How does the heterogeneous cross-chain protocol Poly Network provide value for the multi-chain ecosystem?

This article was published on ChainNews, author: Pan Zhixiong.

With the rapid development of ecosystems like Binance Smart Chain (BSC) and Solana, a cross-chain infrastructure that can connect multiple heterogeneous blockchain networks has become extremely important, especially as everyone hopes to migrate some basic asset liquidity from the Ethereum ecosystem as initial resources for starting their ecosystems.

As a result, cross-chain solutions or tools are receiving increasing attention from the market, such as Ren Protocol, pNetwork, and DeCus, which focus solely on asset cross-chain functionality, the NEAR Rainbow Bridge based on the concept of light nodes, and an increasing number of applications exploring the possibilities of cross-chain deployment.

Among them, Poly Network stands out as it provides a comprehensive cross-chain solution. Functionally, it is somewhat similar to Cosmos Hub, as it can connect multiple blockchain networks. However, unlike Cosmos Hub, it aims to support all blockchain networks rather than just those that meet specific requirements. Poly Network states that it has completed $4.5 billion in cross-chain asset transfers, with over 110,000 addresses using its cross-chain services. (Data source)

As one of the initiators of Poly Network, Onchain Distribution Technology CEO and Neo founder Da Hongfei stated, "Poly Network provides interoperability for various heterogeneous blockchains, helping projects and assets easily enter an interoperable world, and Poly Network has become a key platform hub. Integrating with Poly Network not only enhances the scalability of various protocols, projects, and tools but also optimizes the flow and use of on-chain assets."

In contrast, Cosmos and Polkadot offer a more specialized cross-chain solution. They have designed a cross-chain architecture that allows blockchains integrated into this solution to communicate. However, many blockchains may not natively integrate into this framework, which means that direct communication between the Cosmos ecosystem, Polkadot ecosystem, Ethereum, and Bitcoin networks is not possible, as they are all heterogeneous blockchain systems.

According to Poly Network's technical lead Tan Yuan, their difference from Cosmos and Polkadot lies in the fact that Poly Network does not establish a new center but connects all existing chains. "Poly Network does not need to build a large ecosystem, such as recreating Ethereum. The reason Cosmos and Polkadot develop relatively slowly is that they need to restructure their ecosystems rather than directly focus on cross-chain activities."

User and New Public Chain Needs: Asset Cross-Chain

As Ethereum's on-chain transaction costs (Gas) rise again, users need to spend hundreds of dollars to interact with smart contracts, creating a strong incentive to migrate some assets to other public chains with lower costs that can also provide similar functionalities.

For public chains, starting an ecosystem requires not only users but also a significant injection of assets to create network effects and develop application ecosystems, especially in financial scenarios.

Compared to issuing new assets, a more convenient method may be to migrate some assets from the Ethereum ecosystem to the networks of other new public chains. Therefore, Poly Network can serve as a bridge, providing such tools for all public chains and users.

In particular, EVM-compatible public chains are becoming more popular platforms recently, as application developers can quickly migrate applications from the Ethereum platform to these public chains, and many cryptographic components of these public chains can be reused, making it relatively easier for Poly Network to support them.

Additionally, there are many opportunities for other non-EVM-compatible public chains to develop their ecosystems in the future, so Poly Network will gradually support them as well. However, since many public chains have their unique cryptographic and consensus designs, supporting them requires some development costs.

Tan Yuan stated, "The differences between heterogeneous and homogeneous chains can be quite significant. Homogeneous chains, like Cosmos and Polkadot, have many similar elements such as block headers and cryptographic algorithms, making them easier to work with."

With the ongoing development by the Poly Network team, ten heterogeneous chains have already been integrated, including Bitcoin, Ethereum, Neo, Ontology, BSC, HECO, OKExChain, Elrond, Zilliqa, and Cosmos-SDK. "Each of these ten heterogeneous chains has a separate sub-module compatible with different protocols. Once compatible with these ten heterogeneous chains, it can also be compatible with all homogeneous chains within them."

Three Core Protocols: Asset Bridge, Cross-Chain Swap, NFT

In addition to the current pressing need for asset cross-chain functionality, as applications deploy across multiple chains and the multi-chain ecosystem evolves, the demand for liquidity aggregation will gradually emerge. Poly Network's second core protocol is designed in advance for such a future.

In simple terms, Poly Network's cross-chain Swap can provide the functionality for exchanging any assets across blockchains. However, from an implementation perspective, it requires not only the asset bridge based on Poly Network but also connections to the DeFi protocols within the blockchain networks themselves, leveraging existing liquidity for greater effect.

For example, by utilizing Uniswap on the Ethereum network, MDEX on HECO, and PancakeSwap on BSC, the liquidity of the DeFi ecosystem continues to improve, and capital efficiency is gradually increasing.

According to Poly Network, when users need to use cross-chain Swap, many smart contracts are invoked in the process. "First, it triggers asset cross-chain, then it goes through an intermediate liquidity pool, converting any asset into the corresponding stablecoin of the target chain, and then performs the cross-chain transfer to reach the target network."

There are already products developed for end-users using this solution. For instance, the O3 team, which previously developed a mobile wallet for the Neo ecosystem, has built the O3 Hub (cross-chain pool) functionality module based on Poly Network to provide users with services for cross-chain and any asset. Users can add liquidity on O3 Hub to achieve multi-chain asset mining in a single transaction.

Poly Network's third protocol, Poly Bridge NFT, focuses on a new asset class, providing a complete solution for NFT cross-chain functionality.

For most NFTs, whether they are game items or artworks, they are essentially assets. Therefore, NFTs may eventually circulate across different networks, utilizing blockchain networks to amplify the liquidity of non-fungible assets.

Currently, the bridging functionality of Poly Bridge NFT has been launched on the mainnet, allowing users to transfer NFT assets from Ethereum to the lower transaction fee BSC or HECO networks, and vice versa.

In terms of standards and mechanisms, Poly Network transmits the original NFT's attributes (Metadata) to the target chain to execute "minting/burning." Since different NFTs have different metadata standards, Poly Network adopts the industry-standard Opensea standard. "Additionally, we currently support ERC-721, and in the next version, we will also support ERC-1155."

Roadmap: A Public Chain Serving Public Chains

Poly Network currently resembles a consortium chain, but for a cross-chain platform that connects so many other blockchain networks, its ultimate destination must be a public chain; otherwise, it will face limitations.

Currently, the management of Poly Network relies on four major nodes, which is relatively centralized. However, this model can respond and update more quickly in the early development stages of the protocol, and all four nodes are reputable established projects or organizations in the industry: Onchain, Neo, Ontology, and Switcheo.

According to the Poly Network team, "Poly Network primarily addresses cross-chain needs, but in the long run, it aims to become a public chain."

Therefore, in the short term, Poly Network plans to introduce more reputable nodes and even public chains, which will not only enhance Poly Network's influence but also bring in more resources to increase the network's transaction volume and capacity.

However, in the long term, if it wants to switch to a public chain, it must adopt a permissionless consensus that allows everyone to participate fairly in the network. The team stated that since Poly Network itself does not hold assets, this consensus only needs to ensure the security of the chain itself. "Consensus could consider something like BFT+PoS because PoW is not very suitable for this chain."

In addition to the long-term plan to evolve into a public chain, Poly Network has many current plans that are unrelated to consensus, focusing more on enhancing Poly Network's own functionalities, such as connecting to more DeFi or NFT projects or connecting to more chains.

Originating in 2019, Poly Network has undergone more than two years of iteration. Although the current market environment is far from the stage of "all chains launching simultaneously," the rise of EVM-compatible chains has made the market feel a strong demand for cross-chain functionality for the first time.

There are already multiple cross-chain solutions in the market, and like public chain ecosystems, this market has enough capacity to accommodate multiple solutions without a single dominant player. However, for a protocol that provides public foundational services, what we hope to see is a more open, lower-cost protocol that has proven its security over time, as only this can provide stable and secure cross-chain services for all blockchain networks.