An overview
With so many blockchains, each with its own specific protocol, consensus, and networking layer, decentralized applications usually become isolated, and communicating with other applications or infrastructure outside of the underlying blockchain becomes extremely hard due to the complexity of different infrastructure stacks.
In recent years we witnessed many new blockchains that raised the performance threshold of the industry, this brought out new possibilities in terms of scaling for projects and users but also raised a new set of questions for already established applications.
- Is it worth migrating to a new blockchain infrastructure considering the technical, economic, and social implications?
- Will other projects adopt the same approach?
- Should this be a team or community decision?
- Should this be an industry standard?
- Will this become the new status quo?
Answering these kinds of questions is no easy feat since blockchain technology is still very early in the grand scheme of things and many questions cannot be answered yet.
We’ve seen some applications try to solve some of the performance issues of proof-of-work blockchains, usually, by implementing an L2 solution. Uniswap implemented L2 solutions like Optimistic and Arbitrum and OpenSea integrated Polygon. Approaches such as these solve some of the effects, but not the problem.
A new paradigm
A complementary approach to today’s technical standards regarding overall application performance is horizontal scaling, in a nutshell, horizontal scaling allows load distribution between multiple application and infrastructure instances, the higher the load, the higher the instance number, and the smaller the strain on individual instances.
You may now ask how can this be implemented in blockchain infrastructure, the answer, interoperability.
Interoperability allows blockchains to securely exchange data, it provides an end-to-end stateful protocol for reliable communication between blockchains. By having the ability to communicate on-chain, decentralized applications can be abstracted into multiple pieces.
In order to better understand the concept, let’s use an example: DEX’s.
We’ll use Uniswap as our example, Uniswap is a decentralized exchange application that allows users to directly swap tokens between themselves without the need of a middle man, the underlying application makes use of liquidity pools in order to provide the swap. Currently, Uniswap is deployed on the Ethereum Blockchain, which means that the infrastructure resources are shared with other applications on Ethereum and any transaction that interacts with the Uniswap application has to be validated and persisted to the chain alongside other transactions present in the block which are not related to Uniswap.
In the context of an interoperable ecosystem, Uniswap would become its own application-specific blockchain, this way, the infrastructure resources would be allocated entirely to Uniswap’s needs. Additionally, we can take one step further and structure a DEX in a way that every liquidity pool can be an application-specific blockchain, or take a different approach where you can have multiple instances of the liquidity pool running simultaneously. As you can imagine, interoperability broadens the technical possibilities of decentralized applications.
The Future
Upnance’s vision and mission is to build an ecosystem of products and services focused on interoperability. We along with other foundations, companies, and individuals will join efforts in building and maturing new and existing blockchain technology stacks in order to streamline the development, deployment, and maintenance of blockchain applications.
You can learn more about Upnance by visiting our website.
