Blockchains Need a Compatible Standard for Development
Why the single standard is necessary
Blockchain technology needs a single standard that can be easily integrated and used by every network to make a complete transition from Web2 to Web3.
<p dir="ltr"><strong>A common standard for blockchain networks is essential to achieve full interoperability and interoperability between different decentralized platforms and applications.</strong></p> </li>
This will enable more flexible and scalable ecosystems that can provide seamless interoperability between blockchains and simplify the deployment of new applications on different blockchain networks.
The need for a single standard is increasing, given that many new layer-1 blockchains have now emerged. However, almost all of them operate in isolation from one another.
A single standard for financial institutions
Blockchain interoperability is especially important for financial institutions looking to tokenize real-world assets. Isolating different blockchains can lead to limited liquidity, making it difficult to exchange and use securities on the blockchain.
<p dir="ltr"><strong>It must be kept in mind that blockchain interoperability can present security risks. </strong></p> </li>
Implementing appropriate risk management and security systems should become a priority when developing a common communication standard for blockchains to ensure that networks are secure and reliable.
Creating a common communication standard for blockchain networks will accelerate the transition from Web2 to Web3 and provide more efficient and secure decentralized ecosystems.
A single standard for DeFi
The issue of security and interoperability in the blockchain is important and relevant, especially in decentralized finance (DeFi), where security is critical to protect user assets.
There are several solutions for security and interoperability in blockchain, including cross-chain bridges, Layer 2 independent sidechains, and oracles.
<p dir="ltr"><strong>Cross-chain bridges, which are used to interoperate between different blockchains, are the riskiest from a security perspective.</strong></p> </li>
Problems with security
According to a published report, half of all exploits in DeFi occurred in cross-chain bridges.
<p dir="ltr"><strong>The most famous example is the Ronin bridge hack, which resulted in a loss of $600 million in March 2022.</strong></p> </li>
Many of the hacks involved multi-signature security settings or consensus mechanisms with credential validation, which are considered centralized and much more vulnerable to attack.
<p dir="ltr"><strong>A lot of early interoperability solutions prioritized "speed" over security, with unpleasant consequences.</strong></p> </li>
To improve security, numerous blockchain platforms are developing their own solutions to ensure interoperability within the platform. This provides more effective security control and avoids potential vulnerabilities associated with the use of third-party bridges.
There are also cross-chain interoperability protocols, such as Chainlink, IBC, Quant Network’s Overledger, and Polkadot, that enable secure communication between different blockchains.
Many blockchain platforms are also improving their security mechanisms, including multi-signature and consensus mechanisms, to improve protection against possible attacks.
Overall, the issue of security and interoperability in blockchain remains one of the most important for the development of this technology and its applications in various industries, including finance, logistics, and medicine.