The Future Of Web3 Is Multi-Chain

Though the early days of web3 were fueled by blockchain maxis, today we know the future of web3 is multi-chain.

Blockchain maximalism—the idea that one blockchain would dominate the digital assets industry—was fairly widespread in the early days of web3. It wasn't uncommon to find self-described Eth, Soloana, Bitcoin “maxis" arguing about which chain would dominate web3.

However, with dozens of blockchains in production today, the possibility of a winner-take-all situation (as predicted by crypto maximalists) has largely diminished and been instead been replaced by a multi-chain future for web3 that’s growing—spurred by the introduction of new blockchains with unique benefits for both developers and users.

In this article, we describe crypto's multi-chain future in detail and explore why and how a multi-chain ecosystem is key to web3's future growth.

The multi-chain thesis

The inevitability of a multi-chain future for web3 can be viewed through the lens of two dominant trends:

Proliferation of smart contract blockchains

At its launch in 2015, Ethereum was the only blockchain capable of offering more advanced functionality than those available on Bitcoin, the first blockchain. Ethereum's integration of a virtual machine (VM) for interpreting smart contracts paved the way for decentralized applications (dapps) and ushered in a new era for web3.

However, Ethereum's limitations—largely due to the need to prioritize decentralization and security ahead of scalability—made it infeasible for certain projects. Some of these limitations included frequent spikes in transaction fees, long processing times, lack of privacy, and more.

To solve the problem, newer blockchains launched that were explicitly designed to remedy some of Ethereum's problems. Among other things, these alternative Layer 1 (L1) chains provided more throughput for dapps, reduced fees for users, and decreased processing delays by implementing more efficient consensus algorithms.

The proliferation of L1 chains has resulted in a vibrant web3 ecosystem composed of different blockchains optimized for different use cases. While these blockchains used to be siloed off from each other, the development of cross-chain bridges has allowed users to move data and value between distinct blockchain networks.

Proliferation of modular blockchains and shared settlement layers

Although alt L1s improved throughput and latency, they still suffered from scalability issues owing to their monolithic architecture. Like Ethereum, these blockchains feature an all-in-one stack that combines consensus and execution in a single system (reducing scalability). Moreover, monolithic chains also force different applications to compete for blockspace, often resulting in higher fees and latency for users.

The introduction of modular blockchains—a type of blockchain that separates execution from consensus—promised to mitigate the problems associated with monolithic L1 chains. Examples of modular blockchains include Layer 2 (L2) scaling protocols and application-specific blockchains:

Layer 2 blockchains: Layer 2 (L2) chains are secondary protocols that scale throughput on Layer 1 chains through off-chain execution. L2 chains feature high throughput and cost efficiency but provide better security guarantees than alternative L1 constructions by relying on Ethereum to settle transactions and enforce validity rules.

By separating execution of transactions from consensus, L2 chains achieve better scalability—faster finality, lower fees, improved UX—than the base layer. Hence, it isn’t surprising that the number of L2 chains (and the total value locked in those protocols) has grown over the years.

Application-specific chains: An application-specific chain (aka app-chain) is one designed to run a single application. Removing the need for dapps to share computational resources ensures developers can provide users with faster transactions and lower latency guarantees.

Given the costs of bootstrapping a chain's security, app-chains today adopt a modular approach by focusing on execution and relying on a more economically secure L1 or L2 for security. This approach, made prominent by Cosmos and Polkadot, results in highly optimized application-specific chains operating separately, but utilizing a common layer for settling transactions.

The benefits of a multi-chain future for web3

For developers

Faster go-to-market (GTM) times

The existence of different blockchains offering unique tradeoffs reduces the barrier to entry for web3 developers and offers projects a faster, cheaper, and easier path to market. For example, a project can choose whichever blockchain satisfies its needs best instead of being forced to adapt designs to specific chains.

Developers looking to build custom chains also benefit in a multi-chain ecosystem. Launching an application-specific chain from scratch used to be difficult, but newer solutions like the Cosmos SDK and Polkadot Substrate have significantly decreased the overhead involved in creating appchains. Ethereum itself has become a viable platform for appchains with the introduction of application-specific Layer 2 (e.g., Immutable X) and Layer 3 chains.

Access to liquidity

With improvements in bridging technology, moving assets and data between different blockchain networks has become more seamless. An advantage of better interoperability between blockchains is that it increases the liquidity available to developers working on new blockchain applications.

Interoperability always makes it possible for projects to tap into new markets (i.e., by deploying a dapp on multiple chains). Sushiswap (currently live on 13+ blockchains) is an example of how dapps can increase user acquisition and generate profits by leveraging the benefits of multi-chain technology.

Experimentation and innovation

Access to different blockchains with distinct architecture creates opportunities for developers to customize dapps to suit the needs of users. Web2 applications are typically limited in terms of technical infrastructure to use (partly caused by FAANG monopolies). In contrast, web3 developers have more options for building applications and can consider the adequacy of specific chains by comparing throughput, security, costs, latency, user adoption, and so on.

The ease of creating sovereign, application-specific blockchains further increases the control development teams have on the technical infrastructure an application uses. The result? More opportunities for innovation and experimentation when building web3 applications.

For users

Better capital efficiency

A multi-chain ecosystem mitigates the problem of capital inefficiency for participants in decentralized finance (DeFi). Assets that would be dormant on one chain can be transferred to other chains and utilized to create more value (e.g., via lending, borrowing, yield farming, staking, and more).

Improved UX

As mentioned, the driving force behind the proliferation of non-Ethereum L1s was the need to improve the experience of users interacting with blockchain applications. Today, many applications are cross-chain dapps that live on heterogeneous blockchains. As such, users can access a particular application on whichever platform happens to offer the most benefits (e.g., liquidity, gas fees, security, etc.).

How Infura is supporting web3's multi-chain future

From its origins as one of the first node providers for the Ethereum blockchain, Infura has expanded its coverage to 10+ networks. This includes Layer 1 chains, like Avalanche and NEAR, the Polygon side-chain, as well as Layer 2 blockchains such as StarkNet, Optimism, and Arbitrum.

While it presents benefits, a multi-chain ecosystem can be difficult to navigate for builders. In particular, the need to set up and manage in-house node infrastructure and learn new tools when developing on new chains can discourage web3 teams from exploring new territory. At Infura, we understand these problems and have designed a comprehensive system to help you build multi-chain dapps with minimal friction.

Need access to blockchain infrastructure without incurring excessive costs? Infura provides reliable and cost-effective RPC endpoints for multiple blockchain networks. Can't decide on which blockchains to integrate? Read our post on how to choose a blockchain for your dapp. Want to use familiar tools for building smart contracts on a new chain? Infura users have access to tools like Truffle, MetaMask, and Ganache. With the recent addition of Celo Network and planned expansion to more networks in the future, Infura remains committed to the growth of web3's multi-chain ecosystem. We encourage dapp developers, enterprises, product teams, and anyone interested in harnessing the potential of multi-chain technology to reach out for support and collaboration.