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How Cross-Chain Composability Is the Future of Decentralized Finance

How Cross-Chain Composability Is the Future of Decentralized Finance
How Cross-Chain Composability Is the Future of Decentralized Finance

Decentralized Finance, or DeFi, has been making strides in providing tools for users to take control of their own money and truly be their own bank. However, the assets that power this revolution exist primarily on blockchains, and historically these networks don’t easily communicate with each other. This creates real roadblocks and liquidity issues for many of the applications that are trying to revolutionize finance. New solutions could pave the way for greater “cross-chain composability,” which would mean users with almost any decentralized holdings could easily use it as collateral to get involved with Decentralized Applications, or DApps, across all networks. One of the first assets that many are setting their sights on is , which still reigns as king — the most commonly held cryptocurrency.

While there are many unique DeFi applications already released or in development, virtually all of them work on one specific blockchain. and are popular choices, for example, but there are several others. For now, Ethereum DApps need to transact using Ether or Ethereum Tokens, EOS DApps must stick with EOS and so on, as these are the only assets the network is designed for. While there has still been notable success in the early iterations of these services, it is obvious that everything would become much smoother, especially for the end user, if any asset could be seamlessly moved wherever it is needed regardless of native blockchain. This matter is also known as “interoperability,” and many see the future as a place where all chains and DApps can easily transfer value between each other. For now, most protocols are effectively isolated, but with the right implementations, the value across all of these networks could become “unchained.”

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Source: investing.com
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