1.What is the concept of Multichain?
Multichain is a term that means "multi-chain, cross-platform". More specifically, in the cryptocurrency market, a project deployed on multichain will be understood as the project being deployed on at least two different chains. It could be Ethereum (ETH), Binance Smart Chain (BSC), Solana (SOL), Polkadot (DOT), Avalanche (AVAX), or other blockchains.
At the same time, Cross-chain is a solution that helps transfer assets from one chain to another to optimize the ability to combine between chains. Projects operating in the Cross-chain field will have the function of connecting and circulating blockchain platform assets of different structures.
A multi-chain deployment project means that in addition to the original root chain (Bitcoin, Ethereum, BSC, ...), the project can be independently deployed on another chain. However, in order to rotate assets between chains, cross-chain tools are required.
2. Benefits and impacts of implementing Multichain
In the ever-evolving cryptocurrency space, there are extremely well-known names on each platform. For example, there is Uniswap on Ethereum, PancakeSwap on Binance Smart Chain, Quickswap on Polygon, etc.
However, these projects all operate very independently, have limited access to users, and have no connection with the rest of the ecosystem. Therefore, the introduction of multichain will solve this problem.
When applying the multichain mechanism, not only users but also projects gain a lot of benefits. Specifically, acquiring users in new ecosystems; Overcoming congestion and slow speed in the main chain; Taking advantage of other chains, fast speed and low cost; Introducing tokens to other ecosystems (especially stablecoin projects). Not to mention, users in small ecosystems will have the opportunity to access areas that their ecosystem cannot deploy (insurance, index tokens...)
Crosschain & Multichain trends and developments
Crosschain has made a great contribution to the development of Multichain, because Crosschain is responsible for helping users transfer assets between chains. I summarize the development of Cross-chain and Multi-chain into the following 3 stages:
Phase 1: The emergence of cross-chainss tools in the new ecosystem
In the first stage, in order to attract digital assets from other ecosystems, newly developed ecosystems such as Binance Smart Chain and Polkadot have deployed #cross-chain bridging mechanisms to support users to transfer digital assets from other chains to their own chains, especially to attract users from the Ethereum chain, the most powerful development chain of the DeFi platform.
Binance Smart Chain also implements Binance Bridge on the platform, allowing users to transfer digital assets from other chains to the BSC chain and vice versa. Not only BSC, when Solana has Wormhole, NEAR has Rainbow Bridge, etc., each ecosystem will gradually deploy its "bridge" tool.
Most of these supporting tools are created by the ecosystem and are focused on bringing Ethereum user numbers into their ecosystem.
Phase 2: Support Cross-chain & Multi-chain projects
Entering the second stage, with the development trend of cryptocurrency and user demand, a series of crosschain-focused projects are expected to improve service quality and user experience across platforms. Users can easily interact on one platform and transfer their assets to many other chains.
AnySwap and Multi-chain.xyz are two prominent projects in the cross-chain space that support up to 10 chains, mainly those built on Ethereum’s EVM. These projects can help users transfer assets between many chains such as Ethereum, BSC, Fantom, etc. without having to do it on many different bridges.
This is a decisive stage before the project plans to launch on other chains. But users need to pay attention to whether the project's native token is heavily used on the new chain. If the token is heavily used in Yield Farming, Pool or AMM, the project may be deployed on these chains because the platform already has many users who are already using the Cross-chain bridge to circulate tokens.
Phase 3: The trend of integration between Multichain and DeFi projects
At the same time, large-scale projects with potential in the market have begun to gradually implement Multichain. Projects implement multichain in the market to facilitate the acquisition of new users and promote their products on new platforms. When successfully deployed on other chains, the project will have higher applicability, attract users and bring investment cash flow to the project.
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