Multi-Chain

Multi-chain in blockchain refers to the DeFi (decentralized finance) platform, which allows different blockchain networks to interact. This platform's main purpose is to act as a bridge (or router) among multiple blockchains and ensure interoperability across these networks.

Dejun Qian launched the multi-chain crypto blockchain (formerly known as Anyswap) under the Fusion Foundation in 2020. It allowed users to bridge pegged tokens and liquidity pools. Also, swaps of crypto tokens were possible. They also released MULTI as the multi-chain coin on the platform.

A multi-chain platform is a protocol that allows users to bridge their tokens across different blockchains. It works in a DeFi space to ensure effective communication between multiple networks, increasing interoperability across these networks. So, if a person wants to transfer tokens to another network, the multi-chain bridge will lock and convert them into wrapped tokens before sending them. Likewise, it is also possible to send NFTs (non-fungible tokens) via this platform. However, they utilize various bridges and routes to perform this action.

The mechanism of multi-chain crypto depends on three major components: bridges, liquidity pools, routers, and SMPC nodes. When a transaction request occurs, the platform develops a bridge from the current blockchain to the desired one. During this process, the tokens get locked in smart contracts on the former chain. Nonetheless, they get wrapped until they reach the designated chain. However, this transfer can also occur via liquidity pools. 

Since some coins already exist in their native form, multi-chain bridges cannot be used. For instance, USDC acts as a native token on most blockchains. Instead, the platform's liquidity is applied. Here, the liquidity providers deposit their tokens in the pools, which ultimately route to the users via swaps. 

Once the bridge develops, the cross-chain routers perform their action. They take the user's request to the other blockchain via bridges or liquidity pools. However, if the platform supports certain assets, the routers will still transfer, even if it is a native or governance token. 

For privacy, the multi-chain crypto platform depends on the Secure Multi-Party Computation (SMPC) nodes. These nodes work on a distributed key generation algorithm, where each node has a small part of the private key. When all parts come together, the transaction can be signed. As a result, no one node has complete control of the secret key.

Following are the features of a multi-chain platform that enables blockchain protocol on their protocol. Let us look at them:

• Issuance Of Tokens: One significant feature is the platform's ability to issue tokens across different blockchains. In total, it supports 1100 crypto tokens. 
• Considers Multiple Blockchain Networks: The platform allows users to bridge tokens across 26 blockchains like Ethereum, Bitcoin, Binance Smart Chain, Polygon, Avalanche, and others. If a person wants to transfer BNB from the Binance smart chain to Ethereum, this protocol will wrap them up and issue them to the latter.
• Free Listing: This platform also enables listing requests at zero cost. Also, the process takes less time, from three days to one week. 
• Staking: The nodes can stake their multi-chain coins and earn veMULTI. Users holding MULTI can lock them and earn voting powers in return. For every 1 MULTI locked in a year, the holder receives 0.25 veMULTI. It was first launched in May 2022 to multi-holders. 
• Developer Easy Platform: Individuals who wish to run a multi-chain wallet or network need little hassle. The bare minimum requirement is 1GB of disk space and RAM of 512 bytes. However, for enhanced speed, the nodes must have RAM of 32 GB. 
• Peer-To-Peer Communication: This blockchain technology enables peer-to-peer interaction between the associated chains. Each node has a set of permissions along with an IP address. Unless the other chain recognizes the handshake, the connection does not develop. Only when the blockchain receives satisfactory messages does peer-to-peer interaction happen. 
• Scalability: Multiple transactions are recorded on this network, around 2000 of them operating on a secured base per second. 

Let us look at some examples of multi-chain platforms to comprehend the concept in a better way.

Example #1

Suppose Levin and Jessy are traders dealing in crypto tokens across various platforms. At one point, when Jessy needed some ETH for a transaction, the former did send her the requested amount. However, when Jessy wished to return the owed amount, the issue of switching between blockchains occurred. So, she downloaded the multi-chain application and logged in to her account. Later, they approved the blockchain current and connected it to the supported multi-chain wallet. As a result, the POLY got swapped with ETH. Once approved, these coins were sent to Levin via a cross-chain router.

Example #2

As of August 2023, the blockchain network multi-chain is facing a significant crisis after its CEO, Zhaojun He, was arrested by Chinese authorities in May. The arrest has left $1.5 billion in total value locked (TVL) on the protocol inaccessible, raising concerns among users and investors. Although the specific charges against Zhaojun He have not been disclosed, it is suspected that the arrest might be linked to a broader crackdown on cryptocurrency by Chinese authorities, possibly involving anti-money laundering operations.

Since the arrest, there have been mysterious movements of funds on the multi-chain protocol, with assets being transferred to unidentified wallets. This has further escalated fears and confusion among users, many of whom are now unable to access their investments. The situation has led to the formation of a victims' group, with over 300 members demanding answers and clarity on the fate of their funds.

With the benefits offered by multi-chain, there are certain limitations to it. Let us look at them:

Although multi-chain and cross-chain have various similarities in their functions, they differ. So does Hyperledger Fabric. Let us look at their differences: