Right now, your DeFi product has to be omnidirectional to be competitive – that’s the hard (and exciting) fact of 2021. Whether you’re building wallets, renting services, or playing DeFi games, your target audience knows there’s more to it than that is crypto space as Ethereum. And they expect you to deliver the best of all worlds.
There always seems to be a debate about which blockchain is the best foundation for projects. Advanced security, low transaction costs, and high speeds – there will always be a chain that offers the bigger advantage. As speculators debate the next potential “Ethereum killer,” a new multi-pronged reality is forming with less obvious competitive implications.
Instead of a doggy-eat-dog framework, the future of blockchain and DeFi will favor products that merge into a collaborative, multi-user solution and ultimately forget about products that remain isolated.
This trend is driven in part by the Polkadot and Kusama ecosystem, which is based at its core on a multi-pronged philosophy. The parachains connected to the relay chain communicate with one another without any problems, which raises the bar even higher for the entire room. With the second series of parachain slot auctions just starting, they continue to set the standard for the multi-sector industry.
Projects that make it easier for the average user to connect more systems – like the Moonbeam protocol and the Phantom wallet – are raising millions of dollars to simplify this new omnidirectional reality for users. But how do you deal with it as a developer?
We can clearly see that the market is shaped by the needs of the users. Depending on their needs, your users are turning to blockchains that serve them better – and the platforms that give them access. As a result, projects that support multiple chains gain larger audiences and greater liquidity. This means that your DeFi product must support at least Ethereum and a “real” blockchain – there are established market leaders in terms of trading, staking, tokens that are not available (NFT) and more. And the more threads you can work on, the better.
As a developer, pursuing these multi-pronged goals, you can encounter a number of obstacles.
Related: How much conspiracy is behind Kusama’s parachain auctions?
Obstacles to the construction of multihain
High costs: Suppose you want to create a cross-chain bridge that needs to run a large number of nodes for all of the chains that you want to connect together. It’s expensive and very expensive in terms of maintenance. It can become expensive for a developer to build and run a node on a single blockchain. Now imagine you have to connect two, three, or ten.
It becomes extremely difficult in terms of hardware, maintenance and access to capital. You will need more resources and investment to get started unless you can find other inexpensive solutions.
Security challenges: Before the recent bridging hacks, security remains one of the biggest challenges with multimodal – when you exchange assets, there are more opportunities for hackers. If we look at the recent PolyNetwork incident, we can see that bridges can become extremely vulnerable.
Hackers discovered network weaknesses in Poly’s inter-chain messaging system and exploited them to steal an estimated $ 600 million in user funds. This is an important lesson for new DeFi multihain solutions to understand the consequences of security failures.
Complex classes: Of course, connecting and integrating blockchains adds many levels of complexity and workarounds that are required to connect different chains. Each series offers new properties, mechanics and nuances that builders have to get used to. This could mean that DeFi organizations need to reach a wider talent pool in order to gain access to a wider range of skills. Blockchains are constantly evolving, and so should you.
Despite the increased hurdles and difficulties that the reusable construction brings with it, this is crucial for the future success of DeFi products. There can be no isolated products on the Internet, 3. because they do not exist in a vacuum, but in a decentralized economy of the new generation. Projects need a robust and networked infrastructure in order to apply effectively in this economy and to inspire a new audience. But how do we get there?
We need to provide developers with easy and streamlined access to nodes, APIs, and support for a growing number of blockchains. With more build options, DeFi developers can break down barriers to entry and contribute to the next generations of blockchain and finance. The faster we break down these barriers, the smoother our next steps towards better user experience and mass adoption will be.
Chandler tune is Co-Founder and CEO of Ankr Network, a 3rd San Francisco-based website infrastructure company and winner of the Forbes “30 Under 30” award. Previously, he was an engineer at Amazon Web Expert Services.