Web3 adoption: the importance of blockchain interoperability

Web3 is currently one of the hottest buzzwords in technology circles around the world, with billions of dollars of venture capital pouring into the industry. There are endless news headlines about how 2022 will be the year we start taking control of our data and assets, using decentralized applications running on blockchain. Except that there is a central problem with this thesis, or at least, the temporal sequence. The underlying infrastructure still has fundamental problems to address, mainly the dependence on the traditional structure. Consider that there are over 4.5 billion internet users, yet cryptocurrencies only have around 300 million users. However, scalability is still an endlessly debated issue as core blockchain developers strive to meet the transaction speeds users have grown accustomed to on Web2. The dominance of Ethereum on the blockchain ecosystem is now undeniable. The platform had a firsthand advantage like no other. Since launching in 2015, there has been a boom in development as innovators hooked on the new economic opportunities of token minting. While the heady days of the ICO era are behind us, many projects continue to scale up on Ethereum as a development platform simply due to network effects. Benefits interoperability How did it happen? After all, the idea of "killing Ethereum" blockchain platforms has been around for nearly as long as Ethereum itself. But Ethereum's early competitors made a huge mistake. They attempted to compete on Ethereum's biggest weakness - lack of scalability - often by compromising decentralization. Running fewer network nodes meant they could process transactions faster. Of course, this also meant that they could compete on price and reduce Ethereum's fees by making the nodes process far more transactions.

The problem was that the developers of these platforms greatly underestimated Ethereum's network effect. So their platforms struggled to gain adoption. Only a small handful of projects at the time, most notably Cosmos and Polkadot, identified interoperability as a critical success factor in achieving blockchain adoption. Platforms that might interact with each other offer huge benefits over those that can't. In particular, they can tap into Ethereum's vast active network of developers and users. However, there are other benefits to interoperability. When platforms and projects can send assets and data across networks, the value of those assets and data actually becomes greater. Consider the value of a small national currency compared to the strength of the US dollar or the euro, which derive their global value from the fact that they are much more widespread. This same principle explains DeFi's explosive growth: Once developers started building apps and services that communicated and allowed free transfer of assets, those assets became more valuable and more liquidity began flowing into the industry.

Cosmos: the first interoperable ecosystem for blockchain

Now, the projects that recognized him early are showing clear signs of success in terms of token adoption and pricing. Cosmos was the first interoperable ecosystem for blockchain and there are now as many as four projects in the top twenty-ranked cryptocurrencies, which currently hold a combined market cap of just under $ 70 billion. There is Cosmos's native ATOM token, Terra's UST stablecoin and its native LUNA token. Then there is Cronos (CRO), the blockchain started by the digital asset giant Crypto.com which has since detached itself to become its own open source project managed by Crypto.org. From the point of view of interoperability, Cronos is the most interesting project because it is built using Tendermint and is part of the Cosmos interoperable ecosystem. It is also interoperable with Ethereum, which means that it is the only platform so far that connects the Cosmos and Ethereum dApp ecosystems and, as such, can facilitate the flow of liquidity between both. It is also compatible with other EVM-compatible blockchains, which include BSC, Polygon, Avalanche, and many more.

A platform for Web3 scalability

As a result of this unique position, Cronos is now positioning itself as the platform capable of massively scaling the DeFi and Web3 user community by providing developers the ability to instantly transfer apps and assets from other chains. Thanks to its proof-of-authority consent, it also offers fees basse and very high throughput with fast intent, capable of supporting 50 million transactions in a single day. The mainnet has been in beta since the end of November, and the project now ranks ninth among all public blockchains by total locked value. It has over 10 million users and over $ 2.5 billion stuck in applications. As it is still relatively soon after the mainnet launch, Cronos is actively encouraging development on its platform with an acceleration program that has awarded more than $ 100 million in grants to support the ecosystem. Returning to the idea of Web3 becoming dominant by the end of this year, the fact that interoperability is now more than just a buzzword will certainly help accelerate adoption. However, if Web3 is to gain over a billion users by the end of this year, developers need to reduce reliance on the traditional framework and start unleashing the true benefits of blockchain interoperability.