Blockchain Interoperability is Complex and Needs Better Focus on Security: Unhashed #17

For Unhashed #17, I reached out to Alex Smirnov, the cofounder of deBridge, a cross-chain platform enabling the flow of data across blockchains and helping projects expand to multiple L1s and L2s. In this interview, we cover a variety of topics covering blockchain, crypto, and DeFi. So, let’s dive right in.

Q1. Welcome to Unhashed. What’s your story of getting into crypto and what challenges led you to establish your project deBridge?

Answer: My name is Alex Smirnov. I’m a technical person and I left the academia of Moscow State University where I was working on my Ph.D. thesis in the area of mathematics. I ended up not defending my thesis as I became too fascinated and intrigued by blockchain technologies and the development of blockchain-connected solutions.

My co-founder Yaroslav and I started Phenom – a blockchain research and development company – back in 2017, where we worked on numerous blockchain solutions while participating in various hackathons. One of our focus areas was arbitrage and trading, but we experienced various challenges with centralized parties, frozen funds, long KYC processes, and inefficiencies in the market. We knew that a lot of other people also faced these issues, and that’s why we ended up participating in the Spring 2021 Chainlink Global Hackathon where we ended up winning among more than 140 projects.

Q2: Lack of liquidity is a common concern in blockchain-related bridging solutions. How feasible is cross-chain liquidity transfer between chains with different consensus mechanisms?

Answer: The lack and fragmentation of liquidity is certainly a problem for projects in the ecosystem. This is something that we have had in mind with our protocol design. The current problem is not necessarily about different consensus mechanisms, but rather about liquidity fragmentation as many bridging solutions are trying to create their own AMMs or DEXes that result in additional fragmentation.

It is possible to tap into this existing DeFi infrastructure by using aggregators and DEXes on each blockchain network to achieve the lowest slippage. That is what we are doing at deBridge. Through this approach, one can ensure that the protocol is fully composable with existing DeFi infrastructure, so instead of creating fragmented liquidity, the protocol can facilitate the utilization of existing on-chain liquidity from other protocols like Curve, Uniswap, Sushi, and others.

This makes it highly convenient to access cross-chain liquidity as any smart contract and user can interact with protocols directly from other blockchains. Ultimately, the end users don’t have to think about liquidity and wrapped assets, they just receive the desired asset directly in their wallet.

Q3: Corporates adopting blockchain tech are using permissioned blockchains with minimal to zero external communication. How can they leverage interoperable solutions to further improve?

Answer: One of the most prominent features of public blockchains is their open-source nature and how fast development is going. You only need to create a solution once, and other projects and developers can build new primitives and applications based on already existing ones.

Companies from the traditional world will pick a blockchain network dependent on their specific need. One company may value decentralization over costs, others may prefer the opposite. That’s why it’s crucial to have an infrastructure that enables companies to tap into different blockchain networks based on their preferences, and that can be used as a gateway to interconnect different blockchain networks – private and permissioned with the public and permissionless. This will open up a vast range of new opportunities for legacy companies that have been mostly interested in permissioned blockchains to date.

Q4: deBridge proposes the use of the Light Validation method when the gas fees are high among any of the two blockchain networks. Please explain the method in detail while also touching upon the method’s reliability.

Answer: deBridge has taken a unique and different approach that allows protocols and applications to be completely independent on gas prices in the different blockchains that are supported. The validators that help secure the deBridge protocol, detect all transactions that pass through the deBridge smart contract on every blockchain. As soon as a specific transaction achieves its finality, validators will sign a distinct transaction identifier and store signatures in IPFS. This provides the ability for users and any arbitrary wallet to retrieve signatures from IPFS to initiate transactions in the target chain.

This approach allows the deBridge protocol to be fully independent on the uptime of any blockchain, and continue to validate transactions even if some supported blockchains would for some reason be paused. Light off-chain validations allow to achieve significant transaction throughput with thousands of cross-chain transactions to be processed per second.

Q5: With the lack of global standards in place, is interoperability a security loophole? Share your thoughts on interoperability being a mask for malicious data theft and abuse.

Answer: I think with every new technology, there’s a degree of uncertainty. Cross-chain interoperability is a completely new era within the blockchain ecosystem that has just started to evolve. We have already seen different hacks of projects that try to tap into this new and emerging market. There's no doubt that cross-chain interoperability is complex and difficult to build, but this makes it even more important to have a focus on security via audits, bounties, and code reviews during the development process.

Cross-chain interoperability solutions utilize data and information that are publicly available on-chain, so I would say it’s not a mask for malicious data theft and abuse. It’s rather a tool that can be used in numerous ways that will eventually end up providing a powerful set of technologies and infrastructure that unite different independent blockchain networks and accelerate the overall growth of the blockchain ecosystem.

Q6: What are your thoughts on blockchain agnostic protocols being the future of the DeFi and crypto market?

Answer: I truly believe the most used and prominent protocols in the future will be blockchain-agnostic. Today, we have more than 100 public blockchain networks. Some of them solve specific problems like scaling or privacy. Others are just forks of others with their own communities. The main problem is that all these chains have evolved independently and are not interconnected with each other. This leads to vital problems of ecosystem fragmentation, such as fragmentation of technologies, liquidity, and even competitive environments.

In the future, projects and users will tap into specific blockchain networks for some specific features and the entire ecosystem will communicate with each other. Users will for instance be able to deposit funds in one blockchain, draw credit in a second blockchain, and repay their loan in a third one. This is something that hasn't been possible in the past, and we believe these cross-chain interoperability features will push the ecosystem forward to the next phase.

Disclaimer: The sole purpose of Unhashed is to unhash (decode) information about projects innovating using blockchain and cryptocurrencies and share it with the community. The writer does not have any vested interest in any of the projects covered herein. Not that this article shares any, but still, taking investment advice from strangers on the internet is not a wise thing to do.