A fundamental challenge for the development of decentralized applications (dApps) is the fact that individual blockchains are not interoperable by design. If you want to publish an app that spans blockchains or leverages features that are only available on another blockchain, the standard workaround is token wrapping and taking advantage of a security hole. worm in the form of a bridge to pass the value of these tokens between the two separate blockchains. Depending on the relative market capitalization of the two blockchains and the number of wrapped tokens involved, these bridges created desirable attack vectors for bad actors looking to exploit security gaps, which I discussed in more detail in a previous article.
In a recently published article white paper, ChainZeta offers a different approach to the challenges of blockchain interoperability, through the creation of a public L1 (Layer 1) blockchain specifically designed to connect blockchains agnostically. It does this in order to facilitate interoperability, coupled with a generic smart contract for this L1 blockchain that can contain and manipulate assets on external blockchains.
How does ZetaChain work?
When it comes to engaging with multiple blockchains, a common approach to dApp development is to create an app for each chain. This has the potential to become quite impractical to maintain, especially as the number of heavily used blockchains continues to grow. ZetaChain offers app developers the ability to create a single “omnichain” app that interfaces with all other blockchains through ZetaChain. The diagram below, taken from the white paper, gives an example of what this might look like.
In an interview with The New Stack, where the ZetaChain Contributors Asked to remain anonymous, one of the main contributors said, “With this new paradigm, there could be a world where you deploy a smart contract on ZetaChain and then it works on all chains, so an app developer n You don’t have to deploy a dApp on Ethereum, Polygon and Solana. You can leverage liquidity on all connected chains – we act as a meta layer.
The general idea is that instead of needing to deploy a dApp and accompanying smart contracts on each chain, you add a few additional functions to your existing smart contract and ZetaChain unlocks the functionality they call an omnichain -dApp (odApp).
How is it different from Cosmos?
As I read the whitepaper, ZetaChain seemed to have similarities to what Cosmos offers with its vision of interconnected blockchains. I’ve covered Cosmos before discussing their approach to shared security across these interconnected blockchains.
Speaking with the ZetaChain team, one of the top contributors explained, “If you want to be part of the Cosmos ecosystem, you have to speak IBC,” which is its inter-blockchain communication protocol. The ZetaChains representative further explained that “ZetaChain can support any smart contract blockchain. We also enable support for non-smart contract chains like Bitcoin, Dogecoin, [and] Litecoin using the Threshold Signature Scheme (TSS).
In short, ZetaChain aims to be a protocol-independent layer to interact with any blockchain, while Cosmos has a specific protocol to engage with any compatible blockchain. The ability to control assets on Bitcoin seems to be attractive for financial services, where you have a smart contract on a blockchain that controls a certain amount of Bitcoin.
What about security?
Theoretically, ZetaChain solves one of the main problems plaguing bridging, eliminating the stored value tied to a wrapped currency that can fall victim to endless scams, like the $300 million Wormhole exploit that successfully lured the attention even in the mainstream financial press as CNBC. There is no wrapped currency waiting to be stolen in the ZetaChain approach.
They also seem to have thought about the risk of 51% attacks (explained in more detail in the shared security article linked above) and implemented a smart contract that controls the supply of ZetaChain.
What is less clear is how ZetaChain will build trust in its model of acting as an intermediary. In their model, you have to trust the blockchain you built your dApp on, the blockchain you connect to, and ZetaChain as the middle layer that makes this possible.
When I was initially asked to keep the ZetaChain team anonymous, my first reaction was that they must be doing something unscrupulous. Having met them, I no longer suspect that this is the case and they seem to have other reasons for remaining in the shadows. It also lends some credence to the fact that they received funds from some key players behind Coinbase and Binance. I think this is one of those areas where makers building in Web3 are going to need a paradigm shift in their thinking because most of us want to know who’s behind the technology on which we spend our IT budgets.