What are the ways to play based on cross-chain system?

Cross-chains are a very important part of the cryptocurrency industry.

What are the ways to play based on cross-chain system?

Some time ago, a hot DEX model was born, called O3Swap, which is a DEX based on cross-chain system. With the birth of this product, I feel that I need to explain to you, what are the ways to play based on cross-chain system?

Because this issue actually involves a problem of asset interoperability and application diversity. To put it in a small way, it involves the problem of ease of use and convenience for users.

So it is important for the future blockchain industry and is a very important component.

The four levels of cross-chain
First of all, let’s define the category of cross-chain. There are four levels of cross-chain.

The first level is the gateway cross-chain, which is the simplest, any developer of two chains, the assets on one side to the central system, and then to the other chain, the effect is very similar to the current use of exchanges to exchange assets and then withdraw coins, this network may also be a wallet form. This network may also be in the form of a wallet. The central system is required to have the corresponding token reserve.

The second level is layer 2 cross-chain, which is also a smart contract cross-chain, running a smart contract on the target chain, completing asset verification through relay, that is, book confirmation, and then completing the transfer of assets across the chain.

The third level is layer 1 cross-chain, which requires a unified communication protocol in layer 1, such as the chain of COSMOS ecology and the parallel chain of Boka, which have a set of standard communication protocols on the bottom layer between them.

The fourth level is the cross-chain of layer 0, which is the cross-chain of system layer. It is the basic network communication layer to form a standard unified cross-chain. Like TCP / IP and HTTP protocols, it forms a standard consistency from computing resources and communication networks.

Of these four layers, it is two or three or four that can achieve rich play. But what can be realized at present exists in the second three. That is, layer1 and layer2.

It is mainly these two layers that can realize the interaction of the chain and build virtual machines to achieve a certain sense of “Turing-complete”, so that the development of DApp has some possibilities.

Only the difference between the two in the part of building the foundation will make the application have some limitations, in the following we consider in detail.

The importance of layer2 cross-chaining
First, let’s talk about the importance of layer2 cross-chain. For bitcoin, ethereum and other public chains with layer1, the process of cross-chaining two chains by means of other chain verification is relative to layer1 and layer2. This layer1 is the target two chains. And layer2 is the other chain that verifies the cross-chain.

The key thing is that layer2 is the chain that helps to verify the security of transaction information on both chains, which requires, or can guarantee the security of information transmission through such techniques as zero-knowledge proof, etc. so that information transmission is okay and transactions can be confirmed.

In this way, we can see that in fact, the target two chains of cross-chain and the chain responsible for cross-chain verification are relatively independent, which is why layer2 is split.

Based on this cross-chain process, if we want to develop an application, we usually build a virtual machine on the validation chain, and then the DApp based on the validation chain can realize more interactions, such as directly using the USDT of HECO to buy the assets on the BSC chain, or pledging the assets on HECO to the BSC to generate revenue.

This is a play based on the so-called “layer2 layer cross-chain”. The application of this play will have some operational problems because the two chains of the target chain only pass the confirmation message to each other through the verification chain, but not the protocol or standard unification between the two chains of the target chain.

It may use such cross-chain process, many operations, waiting time is longer, or there will be some lag, etc.

The big pattern of Layer1 cross-chain
The two representative projects of these layers are Cosmos and Polkadot, both of which are expected to have very large structures. The two projects are expected to be very large in structure, Cosmos is the interoperability of 10,000 chains, and 10,000 chains means the projects developed through Cosmos SDK, which will do information interoperability according to IBC protocol. polkadot is to let parallel chains develop projects through Substrate, but the focus is on parallel chains to participate in the verification of relay chains to share security with each other.

Seeing here, the so-called layer2 hierarchical cross-chain and layer1 hierarchical cross-chain, it is obvious that the relationship between the target chain and the verification chain, is different.

In the previous paragraph, the target and verification chains are relatively independent, but in this layer, with the verification chain as the center, the target chains are interconnected with each other. If layer1 is defined at this time, the layer2 validation chain in the previous paragraph becomes the layer1 center, and the target chain becomes the layer2 connected part.

So that the structure is more massive in the layer1 level of cross-chain, because the chains are connected together. And when connected together in this way, the interoperability of standards and rules establishes better security and allows all processes to proceed more smoothly. When going to develop DApps based on this structure, the possibility of development depends on the ability to verify the development of the chain. For example, Polkadot and Cosmos, for the development of DApps, it is basically possible to achieve any kind of application form.

Which cross-chain application forms are in strong demand?
In these cross-chain models, what we need most is to have a directed understanding of those strong requirements, so that when we have such cross-chain requirements, we can find the corresponding methods.

First is cross-chain transfer, this part, is to increase assets in the target chain account, and decrease assets in the original chain account, this demand is very simple to implement, through the operation in the wallet, a contract can be executed, which generally use hash lock or verify the block header way to do confirmation.

There are often such operations between Bitcoin and Ether, most of which are executed through gateways.

Secondly, there are cross-chain transactions, which mainly occur in that the transactions of assets are swapped between different chains, or cannot be used in different chains because of different issuance protocols of stable coins such as USDT. Currently, many users may encounter the problem of whether USDT and DAI on Ether can be used to buy tokens on HECO and on BSC in DEX.

Finally, there is cross-chain DeFi, which mainly locks assets and then generates new assets, such as single-coin mining and dual-coin mining in liquidity mining. There is also deposit management that provides raw funds for lending. Such applications will solve the user’s threshold problem and make the operation a little easier.

These three are very strong demands, and beyond these, there are cross-chain demands for assets such as NFT cross-chain and cross-chain demands for certain services.

The cross-chain demand of other assets and token cross-chain are in the same mode, but the cross-chain of service and technology, what is needed is the encapsulation and sharing of technology as well as service, here the DApp application will be reflected in layer1 level cross-chain, for example, in the boka ecology, one of the parallel chains can just provide certain development service, privacy computing service, single SaaS module service and so on.

Through cross-chain, these technical capabilities will be exported out, while some special DApps can be formed, such as distributed storage, privacy encryption DApps.

For both Cosmos and Polkadot, such models are bound to emerge in the future. When these applications appear, we will not just understand blockchain and cryptocurrency as a tool for issuing coins, but an infrastructure with clear design ideas.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/what-are-the-ways-to-play-based-on-cross-chain-system/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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