Introduction

Interoperability can be likened to a universal translator, allowing seamless communication between people speaking different languages. When applied to the blockchain domain, it opens a plethora of possibilities and opportunities. Interoperability is crucial because it enables disparate blockchains and decentralized applications to exchange information seamlessly. This not only enhances the functionality and value of blockchain networks, but it also fosters collaboration, leverages their individual strengths, and fosters wider adoption of blockchain technology by making it more accessible and user-friendly for developers and users alike. One of the most frustrating experiences in Web 3.0 is having to create different wallets for each new chain and sending funds to each respective address. This post aims not to delve into the complexities of blockchain interoperability, but rather to provide an insight into its mechanics. The key facets to focus on are efficiency, security, scalability, flexibility, and decentralization.

• ⚡️ Efficiency: Efficiency refers to the ability of a system to perform its functions quickly and with minimal resources.

• 🔒 Security: Security refers to the ability of a system to protect against unauthorized access, manipulation, or destruction of data or assets.

• 🚀 Scalability: Scalability refers to the ability of a system to handle increased load and traffic as it grows in size and complexity.

• 🧩 Flexibility: Flexibility refers to the ability of a system to adapt to changing requirements and use cases. In the context of blockchain systems, flexibility often refers to the ability to support different consensus mechanisms, token standards, and smart contract languages.

• 🌐 Decentralization: By making is decentralized the process can become a censorship resistant protocol.

How Interoperability Works

There are 2 types of bridges which are trustless bridges and  trusted bridges. Trusted bridges require users to place their trust in a central entity for transfers. On the contrary, trustless bridges operate on smart contracts on both chains, eliminating the need for a trusted intermediary. The community generally prefers trustless bridges as they align with the fundamental principle of blockchain: anything that can be coded should be, so that there are no actors to rely on. However, trustless bridges come with their own drawbacks, such as high gas fees.

When building bridges it is typically easier to build bridges that rely on same infrastructure and smart contract functionality. For example, Ethereum - Optimism bridges are easier to build compared to Ethereum - Solana bridge, since Solana uses different smart contract systems. For instance, Ethereum uses a Turing complete language called Solidity for its smart contracts, while others like Solana use different languages like Rust or C. So the bridger must know both contract languages and their technical nuances. Furthermore, the bridge needs to be designed such that it can effectively manage the state transition functions of both chains, which can be a complex task given the differences in these functions across different blockchains. Consensus Mechanisms, Chain Security and Standards, Scalability & Performance, Synchronization & Finality. Each plays a critical role in ensuring efficient and secure cross-chain transactions.

At the most fundamental level, data/asset transfers between blockchains require two components. A Light Node, which operates on both blockchains connected by the bridge, and Relayers, which continuously monitor for transactions to relay across chains. Running Light Clients can be resource-intensive, particularly on chains like Ethereum. Understanding these 2 components will make us better appreciate a great interoperability protocol.

1. Light Node (Light Client): A light node, also known as a light client, is a version of the full node that doesn't maintain the entire blockchain history or state. Instead, it only stores the bare minimum necessary, such as block headers, to verify transactions. Light nodes are useful in interoperability because they can quickly check the state of another chain without requiring substantial computational resources.

2. Relayers: In the context of blockchain interoperability, relayers are entities that relay or pass information between two different blockchain networks. They monitor one chain for certain events or transactions and relay this information to another chain. They act as messengers, picking up and delivering information, which can be a transaction or any other data packet, across the bridge between two chains.

Problems

Given the key points of bridge creation outlined above, several challenges arise when striving to achieve those goals. In this section, we discuss some of the key problems including security risks, system complexity, scalability issues, standardization hurdles, governance and legal issues, privacy concerns, and high operational fees associated with interoperability. The aim is to provide a comprehensive understanding of these challenges and why they matter in the broader context of achieving seamless blockchain interoperability.

1. 🛡️ Security Risks: Interoperability can introduce new vulnerabilities. For example, a less secure blockchain could potentially expose a more secure one to risks if they're interoperable. The secure blockchain could become a target for attacks due to the vulnerabilities of the less secure one.

2. 🌀 Complexity: Achieving interoperability between different blockchain systems can be technically complex due to the differences in their protocols, consensus mechanisms, and data formats. Developing and maintaining bridges or other interoperability solutions between multiple blockchains can be a daunting task.

3. 📈 Scalability Issues: Interoperability could exacerbate scalability issues. If multiple blockchains are interoperable and one experiences a surge in transactions, it could potentially slow down the others.

4. 📏 Standardization: There's a lack of standards for blockchain interoperability. The Interledger Protocol (ILP) and the Blockchain Interoperability Alliance are working towards this, but much work remains to be done. The absence of universally agreed-upon standards makes it harder to achieve full interoperability.

5. ⚖️ Governance and Legal Issues: Different blockchains have different governance models, and ensuring coherent decision-making across interoperable chains can be challenging. Additionally, the regulatory landscape for cross-chain transactions is still unclear.

6. 🔒 Privacy: Interoperability might lead to privacy issues. When chains interact, there may be a risk of revealing more information than intended.

7. 💰 High Fees: Maintaining light node's on both blockchains can we highly costly for the bridging protocol, as the storage and computational cost increases over time.

Interoperability Projects

In the following sections, we delve into some of the major interoperability protocols and projects shaping the future of cross-chain communication, including the Inter-Blockchain Communication Protocol (IBC), the Polkadot Ecosystem with its Cross-Chain Message Passing (XCMP), LayerZero's Ultra Light Node in the Ethereum Ecosystem, Succint's Telepathy that brings Zero-Knowledge Proofs to interoperability, and Polymer Labs' zkMint solution. These advancements are not just redefining how blockchains interact, but are also steering us towards a more connected and efficient multi-chain future.

Inter-Blockchain Communication Protocol (IBC)

It started with Tendermint core contributor of Cosmos developing IBC for transfering assets across different blockchains. It became the standart for passing messages between blockchains.

Inter-Blockchain Communication Protocol (IBC) allows independently developed blockchains to natively communicate with each other and exchange value, particularly tokens, which makes them interoperable. The connected blockchains do not need to communicate with each other directly. Instead, they can send packets of information via dedicated channels using smart contracts to connect to the chains. The data is sent via a dedicated channel by a trustless relayer and then authenticated once reaching the destination chain. IBC can be used for cross-chain applications including cross-chain smart contracts, messaging, NFT transfers, oracle data feeds, and more.

The Inter-Blockchain Communication (IBC) protocol uses two main components to enable cross-chain interoperability:

1. Dedicated Channels: IBC uses dedicated channels, created using smart contracts, to securely and efficiently transmit data and messages between different blockchains. These channels can handle a high volume of transactions.

2. Trustless Relayers: These relayers act as intermediaries between blockchains. They are responsible for transmitting data packets across the dedicated channels. Trustless relayers are incentivized to relay information accurately and promptly, and their actions are monitored by the participating blockchains to prevent malicious behavior. This approach maintains security and integrity while enabling cross-chain communication and interoperability.

Cross-Chain Interoperability Protocol

Polkadot Ecosystem

The goal of the Polkadot ecosystem is to create a decentralized and interoperable network of blockchains that can communicate and exchange data with each other. This allows for greater scalability, security, and innovation in the blockchain space.

Cross Chain Message Passing (XCMP)

XCMP (Cross-Chain Message Passing) is a protocol used in the Polkadot ecosystem for communication between different parachains. It works by establishing a messaging channel between two parachains, allowing them to securely and efficiently exchange information. By employing a queuing mechanism and a message format called XCM (Cross-Consensus Message), XCMP ensures trust-minimized, guaranteed, and ordered delivery of messages between parachains. This enables seamless interoperability, allowing various blockchain networks to work together and share resources, assets, and data within the Polkadot ecosystem.

Ethereum Ecosystem

LayerZero - Ultra Light Node

Ultra Light Node (ULN) performs the same validation as on-chain light nodes BUT instead of keeping all block headers sequentially, they are streamed on demand by decentralized oracles.[Deadalus].

The Ultra Light Node (ULN) is a new approach to cross-chain interoperability that combines the security of a light node with the cost-effectiveness of a middle-chain solution. Instead of keeping all block headers sequentially, which is expensive, the ULN streams block headers on demand from decentralized oracles. LayerZero is an on-chain endpoint that runs the ULN, which is configurable by users. When a Dapp wants to send a message from Chain A to Chain B, the message is routed to Chain A's endpoint, which then pings an oracle and a relayer. The oracle forwards the block header to Chain B's endpoint, and the relayer submits the transaction proof. The proof is then validated on Chain B, and the message is forwarded to the end address. This new approach to cross-chain messaging is secure and cost-effective, making it an exciting development in blockchain interoperability.

Bringing ZK to interoperability

Succint - Telephaty

Succinct's Telepathy approach interoperability by using a decentralized and secure zkSNARK interoperability protocol. Built with zkSNARKs, Telepathy allows developers to trustlessly communicate from Ethereum to any other chain with the security of Ethereum's light client protocol, without resorting to less-secure multisigs or centralized actors. It enables interoperability without compromise by using a succinct "proof of consensus" that allows smart contracts on other chains to directly validate Ethereum state by running a gas-efficient light client. The protocol is entirely permissionless and the zkSNARK circuits are open source, so anyone can generate the proofs needed to update the light client.

Succint aims to address the computational cost involved in running on-chain light clients of IBC. Thier proof-of-consensus allows for a more gas-efficient light client by using zkSNARKs. Telephaty at the moment work with Ethereum and 8 EVM (Ethereum Virtual Machine) compatible chains, namely Goerli, Gnosis, Polygon, Binance Smart Chain, Avalanche, Arbitrum, and Optimism. The protocol leverages Ethereum's light client protocol and zkSNARKs to enable trustless communication across these EVM-compatible chains. In the future, it aims to work with non EVM compatible blockchains

Polymer Labs

zkMint, Polymer’s solution that optimizes IBC across all major chains.

Polymer, a multi-chain IBC transport hub, has introduced zkMint, a solution that optimizes inter-blockchain communication (IBC) across all major chains. The solution aims to prove Tendermint consensus in the Ethereum Virtual Machine (EVM) and address the challenges of verifying consensus proofs on-chain, including efficient light client algorithms and practical gas costs. After evaluating several potential solutions, the team settled on modifying Tendermint's consensus algorithm to be SNARK-friendly, resulting in on-chain costs of 300k gas, a significant optimization of ~98.8%. zkMint is Polymer's multi-signature Tendermint BFT consensus engine that can produce multiple signed headers per round of consensus and allows Polymer to optimize the header format for any execution environment it connects to.

‍

Thorchain is a decentralized cross-chain liquidity protocol that enables users to swap assets between various blockchain networks. It supports several popular blockchain networks such as Bitcoin, Ethereum, Binance Chain, Avalanche, Cosmos Hub, Dogecoin, Litecoin, and Bitcoin Cash.

The protocol achieves this interoperability by utilizing a combination of smart contracts, liquidity pools, and incentivized node operators. Liquidity providers contribute their assets to liquidity pools, and these pools enable the swapping of assets across different blockchains. Node operators facilitate the transactions and receive rewards for their services.

Additional Notes & Projects

In addition to the projects mentioned in this article, there are several other initiatives focused on achieving blockchain interoperability, including Allbridge, Via, Across Protocol, Cross-Chain Bridge, Multichain, Squid, Axelar, Nomad, Wormhole, Celer IM, anyCall, Hyperlane, and deBridge, among others. Each of these projects has its own unique approach to achieving interoperability, with varying degrees of success and adoption within the blockchain community. Some projects allow atomic swaps which is cross-chain trading, is a technology that enables the direct peer-to-peer exchange of one cryptocurrency for another without the need for a trusted intermediary, such as a cryptocurrency exchange.

• Allbridge

• Across Protocol

• Multichain

• Squid

• Axelar

• Wormhole

• Celer IM

• anyCall

• Hyperlane

• deBridge

• Darwinia Network

• Shimmer Network

• Assembly.ch

References

1. https://medium.com/layerzero-official/layerzero-integrates-chainlink-oracles-expanding-decentralization-of-the-omnichain-communication-2d9963678483

2. https://medium.com/layerzero-official/layerzero-as-an-ibc-transport-layer-5a676fd2a446

3. https://blog.li.fi/layerzero-a-deep-dive-6a46555967f5

4. https://chain.link/cross-chain

5. https://docs.telepathy.xyz/protocol/proof-of-consensus

6. https://blog.succinct.xyz/blog/telepathy

7. https://tutorials.cosmos.network/academy/3-ibc/1-what-is-ibc.html

8. https://blog.cosmos.network/tagged/byzantine-fault-tolerance?gi=c40adfe741a6

9. https://blog.connext.network/the-interoperability-trilemma-657c2cf69f17

10. https://medium.com/the-interchain-foundation/eli5-what-is-ibc-def44d7b5b4c

11. https://twitter.com/daedalus_angels/status/1504451712525950980?lang=en

12. https://medium.com/evmos/the-evmos-manifesto-7fe5d1ab0d67