In terms of the implementation of CBDCs across multiple systems, they might be locked and wrapped decentrally with the help of cross-chain contracts. By then, centralized exchanges might become obsolete for some users if blockchain interoperability is matured and all systems scale well. An analysis of future economies might be done not only on a national basis but also with an ecosystemic perspective, giving economists true insights on the impact of distributed ledger technologies on the economy. Their concentration and velocity of CBDCs on different blockchain ecosystems will be a relevant metric for analysts of various disciplines. Once officially accepted currencies are in the space of smart contracts, their movement from one contract to another and from one chain to another will be expected as a requirement by users. Independent of them being blockchain-based or not, they will be brought on-chain. CBDCs & Wrapped Tokens in interoperable systemsīy 2026, there might be CBDCs of the major currencies (Ghosh, 2021). The second layer holds the resulting funds and can be withdrawn by owners. This can be the case in channel technology which allows arbitrary logic to be executed. If an L2 protocol is used and accepted, then the transfers can be made using one protocol only. It highly depends on the layer on which the smart contract is supposed to work: if transactions should directly be triggered on L1, some kind of smart contract translation needs to occur. Due to smart contracts not sharing a common language, a different kind of compilation needs to be taken on every end of the interconnecting structure. To make use of such contracts, several conditions need to be fulfilled. What kind of infrastructure is required for them to work?
An example could be an offline payment triggering a process in two different ecosystems or an insurance payment which is triggered, paying parties on several different blockchain ecosystems. They can be considered the next generation of smart contracts and do not only work on one chain but across multiple ecosystems.
Cross-Chain ContractsĬross-Chain contracts are essentially smart contracts executed on both chains respectively (Nazarov, 2021). Before they can be discussed, the possibility of executing cross-chain contracts needs to be wrapped up briefly as it serves as a necessary component. Thus, businesses no longer need to fear using the wrong ecosystem but can confidently go on their chain of choice. Users can create more complex financial mechanisms by combining a larger variety of services.Īlso, the connection between companies using applications from one blockchain or the other has now the possibility to engage with each other without having to adopt a new system. This would, to use a popular analogy, be adding bricks to the set of available money LEGO parts. One use case would be to extend the use of DeFi protocols across more ecosystems. Interconnected ecosystems make it possible to minimize trust and transaction costs while maximizing efficiency.
Without centralized institutions and many steps, this process has not been feasible. The possibility of swapping tokens from different ecosystems as such is already useful. Furthermore, we describe Perun-X, an interoperability protocol that does not depend on its own chain or a new token.Īuthors: Hendrik Amler & Marcel Kaiser Why Cross-Chain Applications matter InterconnectivityĪllows to move value more effectively and in a decentralized manner In this article, we present the current landscape of DLT interconnectivity, what they can enable and what the future might hold. Therefore, the importance of cross-chain infrastructure and applications became more and more obvious. The resulting silos were not exactly the interconnected world that is often propagated. As a consequence, many new ecosystems emerged separately and independently. This is not the case anymore because many projects created their own solutions. A few years ago, blockchain scalability seemed to be the greatest challenge in the development of the blockchain space.