As blockchains and other decentralized ledger technologies gain popularity and continue to acquire users, the necessity for chain interoperability will only increase. In order to prevent projects from becoming segregated silos of information, chain interoperability will be required in order to enable communication between incompatible networks. Blockchain interoperability can improve speed and scalability and allow networks to work together in unison. Interoperable networks cooperate in order to potentially achieve thousands of transactions per second. Ultimately, interoperable blockchains could interoperate with traditional systems like SWIFT and bridge the gap between traditional and blockchain systems.
This article will draw comparisons between the most popular interoperability enabled blockchain solutions: AION, Polkadot, and Cosmos. For a full understanding of each of these, read our separate reviews.
The projects discussed in this article are all focused on interoperability and share a similar goal: each project must be able to connect to other networks and communicate with them effectively.
To achieve interoperability in the AION Network, Connecting Networks and Participating Networks are utilized (this is a hub and spoke method). AION’s bridge protocol enables communication between the connecting and participating networks. The AION bridge has validators that confirm transfers between protocols to maintain accountability across the involved networks. These validators are run by users who have a stake in the Connecting Network to help guarantee their honesty.
To establish the right communication platform, each bridge has a set of validators in charge of translating the protocols and ensuring accountability between networks. To perform this validation, a lightweight BFT-based algorithm is implemented to reach consensus and transactions only get approved after ⅔ of the total weighted votes are confirmed.
Similarly to AION, the Polkadot Network has a Relay Chain which acts as the central connector (hub) and Parachains (spokes) which act as the connecting branches. Parachains are simplified blockchains that connect to the Relay Chain for security and to support trustless transactions. Each Parachain is independent and transactions can be executed in parallel across all Parachains while using the Relay Chain for security. Polkadot pools network security, allowing individual chains to leverage the collective security, without having to deal with the scalability issues with downloading the entire network history.
Much like AION and Polkadot, Cosmos achieves interoperability through the “hub and spoke” model. The project utilizes a network of Zones (spokes) which are connected to the main Hub. In Cosmos, much like the other projects mentioned, Zones are independent blockchains connected to the main Hub (central blockchain) and can be written in any coding language while maintaining their own governance structure. Zones have multiple functions in the Cosmos network; they can be independent blockchains as mentioned above or function as bridges between Cosmos and other incompatible blockchains such as Bitcoin.
As demonstrated by the technical summaries above, all three projects utilize a “hub and spoke” method in order to achieve interoperability. Although each project has named their hubs and spokes differently, it does not change the fact that the mechanisms remain the same. All projects mentioned above employ PoS elements or some staking mechanism variant. Overall, the three projects only have minor differences between them in terms of technology and implementation. It will be interesting to see which project becomes the most popular among developers, as this will be a key factor in its future success. However, there is certainly an option where several of the projects become equally popular and end up interoperating with each other, creating a massive, intertwined blockchain network.
Aion features one of the largest teams in the blockchain industry, led by a well-known figure, Matthew Spoke. Many of the members come from the company formerly known as Nuco, where they built modular decentralized applications. Polkadot is led by the vision of the Web3 Foundation and is executed by Parity Technologies. The Polkadot team is experienced, both technically, in business, and in their understanding of the blockchain industry. The Cosmos team is also involved in developing the Tendermint protocol on which Cosmos is being built. The Cosmos team all have relevant experience with blockchain technology and computer science. Jae Kwon, the founder and CEO of Cosmos, is also the Co-Founder of Tendermint.
All three projects boast an extensive list of partnerships. As expected, most of these partners are other blockchain projects. Having these projects as partners is extremely important for interoperability projects as it provides them, not only with credibility, but also with partners with which to test their platform. One impressive partnership to mention is AION’s partnership with Deloitte.
- Blockchain interoperability is an extremely heated and competitive space. It will take a lot of effort to establish a leadership position in this market.
- Blockchain systems based on the hub-and-spoke model are not the only path to interoperability and could become obsolete against other, more global and coordinated, methods.
- Proof-of-Stake Incentives (Polkadot & Cosmos) and PoS elements may lead to an oligarchy. If left unchecked, PoS based incentives could lead to the massive centralization of tokens.
It is not an obscure fact that the obstacles facing current and future iteration of blockchain technology will need to be able to scale to exponential amounts. As the number of users and IoT enabled devices continues to grow, achieving scalability across all blockchain systems will be essential. Interoperability will allow blockchain projects to cooperate in order to scale and provide a reliable service to users and dApps. Currently, it is difficult to predict which one of these projects will become the go-to interoperability protocol. It is entirely possible that all of them become equally adopted as they enable interoperability with one another. It is also possible that none of these projects see adoption, as the issue of interoperability is solved through global standards such as with TCP/IP in the case of the internet. Either way, it is clear that blockchain interoperability is an issue that must be solved in order to lay the proper groundwork for the next generation of decentralized ledger technologies.
Did you like our analysis of interoperability companies?
Disclaimer: This is not investment advice, merely our opinion and analysis on the project. Do your own research.