Cross-Chain Challenges and Solutions in a Multi-Chain Ecosystem

In the context of the multi-chain landscape of blockchain, achieving secure and convenient cross-chain interoperability has always been a significant challenge faced by the industry. With the increasing demand for cross-chain transactions from users, these challenges have become more prominent. The main aspects include the following:

Main Challenges

security issues

Security is the most critical challenge in cross-chain transactions. Cross-chain bridge protocols that can attract a large amount of assets often become primary targets for hackers. Cross-chain bridges rely on trusted third-party validators to process transactions; if the number of validators is insufficient or the trust model is too centralized, it may be exploited by hackers. Additionally, contract vulnerabilities within the protocol itself often serve as entry points for attacks.

In August 2024, a certain cross-chain bridge was suspected of being hacked, resulting in a loss of approximately $12 million. In March 2022, that bridge had an even more serious security incident, with losses exceeding $600 million, which was referred to as the "largest loss in DeFi history."

high Gas fees

Cross-chain transactions usually incur higher Gas fees. Users need to consider the operating costs on both chains, which makes the overall transaction costs relatively high.

Complexity of Operation

Each blockchain network has its unique consensus mechanism and protocol. This decentralized and independent state requires users to perform complex and cumbersome operations when transferring assets and data across chains. Users who trade frequently are more likely to encounter issues with asset price slippage, increasing the difficulty of transactions.

ERC-7683: A New Solution

In response to the above issues, in May 2024, a certain trading platform and a certain interoperability protocol jointly proposed the ERC-7683 standard, aimed at simplifying cross-chain transaction processes through a shared execution network, enhancing their speed and security.

Core Technology

The ERC-7683 standard is created based on the CrossChainOrder structure, providing the ISettlementContract smart contract interface to implement a standard API for cross-chain trading execution systems. Its core idea is to make all "cross-chain intents" follow the same order structure, significantly enhancing the flexibility and user-friendliness of cross-chain operations.

Application Status

In August 2024, a certain Layer 2 solution announced the adoption of the ERC-7683 standard, aiming to achieve efficient transfer of ETH and USDC within its ecosystem and promote application layer interoperability across the broader Ethereum ecosystem.

It is worth noting that the ERC-7683 standard primarily addresses the standardization of implementation entry points, ensuring consistency in user experience. However, it does not directly solve the problem of insufficient cross-chain liquidity. The effective implementation of this standard requires the formation of a wide-area effect—more use cases coming on board, more users utilizing it, thereby attracting more "Fillers" (transaction executors), ultimately improving overall cross-chain transaction efficiency.

industry support

The co-founder of Ethereum expressed support for the ERC-7683 standard. He pointed out that the standard can include batch transactions, Merkle proofs, and other on-chain activities, and provided examples of its potential application scenarios: users can easily transfer assets between different chains by simply pasting the ERC-7683 address into their wallet.

Future Outlook

The multi-chain pattern is an inevitable trend in the Web3 era. The optimization and simplification of cross-chain transactions, as well as the further release of liquidity, will be key challenges for future development. The ERC-7683 standard directly addresses the pain points of cross-chain transactions and is expected to significantly enhance interoperability between blockchains, having a profound impact on the entire blockchain world.

At this stage, users can expect an enhanced experience brought by the ERC-7683 standard, which will inject new vitality into more DeFi projects, provide more liquidity support, and accelerate the development of the entire ecosystem.