March 21, 2023

This post was originally published on Router Protocol

With just 2 days to go for the unveiling of Router’s Gen III Interoperability Infra, it’s worthwhile to delve into the previous generation of cross-chain solutions.

But why did the need for cross-chain arise in the first place?

As various blockchain ecosystems emerged, several challenges came to fore.

First was scalability. Not all blockchains enjoyed high throughput. So scaling solutions in the form of Layer 2s emerged. But this also meant fragmented liquidity and wrapped tokens. Blockchain networks started building native bridges for movement of liquidity between the parent network and the scaling network. In many ways, even centralized exchanges can be considered as centralized bridges. Then came the evolution of HTLCs (Hash-time locked contracts). In simple terms, these are pairwise bridges that transfer assets between blockchains using wrapped assets. Collectively, these can be referred to as Generation I bridging solutions. Speed and security were both major challenges in this generation.

Second, there was the issue of user base fragmentation. Depending on their preferences, users chose to be a part of a particular blockchain ecosystem. Interoperability became a growing need. This is when Generation 2 bridges came to the picture. Proof of Authority solutions like Router v1 came to the fore. The era of bridge aggregators began. Aggregators like Li.Fi, Socket provided interfaces that could route users to the correct bridge based on the assets they wanted to transfer. While this consolidated the plethora of bridging options available and provided a unified user interface, underlying concerns of security still depended on the bridges themselves. Solutions like Light Client Node based approaches, Optimistic Bridges then came to the fore. LCNs are very expensive to operate and adding support for a new chain could take incredibly long. Liveness constraints of the relayers is also a drawback in the LCN based bridges. Optimistic bridges suffered from high latency. Then we saw the evolution of cross-chain message transfer that in some cases enabled native value transfer. Collectively these can be referred to as Generation II cross-chain solutions.

Third, there is the developer perspective. As a web3 dApp developer, deploying on multiple blockchain ecosystems became a nightmare. Even advanced solutions like generic message transfer capabilities and Ultra LCN based approaches could not make a chain-agnostic dApps a reality. At Router, we’ve achieved it. We refer to this as the 3rd Generation of Cross-Chain. Stay tuned for more!

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