VYSYN Ventures Weekly Insights #67 — Cardano CEO Hoskinson advocates for interoperability amid broader pushes towards an interconnected blockchain industry.
Charles Hoskinson, CEO and founder of Cardano, believes the future of the blockchain industry lies in blockchains coexisting with high levels of interoperability between networks. According to him, the benefits of such a system outweighs the ones brought about by competing blockchains, which means cooperation and interoperability are natural evolutionary steps in the advancement of the wider crypto industry.
In the latest VYSYN Release, we analyze Hoskinson’s prediction and explore the possibilities of independent blockchains working together. We also dive into examples of interoperable blockchains.
Hoskinson advocates for interoperability
Charles Hoskinson recently emphasized the importance of interoperability among blockchain networks. As it stands, there is limited interoperability between blockchain networks as most exist as isolated systems. Few technologies facilitate interaction between chains.
Two blockchains that have been mentioned as potential collaborators in the move towards interoperability are Cardano and Solana. Cardano is a DApp creation platform that runs on a proof-of-stake (PoS) protocol. Dubbed the Ethereum rival, the platform is based on peer-review research, and promotes a system of decentralized governance. The Cardano network recently executed an upgrade christened the “Alonzo” hard fork. This upgrade allows Cardano to support smart contract creation and their attendant functionalities.
Solana is also a DApp creation platform that runs on a Proof-of-History (PoH) protocol, and has always enabled smart contract functionality. According to information on the project’s website, over 400 individual projects are currently running within its ecosystem, cutting across DeFi, NFT, Web3. Solana has recently been recording tremendous growth as it’s high-throughput low-cost chain attracts an increasing share of Dapps and users.
It’s native token SOL has also outperformed the broader market in recent weeks. SOL recently reached all-time heights of over $220 on September 9th but some network issues during the week, alongside broader market declines, catalyzed a reversal which has SOL trading at $145 at the time of writing.
Interoperability between Cardano and Solana is certainly possible. If executed correctly, such a development would increase the value inherent in each network. A bridge between Cardano’s PoS and Solana’s PoH protocols would create a network that gives users the advantages of both blockchain networks along with the ability to transfer assets and query data between both networks.
Hoskinson has suggested ways that both Cardano and Solana can work together. But firstly, he emphasized that such a development will be the decision of the project’s community, not his. He believes that both projects can collaborate for economic, engineering, and scientific purposes.
A hypothetical scenario for collaboration could be a financial Cardano DApp that would leverage SOL’s tech to overcome Cardano’s weaknesses such as transaction times. In turn SOL DApps could leverage Cardano’s expertise to gain access to markets around the world while remaining compliant. Hoskinson notes that a collaboration can only happen after both projects have shared interests in solving the same problems.
Previous advances in interoperability
The activation of Solana’s Wormhole earlier this year, forming a bridge between Solana and Ethereum, is an example of interoperability. It is also one of the reasons behind Solana’s rise to prominence.
Another blockchain project due to its interoperability potential is Polkadot. Running on a Delegated Proof-of-Stake (DPoS) algorithm, a consensus algorithm that uses a democratic voting and election process to protect a blockchain, the project aims to promote interoperability between blockchains. Projects like Kusama and the Acala network run on the Polkadot ecosystem and can easily interact with other chains.
According to Hoskinson, collaboration through interoperability can be likened to how people use parallel WiFi routers in their living or workspaces. No one cares about the brand of router their devices are connected to, as long as they’re connected to the network.
Interoperability movements are not limited to altcoins. A recent announcement by the RSK project, a side chain of the Bitcoin blockchain, is an indication that developers are thinking along the same lines. The team behind RSK announced the launch of a bridge with Ethereum. A side-effect of this development is that developers on the RSK network will get access to Ethereum’s user base, the home of DeFi projects.
Will we have a fully interoperable blockchain ecosystem?
Blockchain technology is still in its early stages of development and is currently just scratching the surface of it’s full potential. This is evident with the many upgrades that are emerging even in well-established blockchains like Ethereum. As the industry grows, products will continue to evolve, and so will the narratives and philosophies surrounding the industry.
Thanks to the influx of new products in the industry enabled by DeFi and NFTs, the interoperability conversation is here to stay. In the long run, we may have an industry where fully interoperable blockchains function to provide users maximum value. However, as it stands, we are seeing some major entities move towards greater interoperability.
About VYSYN Ventures
VYSYN Ventures is a longstanding venture capital company that specializes in funding and supporting disruptive startups in the blockchain and cryptocurrency industry. We have provided early-stage support to several projects that have grown to USD market capitalizations of hundreds of millions and even billions. Our incubation program focuses on providing capital allocations, versatile marketing support, and tech assistance.