The need for cross-chain NFTs in a multi-chain ecosystem
Ramani Ramachandran is the CEO and co-founder of Router protocol and Dfyn network.
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For a multi-chain ecosystem to thrive and crypto to evolve, cross-chain non-fungible tokens (NFTs) are a must.
In the face of recent events, there is much to be said for centralized, opaque entities. We have been hit by disaster after disaster during 2022 – the collapse of FTX be the freshest in our minds. People dislike crypto and are looking for a remedy.
Amidst the chaos, there is one sector that has gained massive traction: NFTs. And it’s not just crypto giants who like Binance which shows confidence, but real-life adoption is also increasing. Luxury brands such as Guccisports icons like Ronaldo, and even social platforms like Reddit and Twitter has integrated NFTs at a rapid pace.
However, there is a problem. NFTs are siled by individual blockchains while we live in a multi-chain ecosystem. Thus, there is a case to be made for cross-chain NFTs.
Multi-chain ecosystem
Crypto has an abundance of Layer 1 (L1) blockchains.
Some are built to be general, while others have a specific niche they are trying to fill. And since they come with different trade-offs between scalability, throughput and security, there is not yet a clear winner who can take it all.
So there won’t be one chain on top of the mountain. There will always be different projects that will choose their home based on their specific needs.
Because of these differences, the users, builders, and protocols of Web3 are spread across chains, forming several disjointed networks.
Basically, this idea comes with the problem of isolation and fragmented liquidity. This obstacle is already partially solved by cross-chain bridges that allow you to lock assets on one chain and extract them on another.
But in a multi-chain future, fragmentation of fungible tokens like ethereum (ETH) or avalanche (AVAX) will not be the only thing limiting users from accessing other ecosystems.
Non-fungible tokens have several innovative use cases due to their verifiable and trustless properties, but there is one that is the natural progression for the Web3 community: digital identity.
Digital identities
We all portray an external image of ourselves online.
And it’s for a good reason. As we have evolved into a more digital world, we are slowly transferring our real personas online. Think about social media – we project an image of ourselves on different platforms such as Twitter, InstagramEven LinkedIn.
It is your digital identity – a representation of your real persona in a digital environment.
We care about our digital identity because, in a Covid world, it was our only way to interact with other people.
Think about the NFT craze last year – people were, and still are, willing to pay thousands of dollars for a PFP (profile picture) unique and representative of only them. Our avatars in a digital world are essentially our faces.
This is also why people love to buy skins in video games and spend hundreds of hours pumping out content on social media – to paint a picture of themselves for others to see.
Social media is so popular for the same reason. It allows you to create a unique persona of yourself online.
However, we have a problem with digital identity in the current state of social media. Your digital identity can be erased at any time – all content, engagement and connections can be lost.
This is where NFTs come in: NFTs can be used to store and transfer all aspects of your digital identity.
You want to own your identity – which is not possible in the current state of social apps.
With the rise of Web3, we are slowly transforming the internet into a place where distrust and user ownership are the norms.
The need for cross-chain NFTs
If your digital identity is an NFT, it must be chain agnostic.
Like your real persona, you prefer to take it with you wherever you go.
If you were limited to a single blockchain, the idea wouldn’t work. Communities, decentralized apps (dapps) and games will all be spread across a wider ecosystem consisting of multiple blockchains.
For a multi-chain ecosystem to be sufficiently inclusive, interoperability is a must.
As an example, consider the metaverse. A virtual world that everyone can gain access. NFTs will form an important link to combine the Web3 and the metaverse into one, allowing people to transfer, trade, and use things like avatars, items, and even lands.
Even if you ignore digital identity, you can think of some NFTs as a store of value that you might want to transfer to another chain, further reinforcing the need for cross-chain infrastructure.
Interoperability infrastructure will provide the foundation for a thriving metaverse. Without it, we will end up with similar closed societies to the ones we know now.
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Learn more:
– Coinbase Disables NFT Trading on Wallet Due to Apple’s App Store Guidelines – Here’s What Happened
– See: Concordium’s digital identity chairman, growth plans, crypto trends and more
– JPMorgan explores digital identity wallets in Web3
– Where do we stand on self-overwhelming identity?
– Soulbound Tokens – The Future Of NFTs
– Soulbound Tokens vs Self-Sovereign Identity: Web3’s Search for a Digital ID Solution
