The fall of Luna and Terra Protocol has shown the necessity of including multichain capabilities in today’s blockchain projects. On this episode of ShuttleCast, learn about the history of blockchain protocols, the challenges projects are facing and what future is holding for Web 3 developments.
The Rise of Blockchain Space
Blockchain technology entered the forefront after the introduction of Bitcoin in 2009 as the first decentralized cryptocurrency for peer-to-peer value transfer. The underlying technology functioning as a trustless ledger gained more importance in 2014 with Ethereum presenting a programmable blockchain ecosystem with smart contract capabilities. These smart contracts enabled blockchains to support the creation and maintenance of completely decentralized applications capable of catering to a variety of use cases.
The Ethereum wave gained widespread adoption, and its shortcomings led to the creation of multiple alternative blockchain protocols seeking to solve the scalability issues. While these alternatives have been successful to a large extent, they also made the industry realize that a single blockchain protocol may not meet the evolving needs of the crypto ecosystem. Leveraging all the benefits of shifting operations to a decentralized setting can be achieved only by adopting a wider multichain approach. A fact that has been reiterated on multiple occasions by various incidents including record high gas fees, low transaction processing capabilities, confirmation delays and even security concerns in a few cases.
Inheriting Legacy Issues, Only Way Forward for Single Chain Applications
At present, the industry-wide practice is to pick a protocol that meets the majority of the project’s needs and start developing on it. The resulting product or service will be completely dependent on the characteristics of its parent protocol, both good and bad. These legacy issues have the tendency to crop up when least expected and if not careful, can bring the whole project as well as the community down with no warning.
Many projects in recent days have realized the uncertainties and certain risks associated with individual blockchains. So, the calls for consolidation of protocols are increasing each day. During ShuttleCast, Zhuang mentioned ShuttleOne’s first-hand experience when they were operating exclusively on the Ethereum blockchain. While things were rosy at the beginning, ShuttleOne users suddenly had to shell out a significant amount towards transaction costs while making fund transfers. Even after paying such huge fees, they had to face tense moments with delayed transaction confirmations. These issues led ShuttleOne to start working on a multichain aggregation solution called the Metachain.
In Zhuang’s words:“In 2020, we started to deploy and build on-off ramps for ShuttleSwap, to enable the community to bring the value of digital assets on one chain to a bank account. While initially successful, we started having problems when the hype surrounding Ethereum increased. We witnessed the transaction costs go up over a couple of weeks. Our users had to pay a fair bit to remit money, make payments, etc. We were promised cheaper, better, and faster transactions that are verifiable, transparent, and trustless. However, we faced congestion, transaction processing speeds far below any centralized payment network and more. At this point we realized the importance of being blockchain agnostic, how the use of multiple blockchain protocols and databases not only drives value financially, but also helps projects ensure they are always on the most efficient chain.”
The resulting Metachain by ShuttleOne has not only made multichain compatibility easier for projects, but also enhanced the functionalities of ShuttleSwap. Today, the Metachain-powered ShuttleSwap boasts of conducting a single, one-time transaction of $40 million, a new record in its history.
The history of inherited legacy issues affecting businesses and projects built on respective protocols is not limited to ShuttleOne’s experience with Ethereum, or the disruption of Terra ecosystem. Even the Ethereum fork that led to the creation of Ethereum Classic was a result of the same issue, and there are many more if we go on digging.
Multichain, No Doubt is the Future
The rise of Web3 is the result of a collaborative multi-industry effort with tech, economics, and financial sectors at the helm. As a still-evolving ecosystem, there exists a lot of room for improvement. While blockchain concepts act as the foundation of Web3, the siloed nature of various protocols, each playing host to similar decentralized applications has led to a very high degree of fragmentation.
On the other hand, new blockchain protocols continue to emerge, with entrepreneurs and developers creating forks of existing protocols with the intention of addressing the existing flaws in the ecosystem. As a result, they end up competing to attract a small talent pool capable of creating applications on their protocols. Such a competitive atmosphere neither enables efficient utilization of existing resources nor addresses few legacy issues that are inherent in the parent chain. In short, the competition to create the next generation of web3 platforms has become a vicious circle with no significant progress on the ground.
Meanwhile, projects operating on a single protocol in the current scenario are unable to efficiently extract value worth over 10 billion in on-chain assets locked across multiple protocols. At the same time, they are enslaved to a single protocol, with any negative developments on a protocol level adversely affecting their business. The recent decision of Terra to halt their blockchain is a good example of the cause and effect, where issues with UST and protocol token LUNA ultimately resulted in Terra-based projects forcefully suspending their operations.
By incorporating multichain capabilities, projects can not only tap into the liquidity across multiple protocols, reach wider audience but also efficiently manage blockchain-related risks. Multichain projects can conserve their operations and token value by switching between different protocols in an event one of them ceases operations or gets compromised due to various factors.
Driving the Multichain, Protocol-Proof dApps Evolution
Explaining the advantages of multichain capabilities for blockchain projects, Zhuang mentioned how ShuttleOne is making it easier for both new and existing projects to incorporate cross-chain functionalities. He explained the rationale behind Metachain’s development and his team’s commitment towards helping projects achieve multichain capabilities.
The ShuttleOne ecosystem built around its Metachain multichain aggregator connects various protocols while providing a range of tools including multichain wallet infrastructure that is compliant with the current banking system across 80 countries.
Explaining Metachain, Zhuang said, “Metachain is an aggregator for everything you want to do minting, transferring and converting tokens, all connected to a very compliant fiat on-off ramp so that you don’t have to go to any more intermediaries or middlemen”
By building dApps on the Metachain ecosystem, projects can seamlessly operate on all supported blockchain protocols without having to create different versions of the product or the tokens for each protocol. The dApps can connect with any supported blockchain or Metachain tools of choice over a single API.
Driving home the point about the benefits of Metachain based applications, Zhuang gives an example, “In the future, we see an increased potential, consolidation and grouping of cross-chain marketplaces selling NFTs related to real world or virtual products, benefiting the creators. Metachain creators who first mint on one of the NFT marketplaces or not selling well on a particular chain will be able to jump and move to a different marketplace on another chain with a better demand. They don’t have to worry about the tools etc., needed for bridging from one protocol to another.”
How to derisk from single blockchain protocol issue
If you are a blockchain project, get in touch with us. ShuttleOne team will be happy to provide you with more information about how Metachain connects apps in one simple API to help increase the visibility of your project token on multiple chains. Learn how to derisk Web 3 projects from legacy issues of single chain protocols with ShuttleOne.
Connect with us