Multichain solutions will transform the blockchain space from a “interesting new technology” to a critical, fast-growing industry.
Some estimate that the blockchain industry market will be worth more than $21 billion by 2025. The total market capitalization of the cryptocurrency market has already surpassed $1.9 trillion. An ecosystem that was once defined by its close-knit community and exclusivity is now reaching governments, businesses, institutional investors, and individuals, all of whom are becoming more optimistic about the changing landscape.
With this newfound popularity, a fork in the road has appeared. We have reached the point in adoption where the number of users utilizing decentralized technology has surpassed the technology’s functionality. As a result, networks are frequently congested, and solutions are in high demand.
Many of the impediments we’re facing could be easily overcome with scaling solutions like bridges, parachains, and other features that create seamless transitions for Web 3.0 users and rely solely on a shared vision of a multichain approach to the next wave of blockchain adoption.
The Ethereum Scalability Challenge
Almost all DeFi projects are now built on the Ethereum blockchain, which has become the standard default blockchain for many decentralized applications (DApps) and protocols. Scalability on Ethereum, on the other hand, has presented numerous challenges. Costly gas fees, a complicated onboarding process, and unnecessary repetition and obstacles for developers aiming to create new DApps and accompanying products are among the pain points that have slowed adoption.
As a result, blockchains such as Binance Smart Chain, Solana, Cosmos, and layer-two solutions like Polygon have recently emerged, quickly catching up and solving some of the problems associated with building on Ethereum. Contrary to popular belief, these solutions are being implemented to provide a multichain approach to building for Web 3.0, not to “kill Ethereum.” The number of blockchains and blockchain projects being built every day is increasing as developers try to capitalize on the technology’s capabilities. The increase is a tacit acknowledgement that no perfect solution will be able to address all blockchain needs at the same time.
Rather than competing in a multichain world, we have the ability to facilitate and interconnect new chains in order to improve the overall user experience. A multichain ecosystem would enable anyone to build anywhere. It relies on cross-chain solutions, some of which are already in use. Solutions for Ethereum Virtual Machine compatibility are also becoming important pillars of the ecosystem. These solutions enable different blockchains to communicate with one another without the use of intermediaries, much like the internet does today.
Learning from the internet’s evolution
Like the internet before it, which was once disjointed and had its own set of scaling issues, blockchain technology must evolve from its current state — isolated chains — to a connected ecosystem. This will allow new and inexperienced users to reap the full benefits of ledger technology. The goal is to construct for commercial use.
DApps are now complex and expensive, in the same way, that the World Wide Web was once described as “slow” and “crude.” Unlike the fluid experience provided by modern websites and apps such as YouTube or Instagram, the blockchain experience is defined and experienced by each moving part. As a result, actions that should be seamless become fragmented. Multichain technologies will transform the experience from complicated chain-to-chain movements to continuous activities in which the end-user has no idea which chain they are operating on.
At the moment, we can only speculate on what this might look like, but we do know that it has the potential to revolutionize how we use blockchain technology. Take, for example, the use of blockchain in the traditional financial sector. Interoperability would make interactions between banks using different blockchains too complicated, effectively cutting off any communication between customers who bank using different blockchains. If these blockchains were interoperable, data transmission from one to the other would be not only possible, but also secure and faster.
If history is any guide, the natural evolution of Web 3.0 will be the ultimate connector of on-chain communication and data-sharing. Whereas Web 2.0 made the internet more interactive, Web 3.0 will make it more accessible, inclusive, and semantic.
A future with multiple blockchains
Taking control of the existing blockchain complexities is critical to transforming blockchain into a high-growth industry.
Consider Ethereum and other major layer-one blockchains to be cities. They are more congested and more expensive, but they provide certain advantages. Layer-two blockchains and sidechains, on the other hand, are more like the suburbs. They are less crowded and may provide less security. Users could have the best of both worlds if there was a proper means of fast transportation between these communities.
To prepare for the mass adoption of Web 3.0, which will result in an influx of over a billion users, we must be prepared to adopt a multichain approach, which will eliminate complex transactions and ensure a frictionless experience for end users.