This means that crypto users are often limited to one network or have to go through lengthy processes to leverage the functionalities of various blockchain networks. The Value Proposition of Cross-ChainsĪt the core, blockchain ecosystems like Bitcoin and Ethereum have been designed to operate independently. Several cross-chain projects have already launched mainnet solutions and connect various blockchain environments, including Layer-1 to Layer-2 and Layer-2 to Layer-2 networks. While there has been much hype on Layer-2 solutions, cross-chain networks have been quietly growing and now closer than ever to integrate the blockchain ecosystem. Recent months have been fascinating with Layer-2 chains launching on Ethereum and Binance Smart Chain (BSC), amongst other Layer-1 networks. Some of the scalability solutions that have since come up include Layer-2 chains and cross-chain bridges the former niche focuses on solving scalability while the latter solves interoperability. However, the growth of the crypto ecosystem is now challenging the capacity of Layer-1 blockchains, forcing innovators to debut scalability and interoperability solutions. These are the pioneer chains and enjoy significant dominance in market capitalization and adoption. The Bitcoin and Ethereum blockchain ecosystems are Layer-1 blockchains, given that transactions and operations are settled on the base layer. Unlike traditional finance, where transactions take place off-chain, the crypto ecosystem has introduced public ledgers such as Bitcoin and Ethereum’s blockchains that anyone can track. This fundamental building block facilitates on-chain transactions within the crypto ecosystem, allowing stakeholders to validate or verify these transactions. Blockchain networks are gradually changing the nature of transactions through on-chain infrastructures.
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