A glimpse at the multi-chain future

Scalability has been and will continue to be one of the most difficult challenges, particularly for blockchains that act as shared environments for applications. In this model, applications are all competing for resources and are all affected by the usage of other applications, the adverse effect of which is high gas fees. Interestingly, no blockchain can guarantee low fees. It can provide low fees up to a certain point, but once usage exceeds a certain level fees will rise. All blockchains have a finite capacity, so it is natural that at some point demand will cause higher fees.

As an application, the best guarantee for scalability and low fees that can be provided is for it to live on its own chain. No other applications are competing for the same finite capacity, and the application has sovereignty over the environment it lives on. Composability breaks between blockchains, but that is the effect of a multi-chain ecosystem.

Applications that require composability between other applications can live on a shared blockchain. An application that automates liquidity strategies for Uniswap LPs naturally needs to live on the same blockchain as Uniswap so that it can atomically read and write state to Uniswap’s contracts. Here, the application can harness already existing network effects of the chain, developer tooling, and a rich universe of assets and liquidity. However, not all applications will require composability or are willing to accept the tradeoffs of a shared blockchain.

This inevitably leads to a multi-chain ecosystem with a long tail of varying use-cases and degrees of interoperability. To ensure that interoperability is secure, the bridges that these chains rely on must also be secure. While risks such as implementation and smart contract bugs will be present regardless of the bridge type, security will ensure that the way by which it facilitates communication is of the highest standard. Validating bridges are the pinnacle of security through the lens of their trust-minimization properties. Trust-minimization is achieved through fraud/validity proofs and data availability verification. Since the bridge is directly responsible for verifying validity and availability, it requires no third party and can operate securely in the presence of a dishonest majority.

Security of the chains themselves is also tantamount to their protection against adversaries. With many blockchains, it is unreasonable to assume that each will have a unique set of validators, or that each validator set will even be secure. With a data availability and consensus layer like Celestia, new chains can be bootstrapped without the need for a validator set. The chain can post its transaction data to Celestia, allowing it to inherit security through the consensus and data availability verification that Celestia provides. This enables a cheaper and sustainable avenue for bootstrapping secure blockchains at scale. Additionally, the chain retains sovereignty over its environment because Celestia is unconcerned with the validity of the transactions that are published.

The multi-chain ecosystem runs foundationally deeper than the technology itself. Instead, each chain can act as a social coordination mechanism. Akin to the sovereignty of a nation, a sovereign chain can define the rules and social processes regarding its environment. An application that deploys to a shared blockchain is bound by the social consensus of the underlying blockchain. If the stakeholder set becomes large and potentially too diverse, governance can stagnate, and the application’s values may become misaligned with that of the stakeholders. Just as it is important to decide where to incorporate a company choosing where to deploy an application can come with many of the same tradeoffs.

Ultimately, the multi-chain ecosystem will be encompassed by potentially millions of interconnected blockchains with varying governance processes, degrees of interoperability, and technological stacks. It is not a question of whether the future will be multi-chain, but how exactly that multi-chain future will materialize.