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What Is Cross-Chain? How Does It Work?

Updated 2023-07-21 15:56:47


Normally, cross-chains play as an efficient interoperability among various blockchain networks, allowing the transfer or exchange of data and information between networks. Moreover, cross-chain technology focuses on overcoming the limitations of isolated and individual networks by creating bridges or protocols that allow communication and interoperability. In this article, the definitions of cross-chain technology and other interesting facts about cross-chain technology will be discussed briefly.


What is Cross-Chain?

Cross-chain is an interconnection of two or more separate blockchains


Cross-chain is an interconnection or relation of two or more completely different separate blockchains. Cross-chain can enable the transfer of digital information and data throughout the blockchain ecosystem. This technology eliminates the necessity for a trusted mid-man or third party in between. It can serve an important play in blockchain network and interoperability which can result in greater Web 3 adoption. There are various applicable cases for cross-chain technology like asset transfer via cross-chain bridges, cross-chain oracles, and cross-chain smart contracts.


Why is Cross-chain necessary?

Why is Cross-chain necessary?


With the gradual increment and enhancement of blockchain, the interdependence of blockchains is becoming more critical. Thus, efficient and secure cross-chain solutions are required for the future of Web3. As it is above-mentioned, it is relatively necessary for the efficient and secure transfer of digital information through different blockchains. Numerous blockchain technologies functioned to be non-custodial and trustless. This means that users will be able to control and own their funds and data at all times.


Blockchain facilitates interoperability in a more safe, secure, and decentralized way. Some other cross-chain technologies focus on convenience and usability in decentralization and security. Cross-chain bridges will serve a critical role in people’s finances like transactions between banks and trusted third parties. Moreover, DeFi ecosystems cannot be able to function without cross-chain technology. This is the fact that cross-chain is a central party to enabling token swaps and data transfers among various blockchains. Furthermore, cross-chain improves and enhances the efficiency of blockchains which will result in liquid communications across blockchains.


2 Types of cross-chain

Within the monarchy of cross-chain solutions, two significant types have gained importance: isomorphic cross-chain and heterogeneous cross-chain. The characteristics and applications of these two will be discussed briefly below.


Isomorphic Cross-chain

Types of cross-chain - Isomorphic Cross-chain


Isomorphic cross-chain technology defines as an approach where the linked blockchain networks share the same protocols, consensus mechanisms, and smart contract languages. This approach accomplishes interoperability by making a seamless connection between blockchains with specific features.


3 Benefits of Isomorphic Cross-chain

1) Protocol compatibility

Isomorphic cross-chain solutions and systems will make sure that the linked and connected blockchains can know and communicate with each other using shared protocols and standards.


2) Consensus Mechanism

This technology makes sure consensus arrangement among the contributing blockchains. It also enables the blockchains to legalize and agree upon the transferred digital assets and information.


3) Smart Contract Integration

This solution empowers the execution of smart contracts throughout the linked blockchains, providing an integrated environment for decentralized applications to cooperate and function.


Applications of Isomorphic Cross-chain

Token Transfers

Isomorphic cross-chain solution simplifies the efficient transfer of tokens and digital assets throughout companionable blockchain networks. It enhances liquidity and allows broader asset accessibility.


Data Sharing

Isomorphic technology lets users have secure and transparent data allocation among blockchain networks with the assistance of supply chain management, identity authentication, and decentralized data exchanges.


Heterogenous Cross-Chain

Types of cross-chain - Heterogenous Cross-chain


Heterogeneous cross-chain technology is also called multi-chain cross-chain. It connects various blockchains with different protocols, consensus mechanisms, and smart contracts. These different kinds of blockchains will have efficient communication and interoperability by the several special features of Heterogeneous cross-chain.


3 Benefits of Heterogeneous cross-chain

1) Interoperability

Heterogeneous cross-chain technology creates bridges that enable the transfer or delivery of digital assets and information among dissimilar blockchain networks.


2) Chain Independence

Interlocked blockchain in a heterogeneous cross-chain network holds its individuality, preserving its consensus mechanisms, governance models, and smart contracts.


3) Particular Functionality

Heterogeneous cross-chain enables blockchains with particular capabilities and advantages to operate and leverage one another’s functionalities, leading to better privacy and efficiency.


Applications of Heterogeneous Cross-chain

Decentralized Finance (DeFi)

Heterogeneous cross-chain serves as a significant factor in the interoperability of DeFi protocols. It also allows the unified movement of assets, liquidity function among blockchain-based platforms, decentralized exchanges, and yield farming applications.


Asset Tokenization

Heterogeneous cross-chain enables the tokenization of real assets across different various blockchains. It also enables the representation and transfer of assets such as real estate or art things in a safe and secure way.


Cross-Protocol Communication

This technology supports atomic swaps and cross-protocol communication by allowing users to exchange and transfer assets and interrelate with decentralized applications through different blockchain networks.


How Does Cross-Chain Work?