Cross-chain and multi-chain. You will no doubt be familiar with these two terms as you engage with the crypto ecosystem. But do you understand the difference?
Each of these technologies contributes something important to the blockchain space. Still, they do so in different ways – and understanding the function and limits of each one is essential for anyone trying to comprehend the crypto space and its future.
So what exactly do these terms mean – and how do they impact blockchain? In this article, we answer that question.
What is a Multi-chain?
Being multi-chain means the application is deployed on multiple blockchains, but each deployment is isolated and cannot communicate with other versions on different blockchains.
Many dApps deploy on multiple blockchains, making them multi-chain so users can access the native assets of other blockchains. But the smart contracts which make the dApp functional on different blockchains cannot communicate and transfer messages with each other.
This causes fragmentation of the dApp on multiple chains. It also causes the fragmentation of resources and liquidity. So, multi-chain is not true interoperability as there's no communication.
Curve Finance and Aave are good examples of multi-chain dApps.
The multi-chain approach creates a sort of internet of blockchains that allows users to transact across multiple chains simultaneously without needing to move their assets from one network to the other.
It achieves this by splitting its underlying blockchain into different layers: the consensus layer, which keeps the system secure, is the base layer for the entire network. This common strand keeps all the different blockchains within the multi-chain system secure.
By contrast, the network's application layer, which sits on top, is programmable – this enables different individual blockchains to co-exist and communicate freely, despite each one being a unique ecosystem.
What is Cross-chain?
Being cross-chain means that the application is deployed on many blockchains, but each deployment has the ability to communicate with every other deployment of the same application on different blockchains.
In cross-chain architectures, blockchains are not isolated silos but are interconnected.
In this case, the smart contracts of the dapp, which are deployed on multiple blockchains, can communicate and send messages to each other.
This approach of cross-chain technology offers true interoperability between smart contracts and enables seamless communication, making the user experience as smooth as possible.
Takeaway
So to summarize, multi-chain technology creates an internet of blockchains capable of communicating freely while remaining secure thanks to a shared underlying security layer. On the other hand, cross-chain technology uses smart contracts to create synthetic versions of your coins that can interact with other blockchains directly.
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