The importance of Blockchain interoperability must be considered if Web3 is to gain mass adoption. Many blockchain networks are springing up daily in the Web3 space, and there is a need to make the Blockchain ecosystem a Universe and not be in Isolation. Before diving deep into this topic, it is crucial to define the term “Blockchain interoperability.”
Blockchain interoperability refers to the ability of different blockchain networks or platforms to communicate and work together seamlessly. In other words, it’s the capacity for separate blockchains to share and exchange data, assets, or information without requiring users to go through complex processes or intermediaries.
For example, building a decentralized lending protocol, requires access to an accurate exchange rate for collateralized assets to determine the number of tokens the user borrows and ensure that the loan stays solvent.
Without access to external data, the application will cease to exist.
Blockchains are often built with unique protocols, consensus mechanisms, and data structures, which can make it challenging for them to directly interact with each other. Interoperability addresses this challenge by creating standardized protocols, tools, and technologies that allow these disparate blockchains to connect and exchange data in a secure and efficient manner.
The importance of blockchain interoperability lies in its potential to:
Enhance Ecosystem Integration
Interoperability enables different blockchains to collaborate, expanding the functionality and potential use cases of each blockchain within a larger ecosystem.
Asset Transfer
Users can transfer assets (like tokens or cryptocurrencies) between different blockchains without needing centralized exchanges or complex conversion processes.
Cross-Chain Smart Contracts
Smart contracts on one blockchain can interact with smart contracts on another blockchain, enabling more complex and comprehensive decentralized applications.
Scalability Solutions
Interoperability can help reduce congestion on a single blockchain by allowing some transactions or data to be processed on connected chains.
Diverse Use Cases
It allows for the creation of decentralized applications that span multiple blockchains, enabling more intricate and versatile applications.
What are the Projects Enabling Interoperability in Blockchain?
For the future of Web3 to be more accessible and lead to fewer barriers to entry, there are some products in the Web3 ecosystem that actually solve these problems.
This section will highlight a few of them.
The Acurast Universe is a platform and protocol designed to enable Web3 projects and enterprises to realize the full potential of Web3. This is accomplished by building new and improved use cases that are empowered by a universe of interconnected worlds.
Focusing on the value propositions of a decentralized ethos with trustlessness,
interoperability, and self-service at the core of Acurast.
Band Protocol Ensures Interoperability Between Smart Contracts and the Rest of the World. It is a cross-chain data oracle platform that aggregates and connects real-world data and APIs to smart contracts.
Harmony Protocol aims to provide secure and reliable Oracle services for its blockchain. It supports data from various sources and can be used for multiple applications, including DeFi and gaming.
Chainlink is a blockchain oracle network. It offers decentralized Oracle services to various blockchains, enabling them to securely interact with off-chain data sources, APIs, and payment systems. Chainlink’s decentralized Oracle network ensures high reliability and data accuracy.
Tellor is an immutable, decentralized Oracle protocol that incentivizes an open, permissionless network of data reporting and data validation, ensuring that data can be provided by anyone and checked by everyone.
Built for any data type, our network of reporters supports your basic spot prices, more sophisticated pricing specs (TWAP/VWAP), Snapshot Vote Results, or any custom data needs. If your data can be verified, Tellor can bring it on-chain.
Conclusion
With Blockchain interoperability projects like Acurast trying to go beyond interoperability in Web3 and merge the Web2 world and other emerging technologies together, this will lead to an increase in use cases in the Web3 ecosystem.
