Multi-chain is a foundational term that promotes blockchain interoperability and decentralization.
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What Is Multi-Chain?
Multi-chain is a foundational term that promotes blockchain interoperability and decentralization. Central to interoperable blockchains is a multi-chain future and the development of cross-chain infrastructure. Of course, the latter is quite different and it is important to understand why. It is also important not to confuse multi-chain with MultiChain, a project that helps organizations to build applications.
So What Is Multi-Chain?
Multi-chain has two possible meanings. First, a cryptocurrency itself can be “multi-chain” if it is available on multiple blockchains. For example, USDC is a stablecoin that can be found on Ethereum, Solana, Avalanche, TRON, Algorand and other blockchains.
Second, a blockchain protocol (also known as a blockchain platform) can also be “multi-chain” if it enables developers to build multiple independent blockchains on top of it. Polkadot and Cosmos are two popular examples of multi-chain protocols.
Multi-Chain vs Single-Chain
Ethereum is a single-chain protocol. It doesn’t allow developers to build independent blockchains but rather supports the creation of tokens and decentralized applications that run on top of a single chain. One of the biggest advantages of having a multi-chain protocol vs a single-chain protocol is scalability. As user demand increases on multi-chain protocols, it’s trivial to spin up a new blockchain that can handle additional transactions.
For single-chain protocols, one popular scalability solution is layer-2 protocols, such as Bitcoin Lightning Network and Ethereum Plasma, which run on top of a parent blockchain rather than in parallel. While layer 2 does increase scalability, this solution is arguably more complex and doesn’t give developers as much sovereignty as multi-chain protocols do.
Existing across multiple blockchains allows for greater scalability, seamless communication and interaction between blockchains while eliminating the need for intermediaries.
Multi-chain technology creates a network for blockchains to communicate simultaneously without needing to move their assets from one network to another.
What’s the Difference Between Multi-Chain and Cross-Chain?
Multi-chain refers to projects that exist across different networks yet share the same underlying security infrastructure. Such projects don’t necessarily have interoperability across chains. This means that users may need to use a centralized exchange to trade assets from one chain to another.
On the other hand, cross-chain is a slightly different concept. Cross-chain refers to the ability to link blockchains that are independent of each other. For example, cross-chain infrastructure may allow users to transfer assets and/or information between two blockchains without the need for intermediaries. Currently, the most common example of this technology is decentralized cross-chain bridges and cross-chain DEXs, which support the trading of crypto assets 1:1 across two or more blockchains. An example of this would be AtomicDEX.
How Does a Multi-Chain Protocol Work?
The underlying blockchain is split into different layers: the consensus layer and the application layer. The consensus layer forms the underlying security infrastructure that allows projects to exist on multiple chains. The application layer lies on top and allows applications to communicate with one another even though they exist as individual ecosystems. By splitting the layers this way, interoperability is created without compromising security.
The Importance of Multi-Chain
Improvements to blockchain interoperability and user experience are fundamental to the wider adoption of web3. Until the barriers between blockchains are eliminated, transferring information and assets between blockchains will forever be a cumbersome process.
Author: Kadan Stadelmann, CTO of Komodo, a leader in blockchain interoperability and atomic swap technology.
Kadan Stadelmann is a blockchain developer, operations security expert, and Chief Technology Officer of Komodo, an open-source technology provider that offers all-in-one blockchain solutions for developers and businesses. Komodo works closely with organizations that want to launch their own custom decentralized exchanges, DeFi platforms, and independent blockchains. Its flagship technology and end-user application is AtomicDEX – a mobile and web-compatible non-custodial multi-coin wallet and atomic swap-powered DEX rolled into one dApp.
Kadan strongly identifies with Komodo’s open-source vision and ideology. His dedication to the Komodo project is founded on an unwavering desire to make the world a better place. In addition to cryptography, blockchain technology, and development, Kadan is interested in literature, mathematics, astrophysics, and traveling.