With the rise of hundreds of cryptocurrencies, cross-chain transactions have become a hot topic in the blockchain world. Cross-chain transactions allow users to move digital assets between different blockchains, bringing more choices to users, and may also become the cornerstone of the future digital financial world. However, cross-chain transactions also face some challenges, such as interoperability, security and compliance. Ethereum is the most representative intelligent contract platform at present, and it is also actively exploring solutions for cross-chain transactions.
Traditionally, cross-chain transactions are mainly realized through third-party intermediaries. This method has the problems of centralization risk, low efficiency and high handling fee. Ethereum is committed to solving these problems, that is, by developing more technologies and standards, to achieve more secure and efficient decentralized cross-chain transactions.
The first solution is the atomic exchange protocol. AtomicSwap is a cross-chain transaction protocol without trust mechanism, which can ensure that the digital assets between participants will not be maliciously attacked in cross-chain transactions. Ethereum users can use this protocol to achieve transactions with other blockchains, and in this process, they do not have to rely on third parties and intermediaries. Because the protocol does not need trust mechanism, it can be more secure and can complete the transaction under strong verification conditions.
The second solution is RelayChain/Sidechain. A trunk chain is a super chain that can connect multiple single blockchains. Although there is no direct interaction between each blockchain, they all have relay chains that can communicate with each other. The trunk chain being developed by Ethereum Foundation is Polkadot. As an independent blockchain, it can process the information of other blockchains and send it back to the original blockchain. In this architecture, Ethereum can send the transaction to Polkadot, and then Polkadot sends the transaction to the target blockchain and processes the transaction in the blockchain.
The third solution is the bridging protocol. The bridge agreement aims to build a bridge between the blockchain and the traditional financial market. Ethereum has developed a cryptocurrency called WrappedBitcoin(WBTC), which is the standard token of Ethereum ERC-20, and its value is equivalent to bitcoin. Through WBTC, bitcoin holders can exchange it into ERC-20 standard tokens, and then exchange it to Ethereum to realize the use of bitcoin in Ethereum. In this way, bitcoin can be carried out on the smart contract of Ethereum, thus obtaining more application scenarios.
In a word, Ethereum is trying to solve the problem of cross-chain trading and provide various solutions to realize safe, efficient and interoperable cross-chain trading. These solutions will promote the further development and application of blockchain and digital asset market, and bring users a more convenient, safer and more diversified digital asset experience.