What are the difficulties with full-chain interoperability? What are the core features of ZetaChain?

Author: Haotian, Source: Author Twitter @tmel0211

Recently, the airdrop released by the cross-chain interoperability L1 public chain @zetablockchain has attracted market attention to the "chain abstraction" track. What is chain abstraction, what are the difficulties in full-chain interoperability, and what are the core features of ZetaChain?

In my opinion, if modularization is a "vertical" strategy, then chain abstraction is a "connected horizontal" strategy, which is one of the key tracks that must be paid attention to in 2024. Why, next, let me talk about my understanding:

Whether vertical or horizontal, it is an "alliance" strategy. Modularization is to combine idle blockchain development capabilities with Modular components. A combination of forms to counter Monolithic's comprehensive public chain.

Chain abstraction connects the liquidity scattered among chains in the form of interoperability integration to enhance the experience of developers and users.

What is chain abstraction? The co-founder of Near recently put forward the concept of "chain abstraction". Simple understanding: modularization separates the different functional layers of the blockchain into settlement layer, DA layer, execution layer, rollup layer, etc. This has greatly stimulated the chain construction market. prosperity, but at the same time, it will make liquidity, applications, users, etc. between chains more dispersed, which will bring huge barriers to ordinary users and even developers.

"Chain abstraction" is to solve interoperability problems such as cross-chain communication, asset transfer, and cross-chain smart contract calls between different chains by building a universal all-purpose smart contract.

There are two main common chain-wide interoperability issues:

1) Communication issues between non-similar smart contract chains, such as how to make Can UTXO non-smart contract platforms such as Bitcoin establish effective communication connections with account smart contract platforms such as Ethereum?

2) The problem of non-Wrap method transfer of cross-chain assets. The Wrap method is a common cross-chain bridge solution, but frictions such as handling fees in such solutions cause huge capital losses and It is usually accompanied by a greater centralization risk of asset multi-signature management.

So, can ZetaChain solve these two problems, and how?

ZetaChain is a proof-of-stake blockchain built on the Cosmos SDK and Tendermint PBFT consensus engine. It can be thought of as an application-specific blockchain framework for interoperability.

In layman's terms, it is a "chain within a chain", which adopts a "blockchain of blockchains" (BOB) method, in which a specific chain is embedded into the full chain environment to provide data, network, A framework for consensus, incentive and contract layers to enable interoperability between blockchains.

The core architecture of ZetaChain is mainly divided into: verifiers, observers, and signers.

Verifiers can verify the consensus of maintaining the chain by pledging ZETA tokens. For example, the state transfer of other chains submitted by observers needs to be confirmed by the vote of the verifiers, so the verifiers can obtain certain token incentives. ;

The observer’s responsibility is to monitor the full nodes of the external chain to synchronize specific transaction logs, transfer events and status information, and synchronize the information to the verifiers who determine the consensus;

The signer is mainly responsible for confirming the identity of the external chain. When it comes to requests for asset circulation, the signer can participate in asset signing to ensure safe cross-chain interoperability of assets.

Based on these basic frameworks, ZetaChain can effectively solve the above-mentioned full-chain interoperability issues:

1) Between the EVM chain and the UTXO model chain When assets are in circulation, since there is no smart contract on the Bitcoin network, the only effective way is to deploy light nodes and perform MPC multi-party signature operations based on the ECDSA signature algorithm. Since ZetaChain can hold TSS private keys and addresses, it is possible to use the intelligence on ZetaChain Contract connections manage assets native to the Bitcoin network.

Throughout the process, ZetaChain’s observers must effectively track and manage UTXO on Bitcoin. The core logic is to use Bitcoin as an asset settlement layer to achieve effective control of assets through a multi-signature algorithm. and circulation;

2) The current common cross-chain bridge solutions are the logic of locking assets in chain A and issuing additional assets in chain B. This interaction premise will not only lock the liquidity of a single chain , it will also cause asset loss during the Wrap packaging process, and is often criticized for its asset loss when it comes to DeFi-related application scenarios.

In response to this, ZetaChain built a full-chain Ominichain smart contract and created the ZRC20 token standard. This enables ZetaChain’s full-chain asset circulation to be based on non-Wrap status.

Popular understanding: ZetaChain is equivalent to a chain-in-chain settlement layer in a full-chain environment. Chain A initiates an asset transfer to chain B, which is equivalent to chain A first "settling" with ZetaChain and then settling. The status is synchronized to the B chain, and the B chain will obtain the permission to use the corresponding ZRC20 token. There is no Wrap asset loss and friction in the whole process.

3) The atomic transaction feature based on smart contract management enables external links to use native assets. For example, a cross-chain AMM decentralized exchange can be implemented based on this feature. The general logic is: the assets on each chain are first paired with ZETA. If you want to exchange asset X on chain A with asset Y on chain B, , you can first use the fund pool on the A chain to exchange X for ZETA, then transfer the ZETA cross-chain information on the A chain to B, and then convert the ZETA on the B chain into Y through the Y/ZETA trading pair.

This is very different from trading on different chains and then trading across chains again. It directly reduces transaction slippage and cross-chain losses, which is a great development for the cross-chain deployment and application of DeFi protocols. There are benefits.

The above, through the technical analysis of ZetaChain, everyone can more or less perceive the significance of "chain abstraction" to the current blockchain ecology:

To B For end developers, it can reduce the cost of deploying various protocols across chains and manage liquidity in a full-chain environment, which not only unifies market management but also reduces security risk exposure, especially in the multi-chain era of modular combination and assembly. The full-chain interactive operability solution will become a necessary supplement;

For C-side users, chain abstraction will simplify the relationship between users and various back-end protocols into the relationship between users and DApp applications. Interaction, or even the user directly interacting with the wallet can achieve a full-chain interactive experience, and the wallet can serve as the Solver processing center for the user's complex intent Intent.

Note: The interoperability track, that is, the chain abstract track, will be one of the hottest directions in 2024. Currently, the projects covered by my personal research include 
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@zetablockchain, @ParticleNtwrk, @Entanglefi, @NEARProtocol , etc., it is worth continuing to pay attention to the trends of this track.