Blockchain Pills - Cross Chain
In the past years, an increasingly larger number of people have started to use Ethereum, drawing attention to the possibilities that WEB 3.0 offers. This is the reason why the number of Layer 1 Blockchains has been increasing in recent years.
Layer 1 as Countries
As we discuss a Layer 1 Blockchain, it is similar to a country with closed barriers. Inside, information can flow without any problem and without trust between participants.
With the introduction of Smart Contracts, each of these “countries” can have more “provinces” inside them. Each of them communicates with others, but the country cannot communicate with the outside world.
Even if someone believe that everything different from Bitcoin is not decentralized, or others think that Ethereum is the only possible future, this is not true. The Blockchain industry is ready for a multi-chain future, and each new Blockchain that brings something new to the table will contribute to shaping this future.
If we have one blockchain focused on the fintech world and another one on decentralized identity, they can work together and bring more value.
Explaining this concept could be really complicated, but that’s not the point. The point is that we should be open to new blockchains.
If we want to connect these countries with the real world, how can we do it?
There are several solutions.
Connect the countries
The first one, chosen by Cosmos, is to give each Layer 1 the same infrastructure in a way that the exchange of information between chains becomes easier through a dedicated bridge. In this example, a bridge is literally a gateway to another country. This option solves the problem of connection between chains but (maybe) is not the best setup.
On Ethereum, smart contracts can interact in two ways:
1. Send and receive tokens
2. Give instructions: Smart Contracts can ask another Smart Contract to execute a transaction. In this way, different contracts can be used to collaborate in an application or in a series of transaction.
Inside the protocol of Cosmos, the only informations that can be exchanged are tokens. Blockchains cannot teach each other how to complete a task. To reach a higher level of communication between chains, there are different solutions. For example, Polkadot.
Polkadot
Polkadot is a Layer 0 protocol that aims to connect multiple Layer 1 chains without compromising the composability at a higher level. In this configuration, blockchains are able to exchange information and send/receive instructions. Polkadot does not ask for a change of state in blockchains; it just asks that blockchains adhere to the change function of the relay chain.
Polkadot (we can immagine it as our planet) considers all the laws of different countries that choose to connect with it but it asks for proof of the validity of these laws. This configuration gives parachains the freedom to develop their own consensus mechanism and their own way to finalize blocks.
What does “state change” actually mean?
Let’s take a look at an example.
A Layer 1 blockchain focused on financial decentralization can change the state of another Layer 1 blockchain focused on decentralized identity by requesting user information stored on the identity chain.
The state is changed because the identity chain must execute a new transaction to fulfill this request.
Even if no tokens were exchanged, greater value has been provided because the information provided by the identity chain can potentially be used by the financial chain to make payments to the user.
This is just one example of many that underlie the disruption brought by blockchain technologies.
Layer 2 Blockchains were born to increase the scalability of Layer 1 (more transactions). Ethereum has at least 3 Layer 2 protocols that work to help it (Polygon, Arbitrum, Optimism). So, Layer 2 works on Layer 1.
Now that we’ve explained a bit about Cross-Chains, we can come back with a question:
Do you know any industries that cannot be reshaped to promote fairness and freedom?
Answering this question can help us understand how big the disruption of blockchain will be. For now, this movement is really slow because every blockchain is an island, but we are starting to make important steps toward this future.
In the next articles, we will talk about a technology that enables us to connect these islands and that will accelerate this disruption.
Polkadot
