Blockchain interoperability is all about different blockchains being able to talk to each other. At its core, this relies on cross-chain messaging protocols, which let blockchains share and access data from one another.
These protocols pave the way for cross-chain decentralized applications (dApps), allowing a single dApp to operate seamlessly across various smart contracts on different blockchains. Unlike multi-chain dApps, which simply run the same app on several blockchains without any interaction between them, cross-chain dApps create a more connected experience.
Cross-chain dApps using messaging protocols can have some limitations. For instance, token bridges are mainly designed to move tokens from one blockchain to another. On the other hand, arbitrary data messaging protocols offer broader cross-chain capabilities, allowing for more sophisticated dApps. This includes things like cross-chain decentralized exchanges (DEXs), decentralized money markets, NFTs, decentralized autonomous organizations (DAOs), and a range of modular applications.
Types of Interoperability
To kick things off with classifying blockchain interoperability solutions, it’s a good idea to check out the most common cross-chain interactions.
- Token swaps
- Token bridges
- Lock and mint token bridges (i.e. IOU)
- Burn and mint token bridges (i.e. native)
- Lock and unlock token bridges
- Native payments
- Contract calls
- Programmable token bridges
To enable these cross-chain interactions, there are four main interoperability solutions that help verify the state of a source blockchain and send the resulting transaction to the destination blockchain. These two tasks—state verification and relaying—are crucial for making most cross-chain interactions happen.
Conclusion
Blockchain interoperability is a big part of the next frontier of the ever-evolving Web3 landscape. Interoperability protocols like CCIP can not only help unlock complex applications that function as a unified entity across many blockchains, but they can help empower enterprises, institutions, and governments to securely access any on-chain environment from a single interface. Both functions will be key in developing next-generation dApps that are accessible through more traditional user interfaces, accelerating the rate of Web3 adoption.