Building multichain is a new necessity for DeFi products

Today, your DeFi product must be multi-chain to be competitive; This is the harsh (and exciting) truth of 2021. Whether you are creating a wallet, loan service, or DeFi game, your target audience knows there is more to the crypto space than Ethereum. And they expect you to provide the best of all worlds.

It seems there will always be a debate on which blockchain is the best foundation for projects. Enhanced security, low transaction costs and formidable speed - there will always be a chain that offers greater benefits. As speculators argue over the next "Ethereum killer," a new multi-chain reality is forming that has less marked competitive implication. Rather than a dog-eat-dog framework, the future of blockchain and DeFi will favor those products that are combined in a cooperative multi-user solution and eventually forget about those that remain isolated.

This trend is driven, in part, by the Polkadot and Kusama Ecosystem which was built with a multi-chain philosophy at its core. The parachutes connected to the relay chain easily communicate with each other, further raising the bar throughout the space. With the second set of para-chain slot auctions Just around the corner, continue to set the standard for the multi-chain industry.

Projects that make it easier for the average user to connect more systems, such as the Moonbeam protocol and the Phantom wallet, are raising millions of dollars to simplify this new multi-chain reality for users. But how do you navigate this as a developer?

We can clearly see that the market is determined by the demands of the users. Depending on their needs, their users are turning to blockchains that serve them better and the platforms that offer them access. As a result, projects that support multiple chains get larger audiences and more liquidity. This means that, at a minimum, your DeFi product must be compatible with Ethereum and a "niche" blockchain - there are established leaders for trading, gambling, non-fungible tokens (NFTs), and more. And the more chains you can interact with, the better.

When you are a developer pursuing these multi-chain goals, there are several barriers you could face.

Related: How much intrigue is behind the Kusama parachain auctions?

Barriers to multi-chain construction

High prices: Let's say you want to build a bridge between chains; you need to run a large number of nodes for all the chains you want to join. It is expensive and very maintenance intensive. It can be costly for a developer to get up and running a single blockchain node. Now imagine that you need to connect two, three or ten.

It becomes extremely difficult in terms of hardware, maintenance, and access to capital. You need a lot more resources and investments to get started, unless you can find other profitable solutions.

Security challenges: In light of recent bridge attacks, security remains one of the biggest challenges associated with multi-chain: when assets are exchanged, there are more opportunities for hackers. If we take a look at the recent PolyNetwork incident, we can see that bridges can become extremely vulnerable.

Hackers discovered the network's weaknesses in Poly's cross-chain messaging and exploited them to obtain an estimated $ 600 million in user funding. This is an important lesson for new multi-chain DeFi solutions to understand the consequences of security flaws.

Layers of complexity: Of course, connecting and integrating blockchains will add layers of complexity and the solutions necessary to connect disparate chains. Each string provides a new set of idiosyncrasies, mechanisms, and nuances that builders will need to become familiar with. This likely means that DeFi organizations will need access to a broader talent pool to access more skill sets. Blockchains are constantly evolving and you will need it too.

The solution

Despite the barriers and added difficulty of multi-chain building, it is critical to the future success of DeFi products. There can be no isolated products in Web 3.0, as they do not exist in a vacuum but rather in a decentralized, next-generation economy. Projects need a robust and connected infrastructure to market themselves effectively in this economy and excite new audiences. But how can we get there?

We need to provide developers with easy and affordable access to nodes, APIs, and support for an increasing number of blockchains. With more ways to build, DeFi developers can break down barriers to entry and start contributing to the next generations of blockchain and finance. The faster we break down these barriers, the smoother our next steps toward a better user experience and mass adoption will be.

This article does not contain investment advice or recommendations. Every trade and investment move involves risk, and readers should do their own research when making a decision.

The views, thoughts, and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.