Benefits of Cross-Chain Development

No matter how hard maxis try to convince you that their chain is “best”, the reality is that blockchain development is fragmented. For example, Google Cloud, Amazon Web Services, and Microsoft Azure offer similar services, yet they all exist and own a market share in a competitive market. Projects choose one cloud infrastructure provider over another when building in Web2 for a number of different business, legal, or technical reasons. A project might choose AWS because it offers a compute engine that Azure or GCP don’t, GCP because of a legal conflict with Azure, or maybe even Azure because its prices are cheaper for the project’s use case.

In a similar way, projects building on crypto infrastructure have conflicting business, legal, and technical needs. The difference between Web2 and Web3 development environments is that a Web2 project’s platform is hidden away from the end-user. If it weren’t, users of one product would only be able to communicate with other projects on a similar infrastructure. For example, that mortgage website that’s deployed to AWS? Well, you wouldn’t be able to connect your bank to it because the bank is deployed on Azure. But because Web2 builds protocols that communicate regardless of the infrastructure in which each individual project is deployed, developers get access to services offered by other apps on other infrastructures.

In Web3, these types of communication protocols are being implemented via cross-chain bridges. Developers who take advantage of these bridges not only create better user experiences for their customers, but they also tap into increased liquidity for their DeFi protocols, larger communities to interact with, and greater identity data about the user.

Liquidity

Beyond issuing tokens on one chain and using wrapped assets, there’s also some work being done in native cross-chain tokens. These assets don’t require lock up on the sending chain and minimize custody risk, but they do require the developers to issue their token as a multi-chain token, with mint authorities on connected chains working in tandem to burn and transfer tokens.

Community

Cross-chain voting is a perfect use case for DAOs. Hypothetically, if the Ape NFT projects on various chains wanted to collect votes to form an Ape “United Nations” DAO, they could pick a single chain to collect votes and have each individual project’s members vote on the chain the project is deployed on.

A hypothetical Ape “UN” DAO could go further and build a cross-chain treasury to deploy capital and hold xAssets. They could hold disputes and carry a common code of conduct. They could enforce rules through actions like blacklisting individuals that break their common core of values.

Collectively, these org of orgs could build communities large enough to offer services like insurance and banking to their communities.

Identity

Cross-chain identity, xID, will allow bank xApps to offer loans based on your holdings on other networks and other communities. They’ll allow you to build a cross-chain reputation and further create moats against Sybil attacks by making those attacks even harder and more expensive to carry out.

As projects mature, it makes sense for them to interact with each other, and that’s where cross-chain development comes into play. Composability is one of the hallmark promises of blockchains. Cross-chain development makes it a reality.

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Wormhole

Cross-chain interoperability protocol connecting high value blockchains