Back to the drawing board: rethinking interoperability

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Picture the scene: you are about to deposit your savings into a new bank. But as you fill out the forms, you come across a news story about a $624 million theft caused by a devastating attack on the bank’s computer system.

You start looking at other banks to find a safer alternative, but things are not that easy. You see, there is no way to accurately distinguish or evaluate each bank’s back-end systems, and thefts are commonplace; in fact, a staggering $2.9 billion was stolen from banks between 2021 and 2023 alone due to similar back-end problems.

You’d be forgiven for being a little hesitant about your next move!

It’s hard to believe, but the above is true. But it’s not the banks that are subject to these high-profile, embarrassing breaches… it’s the interchain bridges.

We’ve seen breaches from just about anything you can think of, from unforeseen consequences resulting from overly complex design to unexpected backdoors and outright fraud. The common thread between all these events is that they are disruptive to people who rely on cross-chain solutions and damage the reputation of the blockchain as a whole.

But when you look beyond the headlines, a powerful truth emerges: Cross-chain infrastructure is essential infrastructure. As long as you continue to believe that blockchain has the potential to change the world for the better and mainstream adoption remains the goal, cross-chain solutions are here to stay. So, let’s take a clear and honest look at the current state of blockchain interoperability.

For the uninitiated, blockchain interoperability is the key to fixing the fragmented and siled nature of blockchains. You see, blockchains, being trustless systems, cannot communicate with other blockchains without some kind of intervention. This is where cross-chain solutions come into play. Cross-chain solutions enable data from one blockchain to flow seamlessly into another. Considering that many of the most exciting and important projects are now being built away from the likes of the Ethereum L1 blockchain, engaging with cross-chain solutions is almost a necessity for users of dApps and defi protocols.

Today, blockchain interoperability is a fragmented state of incompatibility. Numerous competing interoperability projects are each vying for supremacy; It creates bespoke cross-chain products with different security and reputation, which ultimately do nothing more than reorganize the blockchain landscape. This incompatibility between different cross-chain solutions remains one of the great ironies of blockchain. Worse, this incompatibility hinders the ability of users, businesses, and regulators to evaluate the security of each alternative, jeopardizing the widespread adoption of blockchain technology as a whole.

The solution to this is a common framework for interoperability.

Blockchain interoperability cannot be the responsibility of a single project. It needs to be an industry-wide effort. Instead of adopting an “every man for himself” mentality, we need to come together and decide exactly how we want to transmit, receive, and verify data from another blockchain.

Although some may object, adopting a common framework for interoperability need not threaten the business models of existing interoperability projects. Instead, it will form the basis of a maximally secure core infrastructure layer from which projects can build unique products that provide different trade-offs for different use cases. This is the important distinction.

Going back to the startup scenario, in the world of traditional finance we have seen tens of thousands of banks build successful businesses with loyal customer bases by relying on secure, shared infrastructure. Similarly, web2 businesses around the world rely on the Internet protocol suite: a shared framework that enables end-to-end data communication between different network devices on the Internet. A common framework that clearly spells out architectural guidelines and interface definitions for interoperability is the clear way forward. Blockchain interoperability should be the underlying infrastructure first, the product second.

Temujin Louie

Temujin Louie is a communications expert with over a decade of experience driving the adoption of transformative digital technologies. His encounter with blockchain began in 2012 during his master’s degree at the London School of Economics and Political Science, where he studied the impact of Bitcoin on existing power structures. Temujin is an expert in blockchain interoperability. He has a rare ability to transform complex technological concepts into compelling narratives. He has served as an important bridge between the world of technology and the wider public, offering his unique insights and strategic acumen to both technology start-ups and global multinationals. Temujin joined Wanchain in March 2021 and serves as Wanchain’s CEO.