aelf Tech Talks — Design and Practice of Blockchain Cross-chain Technology — Part 2

Cross-chain — Why, What and How

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aelf

6 min readNov 13, 2019

After last week’s episode with an overview of blockchain technology, We will delve into cross-chain. In the third module, we will understand what is cross-chain, why cross-chain is needed, and the basic situation of the current cross-chain solution.

.Net Based Projects

Let’s take a quick look at some of the existing .Net-based projects.

What is Cross-Chain

Generally speaking, cross-chain provides the ability for data generated on chain A is applied to chain B in some form.

The intuitive understanding is definitely very simple, but it doesn’t explain why this aspect is so important. We have been saying that blockchain is an open system. Data is transparent within the network. Nodes and applications can be added freely. Network interfaces can be used to interconnect, but the blockchain system itself is still closed. The world is still a closed system, and different blockchain systems cannot be directly interconnected. For example, if you have two bank accounts, it is very convenient to transfer funds across banks, but they are all independent systems, just to make this part of the work safe and fast.

Why Cross-Chain

Cross-bank transfer is an example of breaking the independence of closed systems around us, so we say that closed systems have the motivation and need to breakthrough. There are 5 main requirements to this breakthrough

1. Cross-chain transactions are very similar to the cross-bank transfer we just mentioned. Assets are transferred from one chain to another.If you have assets in chain A, I am on chain B. we must be able to complete the exchange

2. The more important demand derived from asset exchange is the decentralized exchange. Most exchanges are currently operated by a company that is completely centralized.

3. Resource isolation and chain expansion.

Here is an example: Singles Day recently happened. Many businesses participated in Singles Day sales. If you look at a merchant’s merchandise and he was not participating in Singles Day sales, there is a low chance you will purchase from them on Singles Day, because the entire retail landscape has so much traffic on this day. Even if the store was not participating in the event, it will inevitably be affected by it, online, the page can not be refreshed, and the physical store will be very full. The user experience will be very poor. This is the problem that resource isolation can solve, in conjunction with cross-chain technology, one can make different scenarios run on different chains. If a store participating in the Singles Day sales can be placed on a single chain without affecting the normal use of other stores.

4. Asset mapping, many projects’ ERC20 token are on Ethereum, which needs to be mapped to its own chain at a later stage. If there is no cross-chain technology, this process will need to be completed by a centralized organization.

5. Unexplored scenarios, this is a requirement that we have not yet discovered. With the gradual maturity of cross-chain technology, there will be more and more cross-chain scenarios and as such, it must be flexible.

Challenges of Cross-Chain

There are so many cross-chain needs, it makes one wonder why cross-chain technology has not yet developed to the point it can be commercialized on a large scale? Let’s look at the challenges faced by cross-chain solutions:

1. The heart of blockchain is decentralized, but cross-chain actually introduces data from outside the chain. In this process, ensuring the smooth execution of cross-chain functions and ensuring decentralization is challenging.

2. The smooth operation of the chain means that the chain cannot stop producing new blocks due to the cross-chain function.

3. To ensure the security of on chain assets. The chain is often involved in asset transactions, and this process must guarantee asset security.

4. Cross-chain data consistency. Strictly speaking, cross-chain data belongs to the outside chain, and it needs to guarantee its consistency.

5. The problem of load across data. This problem is an efficiency problem. If the load is too high, it will affect the efficiency of the chain.

6. Design of a general-purpose solution. At present, the structure and logic of each public chain is different. A general-purpose solution is critical, as it can reduce redundant development and improve development efficiency.

Cross-Chain Solutions

Next, let’s look at the two solutions. The first mode is the Notary method. The notary here plays a similar role to the notary in our social life. It is operated by an authoritative third-party organization or individual. The role of the notary is to complete the transaction verification, and pass the verification results and other data to other chains. This model is easy to operate, but the shortcoming is that this cultivates a high degree of centralization, people must trust and rely on third-party institutions, and third-party organizations are often centralized organizations even if they implement protection mechanisms such as multi-sign functionality. However, the advantage of this model is that it is easier to implement cross-chain functions based on the existing public chain, as long as the notary party can interface with the existing chain interface and data.

The second method is the relay mode, which completes the data relay through the contract or the independent chain, and the verification of transactions is handed over to the other chain. This model abandons the role of the notary, and the cross-chain operations are directly performed by the nodes inside the network. The cross-chain data is contracted or blocked by a certain chain, and finally reaches the contract or block of the other chain. A core element of this model is that it has a high degree of decentralization and does not need to rely on external institutions. However, this model is accompanied by greater challenges and is difficult to implement. Different blockchain network verification mechanisms vary greatly and need to be processed differently. Most of the recent cross-chain projects are developed based on the relay mode design, such as Cosmos and Polkadot.