What Is Multi-Chain?
It involves the development of cross-chain infrastructure to enable communication and interaction between blockchains.
There are two main interpretations of multi-chain:
- A cryptocurrency can be considered “multi-chain” if available on multiple blockchains. For example, USDC is a stablecoin that exists on Ethereum, Solana, Avalanche, TRON, Algorand, and other blockchains.
- A blockchain protocol or platform can be considered “multi-chain” if it allows developers to build multiple independent blockchains on top of it. Examples of multi-chain protocols include Polkadot and Cosmos.
Multi-Chain vs Single-Chain
- Ethereum is an example of a single-chain protocol where developers can create tokens and decentralized applications on a single chain.
- Multi-chain protocols offer advantages in terms of scalability.
As user demand increases, new blockchains can be created within the multi-chain protocol to handle additional transactions.
Single-chain protocols often rely on layer-2 solutions.
Understanding the Distinction
While multi-chain refers to projects that exist across different networks, cross-chain refers to the ability to link independent blockchains.
Multi-chain projects may not necessarily have interoperability across chains and may require centralized exchanges for asset transfers between chains.
Cross-chain technology, on the other hand, enables the transfer of assets and information between separate blockchains without intermediaries.
Decentralized cross-chain bridges and cross-chain decentralized exchanges (DEXs) are examples of cross-chain infrastructure.
How Does a Multi-Chain Protocol Work?
A multi-chain protocol typically consists of different layers.
The consensus layer forms the underlying security infrastructure that allows projects to exist on multiple chains. On top of the consensus layer, the application layer facilitates communication between applications on different chains.
This layered approach enables interoperability without compromising security.
The Importance of Multi-Chain
Improving blockchain interoperability and user experience is crucial for the broader adoption of Web3.
Breaking down the barriers between blockchains is essential to facilitate the seamless transfer of information and assets.
Multi-chain technology plays a significant role in achieving this goal.