What’s Next After Defi And NFT’s
Blockchain has the potential to be implemented in various industries. Use cases are still getting developed in niche sectors like Supply Chain, Medicine, Real Estate, etc. Once we somewhat figured out the technical foundations of a public blockchain ( Layer 1s, Relay Chains, Layer 2s, experimenting with Governance, trying different Tokenomics, etc), we were ready to build stacks over the foundational framework. Defi was the first sector that gained overwhelming popularity. This was soon followed by Non-Fungible Tokens. Since then Defi has gone back to development mode and it is said that NFTs have entered a bubble zone. These 2 sectors will come back in multiple waves bringing in the need for upgraded solutions (for example Uniswap v3, AAVE launching protocol for institutions). There are however newer sectors that will rise into prominence.
As we slowly move from the monopoly of Ethereum to other popular chains, interoperability becomes increasingly necessary. Let us take examples of the problems we face currently.
1. I own NFTs in HEN in Tezos. I can not sell it in Opensea.
2. I want to move my DOT from polkadot.js to Binance Smart Chain. I do not know if I can do it directly. I have to send my DOT to Binance Exchange and then send it from there.
3. Let us take the example of Finney Coins, I have them in EOS and I have them in WAX. They are in silos, I can not transfer them in between the 2 chains. As a result, I am unable to take advantage of the economic disparity between the two chains and hence losing on opportunities.
4. If I want to send USDT to my parent, I have to use Tron Network to reduce my gas fees.
5. Always, sending tokens directly from one chain to a different chain results in the loss of tokens.
All these problems will be bigger once individuals expand to multiple blockchains. People are not maximalists, they will shift to greener pastures if a blockchain can produce that. I recently got a domain name in NEAR (my first time in NEAR, but it’s a start).
There have been solutions to solve this problem. The introduction of WBTC ensured that we were able to use Bitcoin through Ethereum based smart contract. Ren Protocol ushered in interesting solutions. Ren became quite popular. However, now, we need such solutions more than ever.
Bridge protocol brings in interoperability and this is one segment we desperately need now. And because of this demand, this segment is leading the race to become the next big thing after Defi and NFTs. There has been work going on in silos. For example, each protocol (and even IDOs) talk about interoperability. Lesser-known Layer 1 and Layer 2 solutions like Fuse Network, Secret Network are building bridges to Binance Smart Chain. Protocols are bridging to MATIC. There are few problems with these
1. Each of these protocols has proactively built its bridges to increase its USP. They act in Silos.
2. Such bridges act as a to and fro channel. They do not have a network of chains.
3. These bridges are developed as per the requirement of individual projects and not as per the requirement of the market.
The main challenge is the lack of a proper bridge hub solution where I can choose to go to any blockchain I like with any token and from there I can choose not to return, but land on a different blockchain. It's like a network of roads leading to any office or market which is important. Important to the user, and not to the project. I can go to Hen and then Land in Opensea and then go to Atomic Hub. Just like the other protocols people with start using this bridge network extensively. Darwinia Network is one such project I will talk about in my next article. They have already bridged Ethereum, Tron, Huobi Chain and now working on Kusama Chain. I will try to show with their model how the future of bridge solutions will look like.
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