The blockchain landscape has evolved into a fragmented ecosystem of networks, each with unique architectures, strengths, and limitations. While this diversity fuels innovation, it also creates silos – isolated environments where liquidity, data, and users remain trapped. Just as the early internet needed universal protocols to connect disparate systems, Web3 now demands a new layer of interoperability to unlock its full potential.
Let’s talk about cross-chain.
Cross-chain technology refers to the ability of transferring data and tokens between different blockchains. Hence, it enables interoperability and provides access to DeFi apps on different networks, promoting interconnectivity. This helps in scaling networks and prevents congestion. With the help of cross-chain interoperability, assets and data can flow with ease between decentralized networks. Therefore, it supports greater utility, flexibility, and scalability to blockchain ecosystems. It is analogous to the global SWIFT network in traditional banking, which enables the transfer of value from one banking institution to another. Today, cross chain technology has been successfully applied across healthcare and supply chain sectors. For instance, Electronic Health Records (EHRs) are traditionally stored as isolated databases, which complicates sharing and integration of data. As a solution to this, cross chain bridges link the EHR systems and enable secure sharing of EHRs among different healthcare providers and networks. In case of supply chain management, cross chain technology integrates different blockchain networks used by different supply chain participants. This solves the problem of tracking provenance of assets across global supply chains and allows real time tracking and asset verification.
Interoperability: Why is it important?
Interoperability is a key concept in both multi-chain and cross-chain technologies. It is defined as the degree to which a software system, devices, applications or other entity can connect and communicate with other entities. It is the ability of different systems or components to efficiently exchange and utilize information with each other, even when they have different functions or sources. Blockchains such as Ethereum, Solana, Polkadot, BNB Chain, and Avalanche, operate with certain limitations. This results in an environment which creates friction, trapped liquidity, and poor user experiences. As a solution, cross-chain interoperability is gaining momentum. Cross-chain design enables blockchains to communicate and share assets securely, resulting in elevated efficiency, scalability, and broader adoption. Thus, it offers a competitive edge in Web3’s race toward mass adoption.
What is Web3 and how is it different from Web2?
Web3 is the recapitulation of the internet, built on blockchain technology and controlled by its users. On the other hand, Web2 controls the data, content and transactions through centralized tech corporations. With the advent of the Web3 era, there will be change in management of information and monetization of the internet. In Web2, a transaction relies on two parties, trusting each other with the information being shared. On the contrary, Web3 technology is designed in a way, so that a transaction proceeds only if certain criteria are met and data are verified. The main features of Web3 are decentralization, trustlessness, semantic web, and interoperability. Its key benefits include improved engagement, enhanced privacy and democratized communication. It should be noted that blockchain technology forms the foundation of several Web 3.0 applications.
However, blockchains cannot communicate with external systems or APIs, existing web infrastructure and other blockchains. Hence, Web3 landscape is becoming multi-chain with the help of dApp ecosystem existing across hundreds of blockchains, appchains and layer-2 networks. In order to build bridges between existing Web2 infrastructure and Web3 services, cross-chain interoperability solutions are crucial (example: cross-chain smart contracts). They can reduce fragmentation in the ecosystem, unlock higher capital efficiency and improve liquidity conditions. Cross-chain interoperability allows developers to build one cross-chain application, in which a single unified dApp can function across multiple different smart contracts installed across multiple different blockchains. Hence, deploying multiple individual versions across distinct networks is not required.
The future of decentralized technology depends on eliminating silos
Siloed systems create numerous challenges for organizations, including inefficiency and fragmented data. This happens because isolated systems hinder the flow of information and lead to manual entry, inconsistencies, and operational slowdowns. They also disrupt supply chains by causing stock imbalances, making inventory tracking difficult, and resulting in lost sales and inefficiencies. Eliminating silos is essential to the development of integrated, reliable, and efficient systems that improve decision-making, collaboration, and creativity in a variety of fields, including supply chains, banking, and science. Decentralized technology may unleash the full power of data by dismantling segregated systems, resulting in real-time synchronization, increased transparency, lower costs, and a more robust ecosystem.
The Inter-Blockchain Communication (IBC) protocol
Trustless protocol-level interoperability is a more robust alternative where networks can exchange data directly. In such protocols, each transaction is validated independently and third parties are not required. Hence, decentralization remains intact. The Inter-Blockchain Communication (IBC) protocol is widely regarded as one of the most promising solutions for achieving true blockchain interoperability. Although it was originally developed within the Cosmos ecosystem, IBC allows (almost) any two blockchains to transfer tokens and data between one another directly, securely, without needing any centralized intermediaries. Verification is done at the application (smart-contract) layer of each participating chain.
I, along with my team at Composable Foundation, have successively implemented trustless interoperability between Ethereum, Solana, Polkadot/Kusama, and multiple Cosmos chains. This has been a major milestone for us, as it was a complex engineering challenge. It was made possible by adapting the IBC protocol to operate across these heterogeneous ecosystems. This led to transaction validations handled entirely within the native security models of each network, with no need for centralized bridges or third-party validators. Hence, it is a concrete example of the blockchain’s broader potential. I also believe that it is a foundational layer for the next generation of distributed, secure, and composable digital infrastructure.
This remarkable milestone was achieved through profound technical innovation. Ethereum’s architecture required integration with zero-knowledge proofs to validate block headers. Solana’s validator logic was extended to provide state (Merkle) proofs for some accounts. Purpose-built Substrate pallets were developed on Polkadot and Kusama networks to manage and process cross-chain data securely. A new CosmWASM protocol was designed along with various WebAssembly contracts to enable their integration in the IBC environment. With the help of these adaptations, Composable’s infrastructure supported interaction among these networks. All verifications were executed within the security parameters of the chains. Thus, trustless cross-chain architecture was achieved, promoting independent blockchain networks to communicate securely. This was a significant step towards a resilient, decentralized infrastructure where trust is encoded at the protocol level.
Secure cross-chain systems are built through decentralization which requires a radically different engineering mind-set. The majority of cross-chain systems rely on a trusted approach which uses third-party intermediaries to communicate between blockchains. This enhances development and speeds up the transactions. However, an increase in cross-chain activity has also attracted some risks such as hacking which may lead to exploitation of these trusted systems. Therefore, security is of utmost importance at each step. On the other hand, trustless infrastructure enables blockchain networks to communicate with each other in a secure, and decentralized manner, which also aligns with the Web3 era.
While centralized bridges involve mirroring actions across networks through smart contracts, IBC presents a fundamentally different model. Centralized bridges are controlled by a central authority; examples include Binance Bridge and Multichain. On the other hand, IBC does the mirroring to some extent but in a decentralized way, eliminating the need for a central authority. It functions like a universal messaging protocol, analogous to how TCP/IP enables the internet. Two blockchains that support IBC can interact; it does not matter if they have different internal architectures. Hence, external confirmations by third parties are no longer needed. Each verification step occurs within the chains via finalized blocks and cryptographic proofs.
Competitive Advantage in the Web3 Era
By utilizing cross chain technology, developers can access multiple ecosystems and larger communities, leading to faster user growth and broader innovation. Composable cross-chain apps have the ability to attract developers who want to avoid reinventing the wheel. Interoperable platforms attract institutional partners who prefer flexibility and risk diversification. Interestingly, data from DeFi protocols show that projects integrating multiple chains often achieve higher Total Value Locked (TVL) and user retention. Hence, in Web3’s competitive environment, cross-chain capability may soon become a baseline expectation.
The future of cross-chain interoperability appears exciting. Advances in cryptography are making validation safer, reducing the risk of hacks. As frameworks evolve, compliant cross-chain systems will gain trust from institutions, accelerating mainstream adoption. Cross-chain offers a strategic advantage for businesses. It opens access to larger markets, reduces reliance on any single platform, and has the ability to adapt in a fast-changing industry. For users, it promises frictionless experiences, where digital assets and applications move as easily as information does on today’s internet.
Conclusion
Cross-chain technology enhances the interconnection between blockchain networks by allowing the exchange of information and value. The Web3 era is about decentralization and connection; blockchains cannot achieve their full potential if they remain isolated. Interoperability is the key to unlocking global markets, seamless experiences, and resilient businesses. Building secure, interoperable systems unlocks new creative and technical possibilities. Investing in cross-chain strategies will promote growth, and competitive differentiation in an increasingly crowded Web3 marketplace.
Cross-chain is the strategic edge. However, coordinating developers across multiple ecosystems is one of the hardest parts of cross-chain development. Those who build and adopt secure, interoperable systems today will define the leaders of tomorrow’s decentralized economy. Forward-looking organizations are already leveraging cross-chain to unlock new business models in finance, gaming, supply chains, and beyond. Much like the adoption of the internet’s common standards decades ago, cross-chain can become the baseline expectation in Web3. Businesses that invest early may gain the competitive edge. I believe that the cross-chain systems can be securely built with the help of decentralization, which requires a radically different engineering approach.
