We should be building cross-chain solutions as if consensus mechanisms are unnecessary — because they are. Blockchain technology has been celebrated for its potential to revolutionize various industries through decentralization, security and transparency. The interoperability of different blockchains has become more complex and costly as the ecosystem continues to grow.
The use of consensus algorithms is essential to individual blockchain networks. This ensures that the integrity and security are maintained by all parties. When these mechanisms are used to create interoperability, such as cross-chain links, they can introduce inefficiencies and risk.
Implementing consensus in interoperability often leads to extreme over-collateralization — sometimes more than 100 times the value of the assets being transferred. To secure the network funds are locked in nodes that act as validator, which ties up huge amounts of capital. As an example, the common bridge pays its validators around $30,000. This amounts to $3,000,000 per month. Incentives and maintenance costs for a group of validators adds to the financial burden.
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This over-collateralization isn’t just expensive; it’s economically inefficient. This total value lock (TVL), a metric often used in DeFi, is highlighted. These numbers can be misleading when it comes time to build bridges. They are presented as successful indicators rather than costs incurred. Although consensus is meant to be a way of ensuring security, this does not mean that interoperability will always remain consistent.
Bridges use non-deterministic data. This means that the same input does not always result in the same output on different chains. The stability of the system will decrease with every additional blockchain that is connected if there’s no consistency. This instability can lead to tokens and transactions getting duplicated or stuck, or even disappearing. According to estimates, billions of dollar have been stolen, including $650 from Ronin’s BNB Chain Bridge, $326 from Wormhole bridge and $566 from Binance BNB Chain.
Lack of consistency hampers DeFi abstractions as well as composability. Bridges are often built on primitives which require hard-forks in order to be modified. This complicates innovation and slows down the development of dapps. Most interoperability systems struggle to scale. As these bridges could be considered as blockchains and have their own consensus mechanism, they add additional layers of complexity. The system is not only slowed down, but there are also more failure points.
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Consensus-based mechanisms for interoperability are not needed and could even be counterproductive. We can reduce complexity and costs by eliminating consensus from cross-chain solutions. In place of using validators, which are not secure or efficient by nature, we could use methods such as deterministic verifications.
Proof and verification mechanisms must be removed from layer-1 smart contracts to achieve consensus-less interoperability. This method reduces bottlenecks such as limited data access across chains. By decoupling from individual layer-1 constraints, dapps are enabled to process data more freely and create additional value without being hindered by consensus-related limitations — benefiting not only blockchains, but most importantly, users.
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The focus on deterministic computing can help interoperability to ensure transactions that are both predictable and verifyable, without the burden of consensus. Security assurances can be provided by techniques like cryptographic validation and refereed delegation. This reduces inconsistencies or errors while improving the overall stability.
The removal of consensus in interoperability does not simply represent a cost saving measure, it is a significant strategic shift for the development of blockchain networks. This paradigm change allows for higher levels of abstraction and efficiency. It also provides more space for innovation. This paradigm shift allows developers to create more complex and reusable dapps.
It is inefficient to rely on the current consensus mechanism for interoperability. We can create a blockchain ecosystem that is more robust, scalable, and efficient by rethinking and eliminating the unnecessary layers of consensus in our cross-chain solutions. The strategic decision not only lowers operating costs, but it also encourages innovation and allows blockchain technology to achieve its transformative potential.
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