Cross-Chain Projects to Watch in 2023

Cross-Chain Projects to Watch in 2023

Cross-chain projects aren’t the shiniest products in Web3. They aren’t NFTs or games and are certainly not the most popular DeFi instruments. 

Additionally, they now have a reputation for being unsafe. After the Ronin hack in March 2022, people realized that cross chains are particularly vulnerable to hacks because they have a central point of failure. 

These cross-chain bridges create a pool of assets for which users foreign to a particular chain can exchange their assets. It is this pool of assets that are frequently attacked. 

Despite this, these cross-chain bridges are excellent instruments for bypassing third-party exchanges and simply moving from chain to chain to complete a transaction. 

However, not all cross-chain projects are the same. Some are safer, faster, and more reliable than others. We’ll be looking at five of the most interesting and exciting cross-chain projects you should check out in 2023. 

1. Wormhole

The first project on this list is Wormhole. It was created by Cereus.One and Solana to carry out transactions between Solana and Ethereum. However, with time, the bridge developers saw that Wormhole could be used for many other chains as well. This revelation prompted them to release a second version. 

Just one year after the first Wormhole got on the market, Wormhole V.2 launched, and this time it had support for Solana, Terra, Ethereum, and Binance Smart Chain. It also supports Avalanche, Polygon, Fantom, Oasis, Aurora, Karura, Acala, and Celo. 

Since Wormhole V.2 launched, it has distinguished itself as one of the most dependable bridges in Web3. For one, the chain has extremely low transaction fees, which stand at $0.0001, and a user-friendly interface. While some technical knowledge is still required to reliably make use of the network, it’s a hassle that can easily be dealt with. 

However, Wormhole still suffers from the security dilemmas plaguing cross-chain bridges. In March 2022, the chain was attacked through a vulnerability in its smart contract, and about $325 million in ETH was stolen from the bridge. At the time, it was the second-largest decentralized hack in crypto history. 

In response to the theft, Wormhole offered the hacker $10 million. However, the hacker refused to oblige. Thankfully, the bridge was eventually bailed out by Jump Capital, a Chicago-based trading firm.

Despite the unfortunate attack, Wormhole has continued to provide value to Web3 throughout the toughest months of the crypto winter. Not every project survives a loss as huge as that. It may be counterintuitive but it just proves why the project is one to watch in 2023.

2. LayerZero

Another important cross-chain bridge project to watch out for in 2023 is LayerZero. LayerZero is an omnichain interoperability protocol designed for cross-chain communication that’s specially optimized for effectiveness and guaranteed trustlessness. 

The LayerZero whitepaper argues that the protocol is the first cross-chain protocol to guarantee trustless transactions. Hence, the protocol can guarantee a certain level of safety that other protocols can’t quite match. However, that claim is somewhat dodgy since most cross-chain protocols operate via the means of trustless smart contracts. 

At the crux of LayerZero’s business is the idea that users don’t have to trust the protocol and that protocol will always deliver on its promises. The core difference between LayerZero and all other protocols is that it leverages two off-chain entities, the Oracle and Relayer, to deliver messages across chains without expensive cross-chain state machine replication or intermediary tokens. 

The Oracle, in this case, is a third-party service that provides a mechanism to read a block header from one chain and send it to another chain independently of other LayerZero components. The Relayer is a counterpart to the Oracle that fetches proof of a transaction rather than the blockhead itself. Both components work together to allow LayerZero to deliver messages without intermediary tokens. 

In September 2020, LayerZero raised $6 million through a Series A round led by Binance Labs and Multicoin Capital. Just seven months later, the project raised an additional $135 million in a Series A extension at a valuation of $1 billion. The round was led by Andreessen Horowitz of a16z, PayPal, Coinbase, and Uniswap Labs. The chain is expected to raise at a valuation of around $3 billion in its next funding round. 

3. Binance Bridge

Binance is one of the biggest institutions in Web3. It’s therefore no surprise that Binance Bridge is one to look out for next year. 

The Binance-Ethereum Bridge allows anyone to move funds from Binance to compatible chains. It currently supports Ethereum, XRP, LINK, ATOM, DOT, XTZ, and ONT. 

Early in 2022, Binance decommissioned the old Binance Bridge and reintroduced the project. This time it was called Binance Bridge 2.0. Binance did this to add new features to the product, give it a new look, and make cross-chain transactions better and faster than before. 

The most important part of this new update was that users would be able to perform all their cross transactions through their Binance Wallets and wouldn’t need third-party apps. Another big improvement is that users wouldn’t have to pay transaction fees or wait long before their transactions are confirmed. 

The new Binance Bridge has no transaction fees; users only need to worry about the gas fees for minting new tokens on the chain they want to transact on. However, like many cross-chain projects, Binance Bridge has also suffered hacking losses. 

In October, the chain was hit by a hack that drained almost $600 million from the platform. After the hack, validators suspended the network temporarily, and CZ finally said that user funds were saved. The fact that the project has gotten over that drastic attack and is waxing strong means that 2023 could be a great year. 

4. LI.FI

LI.FI is one of the biggest cross-chain projects in Europe. Recently, the project raised about $5 million in funding from Dragonfly Capital, Scalar, RockTree Capital, and Lattice Capital.

What stands LI.FI apart from the other cross-chain projects is how easy the interface itself is to use. Everything gets done within one interface, simplifying the protocol for users with little experience. 

However, developers, not users, will probably have more reasons to use LI.FI. The protocol allows them to incorporate dApp into any of their projects. Developers can also access LI.FI’s product stack, which allows them to use bridges without incorporating them themselves. 

The SDK that LI.FI offers is like a tool that aggregates bridges and DeXs across fourteen different blockchains. 

LI.FI explicitly argues that the entire protocol isn’t just a cross-chain instrument for users— it’s equally one for developers. That’s why the project takes great care to not just offer cross-chain capabilities to users but also to developers who are looking to build the next big thing. That’s an approach that may take it to the next level in 2023, so keeping a close eye on it is important.

5. Multichain

Formerly known as AnySwap, Multichain is an exciting cross-chain protocol. The network combines all the best parts of cross-chain technology into one bundle. It’s high-performance, non-custodial, and has a robust security infrastructure. 

Right now, Multichain works with many of the biggest chains in Web3. This includes BTC, XRP, LTC, ETH, and USDT. It supports around 20 ecosystems, which have around 948 types of assets in total. 

Since Multichain started in July 2020, it has shown immense flexibility and has been cheaper than many of its competitors. That’s one of the reasons why it remains a popular cross-chain protocol. 

The trust both retail users and institutional investors have in Multichain have seen the project’s locked assets reach a value of $4.5 billion. 

At the beginning of 2022, Multichain raised about $60 million in financing. The round was led by Binance Labs and had some of the biggest capital investors participating. Some of them include Sequoia China, IDG Capital, DeFiance Capital, Circle Ventures, Tron Foundation, Hypersphere Ventures, Primitive Ventures, Magic Ventures, and HashKey.

On the Flipside

  • Cross-chain protocols can be unsafe and many hold no liability for what happens to investors’ funds.

Why You Should Care

Cross-chain projects are a huge part of Web3. Since there are many blockchains, these protocols allow people to complete transactions directly on different chains. Cross-chain protocols make the lives of users and developers easier. That’s why you should care about them.

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