Sugarcane Podcast

Unifying the Crypto World | Interoperability, Standardization, and Multi-Chain Systems | Ep 13

October 03, 2023 Sugarcane Episode 13
Sugarcane Podcast
Unifying the Crypto World | Interoperability, Standardization, and Multi-Chain Systems | Ep 13
Show Notes Transcript Chapter Markers

Let's navigate the technicalities of cross-chain communication, breaking down emerging solutions that promise a seamless user experience across multiple chains. Drawing parallels to the birth of the internet, we explore how a similar approach could unify the fragmented blockchain landscape. From developer tools to user perspectives, we discuss the need for standardization and abstraction in creating a unified multi-chain system. It's a complex journey, but every great innovation takes time.

🤔 What is Interoperability?
💱 Currency Exchange
🛠️ The Current State of Interoperability
🌉 Bridging the Gap
🌍 The Future of Interoperability
🧩 Mass Adoption

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Disclaimer: 🚨 The information provided across all of Sugarcane's communication channels is for informational and entertainment purposes only. It should not be construed as financial or investment advice. Consult with a financial professional before making any investment decisions.

Sheldon:

You're listening to the Sugar Cane podcast, where you get all of crypto's tastiest tidbits. Here's your hosts, Sheldon Trotman and Rudy Dogum.

Rudy:

Welcome back for another week of tasty tidbits. We are going to talk about some important stuff too, like every week, Always better. It's always better. This week it's about interoperability between different blockchains. We know that there's a ton of different tokens under Ethereum. There's different blockchains like Bitcoin and Solana and EOS, for some reason, and Ripple.

Sheldon:

I don't know what else.

Rudy:

There's so many other chains going on and I'm sure you can check on any coin tracking website. You'll see them all listed there. They don't play nice with each other. That's why they're all competing and fighting for crypto space. Sheldon, explain a little bit more to me the word interoperability. What does that mean in terms of crypto?

Sheldon:

There's a couple of different ways to look at it. I know in a couple of past episodes we talked about L2s security. Interoperability really is the unification of this L2 concept or multi-chain concept, Also how we can make it secure. It's a pretty well-understood notion right now that we're going to live in a world where there's multiple different blockchains that do multiple different things. We're talking about all these different blockchains. We don't want to have them all as siloed worlds where our assets are sitting on one place, you have to have assets in another place, you have to have money in another location. All these different worlds talk as though they're one, as they're one seamless platform. Interoperability really is this idea that you now have inter-operation or interconnection between these multiple different blockchains. Interactions kind of feel seamless across the multiple different chains.

Rudy:

Yeah, and to put it into a current world financial perspective, is traveling Simple? You have dollars and you want to go travel to a different country Say somewhere in South America you have to pay in pesos. If you're in a touristic area, you could probably get away with paying with dollars. They would accept it with no issue, especially if you're in a country where inflation is an issue. But if you reverse it, say if you're traveling from somewhere in South America, like Mexico, and going to America, good luck finding a store that's going to take pesos. That's not going to happen, it's just not easy. And the same in Europe. So in Europe, euros are dominant, but if you go to different countries, they might accept euros, but vice versa, they won't accept the local currency. Like, no one's going to accept a Turkish lira, but in Turkey they'll probably accept euros and dollars.

Rudy:

Yeah, so that's a big key thing here with interoperability, today's market money is not that translate of what you have to put in, go to a bank or go to some exchange to swap it for something else. And here, with Ethereum, you can't just use Ethereum on the Bitcoin network. You can't just use Ethereum in the salon network. You have to go through some type of exchange, yep, it's a lot of work to do that, but there are some technologies trying to make that work, so I definitely wanted to learn Sheldon. What are we looking at here, with the difficulty and misconceptions, and how it looks like today? What interoperability is between blockchains?

Sheldon:

Yeah, so to give you context on where we are today in terms of cross-chain communication or cross-chain interactions, if you're doing anything on Ethereum and you wanted to interact with the product that's sitting on Polygon, which is another blockchain on its own purposes, the kind of clunky experience is that if you were to send yourself, let's say, five Ether from Ethereum to Polygon, what happens is that you'd send it through a bridge and you get it the five Ether on the Polygon context. But if you're familiar with Polygon, the actual blockchain, in order to interact with it you have to pay in Matic, which is another separate type of token, and so the kind of funny clunky thing is that if you were to try to send yourself five Ether from Ethereum to Polygon, you get the five Ether on Polygon. The money for all this purpose is kind of stuck there until you actually have Matic to move it. So you essentially just deleted money until you actually have the Matic token to pay for gas or pay for interactions on Polygon.

Rudy:

It's kind of a stupid experience. Yeah that's pretty good.

Sheldon:

Yeah, and same goals for interacting with Avalanche, or it's a bit easier, on arbitra and optimism. Those are other two kind of layer twos we talked about before, but again the whole experience is pretty clunky. It takes a lot of time to get from one place to another and if you use wallets like MetaMask is a pretty popular kind of in browser and mobile app you still have to actually like drop. You have to actually click a drop down to see which particular chain you want to talk, to click on that chain, wait a bit and then interact with it some more. It's like. It's again very clunky. It's kind of what I kind of like to analogize analogize, whatever the word is like, make the comparison to.

Sheldon:

I understand what you're saying. Yeah, yeah, I've made it to comparison to like if you had to have, like, let's say, chrome to open up Facebook, and then if you wanted to check your email, you have to open up Safari to check your email, and if you play a game, you have to open up Firefox to interact with that game. That's currently kind of how I think about the blockchain experience, but there's a lot of solutions coming out now to make the whole process easier and seamless. So, like, actual interactions with the applications that live on both for different blockchains don't necessarily have to be kind of as felt. You don't have to think about the chain, you're on.

Rudy:

Yeah, yeah, and I would hate to have to use different. I mean, I really do use multiple browsers for different things just because of what you're saying, but thankfully most websites work on those browsers. Yeah, and then that's just like, yeah, a piece of the puzzle, and like for interoperability, for blockchain as a whole, as its entirety of an ecosystem technology, do you think this needs to be solved?

Sheldon:

It's one of the big pieces that needs to be fixed for the actual space to evolve and move forward. But it's not it right. Like. New solutions came out, called like account abstraction. If you're in the crypto space, you kind of know what that means or kind of heard it before. But those are ways to abstract away some of the complexity of interacting with chains. Interoperability is another big concept that will really help in terms of abstracting the complexity of different chains. We talked I think last week we looked for that about like scaling and scalability. There's much about scalability solutions that are necessary, but definitely to say is like interoperability is one of those big pillars that help make the whole user experience easier in the crypto space. So, yeah, definitely is big.

Rudy:

Yeah, and there are some projects out there that are trying to make it. I think Cosmos was one of the popular ones. Yeah, so Cosmos has.

Sheldon:

IBC, their inter blockchain communication layer or something like that. If you're not on the Cosmos context, there's like Axelar. Axelar is a pretty big one that actually we use internally to sugarcane make cross-chain communication pretty seamless for the end consumer. There's a number of different solutions out there that help make the whole process pretty easy and simple.

Rudy:

How does their method work versus a bridging method where you just kind of lock and hold your assets?

Sheldon:

Yeah.

Sheldon:

So again I'll go technical and then I'll kind of walk back up from that.

Sheldon:

So at a very kind of technical level, the way that it works is that it has a node that is able to listen to one chain and actually take that interaction and then pass it onto the other chain. So like in the context of going from, let's say, arbitrum to, let's say, optimism, which is another, like two different chains. The way that it works, again, it has like what's called like smart contracts that live on Arbitrum and smart contracts that live on Optimism, that can receive messages and then, instead of transacting value, it just relays the message that something occurred. So like, let's say, I want to have five ether on Arbitrum and I want to lend it on a product that's an Optimism. Say, a big product on Optimism is called Aave, so I want to lend an Aave on Optimism. What happens is that I can send a message from Arbitrum to actually interact with the actual product on Optimism. And so AXLAR, for example, is a pretty secure and swift way to send messages from one chain to another, as again how we use it within Sturgain specifically.

Rudy:

Nice.

Sheldon:

Yeah.

Rudy:

And that's the cool thing about Ethereum is that you can build these tokens or dApps, whatever you want within the Ethereum ecosystem. The interoperability piece is kind of already taken care of Anything can interact with anything within Ethereum.

Rudy:

Yep, it's just the layer one blockchain specifically, that's difficult to mesh with, and other that's the competition space. Right, because Solano is also trying to build their own ecosystem and Bitcoin's sticking pretty strongly with the financial system. Hopefully they grow out of that and grow into more of a digital world of smart contracts and dApps. It's a big hurdle to get through because you're trying to make technologies talk that don't typically talk to each other. Yeah, or necessarily. We're even built to want to talk to each other. They were built to outperform each other and kind of just do away Like you can't. It's hard to install a Mac operating system on like a Windows machine because, even though it's like similar specs, it's just Mac is the one in control of how Mac is installed and it's not necessarily open for anyone to look at. Well, thankfully, these blockchains, it's very open, so people are being creative with it, but it's still a challenge.

Sheldon:

Yeah, actually funny enough, in the early days of the internet it used to be that there were separate kind of intranets or subnets. They're actually small little siloed physically, physically different locations where people were able to talk to each other within that intranet, like location, but with like a lot more kind of standardized protocols like TCI, p and like a lot of different, like SSL, like securing the actual cross chain across internet communication layers, allowed for the internet to feel less like siloed intranets and actually one all cohesive intranet where you can actually interact with any website somewhere into the blockchain context. That's kind of what we're doing with interoperability intranets and internet.

Rudy:

That was like mind blowing when I finally figured out what that meant in high school, I think.

Sheldon:

I think we say last week.

Rudy:

It was surprising how they're in last week too.

Sheldon:

Yeah.

Rudy:

You can't keep up with all this stuff. It's hard.

Sheldon:

Technology.

Rudy:

So I'm here for some, here for folks, I'm here to make it easy for you to understand, because if I get it, you'll be able to get it too.

Sheldon:

Yeah.

Rudy:

But yeah, looking into the future of all this, like, do you think there's high hopes for interoperability? Do you think these blockchains will try to play nice with each other? Do you think they're just going to step on each other and not try to work together?

Sheldon:

Yeah, no, it's inevitable that two things happen. One is that standards start to get adopted. So, like standardization of how blockchains are created and standardization of how blockchains communicate with each other is definitely inevitable, just because, in order for us to have a global financial system that's seamless and open for anyone to interact, there needs to be some standardization so developers can actually build technology that leverages all these different tools. Right? So that's, on one side, the actual standardization of the actual infrastructure that developers use, and then, on the other side, is what I like to call abstraction. So, like, the more that people don't have to think about the base thing that they're on, the better the experience will be.

Sheldon:

So, like again, in the context of the internet, you don't need to switch browsers to interact with different websites or applications. You just use one browser and that does everything that you want for it. Right? In the context of blockchains, more generally speaking, like, the more that we're able to abstract away the complexities of the details of the actual chain, the better the experience will be for anyone trying to use and leverage block technology to own their own assets. So, like again, interoperability works for the infrastructure and makes that easier and more possible, and abstraction works for the consumer to make them more easier to interact with the actual systems themselves. So that's kind of what I think about it, yeah.

Rudy:

And that's the idea right Is to get into our operability, hopefully, this standard, where it does help solve that piece of mass adoption, because there's a whole slew of things we're trying to solve with crypto and crypto and blockchain technology itself.

Sheldon:

Yeah.

Rudy:

And yeah, it's a piece at a time. It's a jigsaw puzzle. It's like a rainbow color where everything is really hard to read when you're trying to solve it together, but it looks really nice when we get it done.

Sheldon:

We need to take a step back and look back at it.

Rudy:

But yeah, that's exciting times. And thanks again, sheldon, because next week we'll have more tasty tidbits, the tastiest of tidbits.

Sheldon:

See, ya, see ya.

Interoperability in Crypto Blockchains
Interoperability and Standardization in Blockchain