Web3 and its underpinning transformative technology enable us to interact with digital assets in a way not previously thought possible. Despite being built upon principles such as decentralization, blockchain tech utilization, and user privacy, Web3 growth could quickly see stagnation without cross-chain composability.
The capability for cross-chain composability ensures blockchain networks remain interoperable without sacrificing the efficiency to share information seamlessly. A lack of cross-chain composability risks rendering the adoption of Web3 inert without the ability to foster innovation and cooperative growth across individual blockchains.
The Importance of Composability
Cross-chain composability integration is fundamental to Web3 due to its ability to enable blockchains to integrate and interact with one another effortlessly. Crucial to the success of future Web3 adoption and the overcoming of technical hurdles, the importance of cross-chain composability cannot be overlooked.
Composability on the scale of global blockchain interoperability enables the creation of decentralized applications (dApps) and business models that can traverse multiple platforms seamlessly. Deriving growth from adaptability, Web3 and cross-chain composability go hand-in-hand by bridging and connecting disconnected blockchain networks.
Going a step beyond dApps and Web3 growth, cross-chain compatibility impacts the financial implications of cross-chain interaction. By connecting different blockchains with cost-efficient bridges, composability effectively reduces transaction costs, grants increased user and developer flexibility and improves cross-chain transaction speeds.
Challenges To Composability
Efficient cross-chain composability — much like Web3 — faces a number of challenges before it can be truly achieved. Current solutions to composability only offer centralized bridges that cause division within the Web3 space. Such bridging solutions quickly result in the fragmentation of liquidity and incompatibility issues arising with wrapped asset movement across blockchains.
Furthermore, these constricting bridging methods to composability pose only further complexity for users when it comes to the process. This directly impacts the user experience and mass adoption of decentralized technology in the future as non-technical users struggle to overcome steep learning curves.
Some protocols have been diligently working to provide solutions to these challenges and bridge not just wrapped assets across blockchains but also the user experience. Sumer is one such protocol.
By creating synthetic assets from established fiat and cryptocurrencies — like USD, ETH, and BTC — Sumer allows users to efficiently overcome composability hurdles through its omnichain technology. This makes the liquidity in the synthetic assets operable across all supported blockchains without sacrificing the benefits of decentralized finance (DeFi).
Focused on capital efficiency, Sumer utilizes a risk engine to correlate a user’s assets to liabilities — efficiently using capital while maximizing Debt-to-Asset (D/A) ratios. Moreover, Sumer furthers the concept of reStaking by making their liquidity more accessible across different blockchains through the protocol’s omnichain composability.
Success Through Collaboration
Web3 is built upon blockchain technology and like blockchain, connected structures function better through collaboration and cooperation as opposed to a disconnected system. This isn’t to say individual blockchains cannot be successful, but without bridges to connect them, the full potential of Web3 cannot be achieved.
In scenarios where users are unable to leverage or transfer their assets smoothly from one blockchain to another, the user experience quickly deteriorates. The restriction of capital and bottlenecking of innovation can only hinder the mass adoption of Web3 technology and long-term success in the tech industry.
A similar comparative example here would be in the 1950’s and 1960’s where computer networks were disconnected prior to the introduction of the internet. Once the internet was established, a then connected computer network enabled the effective sharing of data and informational access on a global scale.
By utilizing cross-chain protocols like Sumer to facilitate asset transfer across different blockchains — through solutions like synthetic assets — the Web3 experience becomes far more collaborative. Moreover, by enabling cross-chain composability, overall market efficiency is also impacted positively. By improving accessibility to liquidity and smoother transactional processes, all forms of financial transaction stand to benefit.
Composability: Overcoming Web3 Stagnation
At a crossroads of adoption and stagnation, without effective cross-chain composability, Web3 risks becoming as siloed as the first computer networks of the 1950’s. Fragmentation of liquidity across blockchains — lacking the support of cross-chain composability — will only lead to the stunted growth of Web3 in the future as transaction volumes increase.
Without the prioritization of cross-chain composability and the ability to deliver a fluid and interconnected blockchain solution, the Web3 user experience could ultimately suffer from long-term interoperability limitations. Instead, by incorporating omnichain bridging solutions to create a frictionless cross-chain process, protocols like Sumer help solidify the foundations of an interconnected Web3 future.