Why you should know about Interoperability Trilemma

I wanted to write this article about the Interoperability trilemma which cross chain bridges are facing in order to get a better grasp of what each one’s strengths are and what they are sacrificing for.

Definition of a Cross chain transaction

The term “cross-chain” refers to the fact that in a cross-chain trade, the source and destination assets are deployed on two different blockchains. At the same moment, execution takes place after traversing two or more distinct blockchain networks.

Asset spillover effects become increasingly visible when the Ethereum network experiences congestion and expensive fees. The introduction of the cross-chain bridge fractures the blockchain island and extends the area for DeFi ecological growth. The savvy money (or smart money) can move back and forth in the public chains in quest of a higher-yielding “Bonanza”. However, chances come at a cost. More than 100 cross-chain bridges supply a plethora of travel options and raise the complexity of choice for consumers as the multi-chain ecosystem expands.

Interoperability

Interoperability refers to the capacity of blockchains to communicate with one another in order to facilitate information sharing. It is the capacity to observe and access data carried/stored in another blockchain. That is, if the information is delivered to another blockchain, a user on the other side may see it, read it, comprehend it, and react correctly while exerting the least amount of work throughout the process. Cross-chain technology aims to develop and improve interoperability across blockchains, removing the need for third parties to make such connections.

Several initiatives are tackling this issue as blockchain technology advances by constructing bridges across networks. As we advance toward a world where blockchains and systems are interoperable, apps will be able to leverage each other’s services and skills. As a new, decentralized, and interoperable internet takes form, this will very certainly have a significant influence on a wide range of services.

Increased liquidity and the capacity to establish a network of services that connect with each other across communities would assist applications such as decentralized finance (DeFi), growing their user base and extending the resources available.

Bridges provide communication between multiple blockchains. And, as with hard math issues, there is no one technique to enable communication across blockchains when looking at multiple bridge solutions in the crypto ecosystem. Bridges have diverse designs with varied strengths and trade-offs, therefore there are several alternatives for which bridge may be utilized to connect between two blockchain networks.

Interoperability Trilemma

The Interoperability Trilemma, is very similar to the Scalability Trilemma. Interoperability protocols can only contain two of the three features listed below:

1. Trustlessness: having the same level of security as the underlying domains.

2. Extensibility: the ability to support any domain.

3. Generalizability: the capacity to handle arbitrary cross-domain data.

Interoperability is essential for a number of use cases:

• Collateral — Without an effective DeFi ecosystem, many blockchains, such as Bitcoin, maintain substantial value, restricting the potential to make income from any assets. Cross-chain bridges might make it easier for anybody to gain access to DeFi capabilities.

• Scalability — Many proof-of-stake blockchains are experiencing scalability concerns, especially as the volume of transactions continues to grow. Cross-chain and sidechain bridges might help relieve these concerns without totally switching networks.

• Efficiency — In addition to increased scalability, crypto users may want to execute transactions on blockchains with cheaper fees, reducing congestion on parent blockchains and saving large sums of money on gas fees.

• Web3 — To foster acceptance, Web3 will rely on interoperability across multiple blockchains. Users, for example, will want to preserve their avatars, currencies, and other non-transferable and fungible assets across games and experiences.

More articles are coming regarding the fundamentals of cross chain bridges, stay tuned!