Bridges were so 2021. People are beginning to understand what cross-chain and multi-chain means, but one thing is less obvious about the whole thing: multi-chain is more than just bridges. Multi-chain is moving complicated chain mechanics into the background.
Axelar Network is its own layer 1 (built with Cosmos), with some super powers which allow it to sign transactions on any other layer 1.
A “bridge” at this point in crypto has essentially meant the ability to "wrap" assets. Like wrapping Bitcoin or fiat dollars onto Ethereum, or an ERC20 onto Avalanche.
A litany of bridges have appeared, some protocol to protocol, some built specifically by app-chains. This pattern tricks us into thinking that bridges have to be standalone projects. What Axelar will reveal is that bridges are a subset of cross chain interactions, which can exist on a general cross chain layer.
Axelar is a generic cross-chain interoperability protocol, built using threshold signature cryptography (TSS) and a proof of stake network (PoS). It is able to verify a transaction on one chain, and trustlessly generate a signature to submit the transaction to another chain. All the while keeping track of finality and trust assumptions in each environment.
Anyone will be able to build smart contract applications which utilise Axelar to send transaction packets to other blockchain networks.
The first real world use of Axelar's technology will be an asset bridge application. Axelar is building it themselves to prove the powers of the network.
Axelar allows generalised transaction forwarding between chains, and in this case the transaction being forwarded is a simple asset transfer.
Technically anyone could build a competing bridge application on top of Axelar's network, Axelar are just building one to show what the network can do.
Enabling liquidity to flow between environments is a natural place to start. Deep UST pools will be supporting asset transfer and exchange across chain using Axelar’s bridge app.
Every new bridge app comes with its own security assumptions, and most bridges have a UX which tricks the user into assuming they're secure. Every new L1 yield hype cycle has incurred enormous use of bridges. Security in this case is siloed: each bridge has to secure itself independently, using multisigs, collateral, auditing.
In contrast, all transactions on Axelar are game-theoretically secured by the collateral backing its proof of stake network. Meaning the security of all ecosystems, bridges and applications sending messages over Axelar can sum their security together.
After the asset bridge, the Axelar and its community will begin releasing buckets of cross-chain applications, which are going to reveal how cross-chain will move crypto UX into the 21st century.
Imagine having one wallet for everything. You can buy an NFT on Stargaze using your Avalanche wallet. You can use one wallet key to put margin and trade on any exchange. Yield apps send your yield back to your single address, instead of needing you to wait for 5 withdrawal and bridging transactions to go through. Only one seed phrase necessary (more if you prefer of course).
Axelar will allow us to do all these things without finding and installing another wallet extension. This is what life will look like. And sooner than you think.
Generalised cross-chain capability is going to be critical for scaling decentralised ecosystems. I’m super excited, and everyone and their dog in this industry should be too.