When I entered crypto, I succumbed to the contest between blockchain ecosystems, believing one had to be “better” than others. I have since realized the future of cryptocurrency is bringing with it a variety of platforms that will excel at different things. With the Inter-Blockchain Communication Protocol (IBC), I’ve left behind the days of thinking chains have to compete and embrace a connected interchain future. Let me explain.
Solana, Polkadot, etc. — what do they have in common? They are individual state machines, each trying to achieve something only one has done before: create a sustainable, robust ecosystem of developers, investors and, most importantly, users.
So far, Ethereum shows no signs of slowing. Since beginning the summer of 2020 with an 8% share of the total crypto market, Ether (ETH) has since captured nearly 20% of the market and has remained there.
There is a reason why the first sentence of many pitches for layer-1 solutions includes the term “Ethereum Killer.” It’s the Moby Dick of crypto — the liquidity king. And so, many projects take on the challenge of improving upon Ethereum, to “build it better.” Unfortunately, the first thing is often a “bridge.” Bridges have exposed users to many risks and resulted in a large number of problems. However, most people are blissfully unaware they are exposed to exploits during the process of bridging and for the entire time that bridged assets are held. Most are also unaware they are holding nothing more than an IOU.
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The original token that represents everything they bought sits on its original chain. Meanwhile, they’re trading the equivalent of a piece of paper.
There are obviously exceptions to the rule. At most, good bridges can decrease risks, but the baseline stays the same. Bridges range from centralized to “semicentralized,” and there is one thing they can never do: actually move an asset to a new chain. Why? Because the two individual networks that the blockchain assets are bridged between have absolutely no way of communicating with one another. They speak different languages because most chains were never designed to communicate with one another.
The existence of bridges is a symptom of a “me vs. you” mentality, where chains try to get each other’s liquidity.
The four most expensive decentralized finance hacks in 2022 were all bridge exploits: Ronin, the BNB Smart Chain bridge, Wormhole…
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