly confirmed by the relay chain. In principle, this is the safest cross-chain interaction mode.
It’s just that the current parachain is limited in that it can only do asset cross-chain based on XCMP and the confirmation time of the parachain is constrained by the relay chain. These constraints make it difficult for polkadot to grow innovative products.
A chain developed based on Cosmos-sdk
Chains developed based on Cosmos-sdk do not require slot auctions. It is a free chain. When the chain needs to interact, the abci-based light nodes of both parties can cross the chain.
Although it is more convenient and free than DOT, it also has the limitation of cross-chain assets, making it difficult to develop unique cross-chain applications.
Isomorphic message Cross-chain
No ready-made products have been seen yet, but this is the product field that the cross-chain application of isomorphic assets will break through. I think this is the direction that the Layer2 project and polkadot and Cosmos should strive to achieve.
Because like the current Layer2, your UniSwap deploys an AMM pool on ETH, Arbtrim, and Optimism respectively. These three pools are scattered, so that Layer2 is just a copy of Layer1’s simple products, which is nothing new.
Polkadot’s parachains and the applications on the chain developed by Cosmos-sdk basically stay in this limitation, and can only grow single-chain application products, or deploy the same copy of application products on multiple chains.
Imagination of isomorphic message cross-chain
If the isomorphic chain realizes message communication at this time. Take the Polkadot parachain as an example.
Recently, OmniBTC spent less than 1/1000 of the token budget to auction the 34th slot of DOT, which means that there are 34 parallel chains on DOT. Now basically there is an AMM DEX on each parallel chain, and the funds are scattered on 34 parallel chains without aggregation.
This has led to a recent joke about the DOT parachain: the DOT parachain is like a small EU country, independent and constrained by each other, and like China’s big pot meal stage at that time, with slots, everyone is a parachain, mutual homogeneity, no law development.
If DOT implements message communication, then OmniSwap products like OmniBTC can aggregate the liquidity pools of 34 parachains into one place. Let users on the chain enjoy the largest flow of funds. Similar to China’s reform and opening up, products like “Shenzhen” will soon be produced.
Heterogeneous assets Cross-chain
Lightning Network for BTC
The lightning network is a trustless cross-chain model. By combining BTC’s multi-signature and time lock, it is cleverly designed: the two parties who do not need a third-party intermediary referee reach a consensus.
Limited to payment and transfer only. Because the lightning network is not a blockchain structure, we classify the lightning network into the category of heterogeneous.
Layer2 ChainX for BTC
- Already implemented: the escrow model based on Taproot’s distributed key threshold signature technology.
- Plan implementation: combine Taproot into the Lightning Network to realize the cross-chain of BTC native assets
The white paper is to use its own distributed key technology to realize the cross-chain of BTC.
However, it is different from the aggregated signature technology in BTC-native Taproot adopted by ChainX. Use node distributed key storage. But recently I saw fund news, saying that RenBTC is actually in a centralized custody similar to WBTC.
Fully centralized BTC custody cross-chain model
Heterogeneous message Cross-chain
Under the basic framework of different chains, the programmable information transfer between the source chain and the destination chain is realized.
19 multi-signature managed node distributed signatures cross-chain message to each chain.
LayerZero uses the on-chain contract cross-chain model, and the trust of the data on the chain needs the guarantee of the ChainLink oracle.
Use a chain to relay this message.
The centralized exchange adopts the private key controlled by the centralization, and uses two operations of recharge and withdrawal to complete the interaction with each chain. The user’s transaction data on the exchange is provided by the data processing of the web2 server of the centralized exchange, which gives Centralized exchanges create fake data at will. This is also the root cause of FTX’s thunderstorm.
Inter-chain interoperability applications based on message cross-chain protocols such as LayerZero/Wormhole can replace the omnichain Dapp of the centralized exchange business.
Well-known omnichain applications include:
- HashFlow: Based on the market maker’s omnichain Swap, the exchange of 10 billion US dollars of funds has been completed.
- OmniBTC: A omnichain financial platform based on cross-chain protocols such as LayerZero/Wormhole. The integration of mainstream Swap such as UniSwap/PacakeSwap and mainstream chains (Aptos, ETH, BSC, Avax, polygon, arbitrum, Optimism) has been realized. One-click exchange function. At present, there are more than 1,000 one-click cross-chain transactions per day. In addition, it is worth looking forward to: omnichain lending, aggregation liquidity agreement Dola, OmniChain (Polkadot’s omnichain parallel chain) is being realized.