In a multi-chain world with over 100 public blockchain networks for users to select from, navigating through the array of options can feel overwhelmingly complicated. Moreover, the lack of unity between chains has led to the fragmentation of liquidity, technologies and competitive environments — benefiting neither developers nor end users. In an industry where attention often centers on high APYs and mooning prices, it is time to return to the fundamentals: developing safe, secure and user-friendly infrastructure that facilitates the continued innovation and adoption of crypto and blockchain.
As interoperability between protocols continues to increase, more and more users will be able to seamlessly move assets and data across interconnected chains. With this growth, however, comes greater security risk — look no further than what happened to Wormhole, one of the largest hacks in crypto history involving a cross-chain bridge. For the community to achieve the benefits that a fully interoperable blockchain ecosystem can provide, cross-chain security is paramount. Here are three themes we see as central to ensuring the ecosystem can scale safely: aligning validator incentives, embracing off-chain validations, and enlisting partners and community members.
1. Validator incentive and slashing mechanisms
At their essence, validators are responsible for verifying cross-chain transactions, playing a key role in upholding the security and integrity of an interoperability protocol. Elected via governance, these validators earn a portion of the protocol’s transaction fees as an economic incentive to continue securing the network and its infrastructure. On the flip side, these validators also bear financial responsibility when the services they provide go awry, including instances when a non-existent transaction is validated or if the protocol’s infrastructure goes offline. When this happens, validators will be “slashed,” meaning that they will lose a given portion of their collateral, depending on the severity of their actions.
By rewarding good behavior and penalizing bad actions, the interests of the protocol, validators and larger community can be aligned and upheld.
2. Off-chain validations
Having a chain-agnostic design is imperative for ensuring that a protocol’s operations are entirely independent of the uptime of all of its supported blockchains. If an underlying blockchain grinds to a halt, the protocol should continue processing the transactions for all other supported chains.
With this design, even if a blockchain goes offline, all transactions going to this blockchain would be processed as soon as the network was up again. As an added benefit of off-chain validation, validators don’t need to broadcast any transactions or bear gas costs — they simply sign a unique identifier of the transaction and store the signatures into a distributed storage protocol such as IPFS.
3. Audits and bug bounties
It goes without saying that crypto is an attractive target for hackers. Reputable cross-chain companies should engage top-tier security audit firms to identify and mitigate against any potential security vulnerabilities or bugs in a protocol’s smart contracts. Furthermore, true to the community-focused, collaborative nature of the crypto industry, running an ongoing bug bounty program is an excellent way to double down on security efforts. Bug bounties are rewards that enlist the help of experienced developers and whitehat community members to identify potential vulnerabilities and exploits in a protocol. By inviting developers to help review code in exchange for rewards, upholding the safety of a network becomes a mutually beneficial effort across user segments.
Cross-chain interoperability is still in its nascent stages, undergoing the growing pains of early-stage technology. Once a secure, unified cross-chain protocol standard arises, the crypto space will become significantly more accessible to the masses. Through greater validator incentivization, incorporating off-chain validations, and increasing community involvement, the blockchain ecosystem can operate in cohesion rather than in fragmentation, onboarding the next generation of users and fueling a new wave of innovative use cases.