DeFi | GameFi

Cross-Chain Bridging for DeFi and GameFi

May 14, 2024

Imagine a group of small islands dotted around an area of an ocean. Each island has a small settlement of people, going about their business and living as best they know how. But there’s a problem. One island has wood but little food. They can build rudimentary huts but can scarcely eat. Their closest island has plenty of food but no wood, so they lack shelter. A third island has wood and food but no hay for their animals. Another island is brimming with hay but little coal to light fires. However, the island with the wood does have coal reserves. Then, one day, someone has an idea. Why not build bridges connecting all the islands so all the islanders can share resources? Soon, wood, food, coal, and hay are moving across the islands, and islanders’ business grows tenfold.

Now, imagine each of those islands is a blockchain. Each blockchain hosts a set of tokenised assets, which had remained confined to their blockchain. Why not build bridges across the blockchains so that assets can be easily shared and traded, similar to what the islanders did?

Cross-chain bridges: a simple solution to a big problem

In computing environments, some terms can be obscure and non-descript. That is not the case here. A cross-chain bridge does exactly what it says. It is a mechanism that enables the transfer of assets back and forth between two or more chains. Those assets can be tokens, cryptocurrencies, or any other tokenised assets hosted on the chains.

You might be wondering what sort of wizardry this is. Furthermore, you might question how it is possible to move assets between two chains whose protocols, rules, etc. might be completely different. These are valid questions, and here’s the answer. The bridge acts as a neutral zone (a no man’s land of sorts) where the switch occurs. 

An example: two blockchain games, one hosted on an Ethereum chain, the second hosted on WAX. Ethereum uses a proof-of-work consensus protocol, while WAX uses a proof-of-stake one, each with its own set of rules. And each of these games has some cool in-game assets, maps, etc. Each game world features a thriving game economy and has something that the other gaming environment lacks (remember the islanders?) Why not connect the two chains with a bridge and enable asset swapping, so that both gaming worlds (and their in-game economies) expand and grow?

Exponential growth for GameFi and DeFi environments

Blockchain has yielded much disruption and innovation throughout its relatively short lifespan, and the future looks just as innovative and bright. 

For some time, this technology has been associated with decentralised finance (DeFi). That is the provision of financial instruments without reliance on centralised intermediaries, such as banks, credit unions, or brokerages. The marriage between blockchain and DeFi has been a successful one, fostering a new era of financial inclusivity and autonomy. According to Statista, there are currently billions held in DeFi environments, showcasing its widespread acceptance and potential for further growth. 

But in more recent times, blockchain has spread its area of influence to gaming in the form of game finance (GameFi), combining cryptocurrencies, non-fungible tokens (NFTs), and other tokenised assets to create a gaming environment where players can play, trade, and earn. This development provides players with true ownership of their in-game items and the ability to earn real-world value through gameplay.

The mechanics underlying GameFi are relatively simple. In-game assets are distributed in NFT form, which guarantees ownership. This is key, as it enables the players to trade these assets as they see fit, sell them to other players, etc. And this is where cross-chain bridges come in. These two-way paths enable these assets to be moved from one chain to another, thus not only safeguarding the liquidity but also enhancing it by facilitating a wider marketplace. By doing this, the player pool grows exponentially, as players can participate in multiple gaming environments without being restricted by the boundaries of a single blockchain.

The same applies to DeFi environments, albeit without the gaming part. Users of different blockchains can have their assets exchanged on the bridge so they can be used on another blockchain. This is sometimes called ‘cross-chain swap.’ It is crucial for building a more interconnected and fluid blockchain ecosystem, where assets can freely move across different platforms, enhancing the user experience and broadening the scope of possibilities.

Cross-chain bridging with Zaisan

The benefits of multi-chain bridging are clear. The islanders knew it, and now you know too. Scalability, portability, and a massively expanded user or player pool are just the tip of the iceberg. These advancements signify a shift towards a more integrated, versatile, and user-centric blockchain ecosystem.

As blockchain technology continues to evolve, it promises to unlock even more innovative applications and opportunities, potentially transforming industries beyond finance and gaming, such as supply chain management, healthcare, and beyond. The journey of blockchain from a novel digital ledger to a bedrock of digital innovation illustrates its immense potential and the myriad of possibilities it holds for the future.

Zaisan is a multi-discipline blockchain services provider, including cross-chain bridging hosting. Among many other features, Zaisan offers the possibility of swapping tokens between Binance Smart Chain (BSC), WAX, and Ethereum.

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