Between the interest rate hike and the rising crypto prices, one of the most important news for the industry almost completely disappeared yesterday. Polkadot’s parachain system is expanding with a new feature, a cross-consensus messaging system (XCM for short). It enables communication between different blockchains. It’s one small step for Polkadot founder Gavin Wood. And a really big one for Web 3.0. Because XCM could solve one of the biggest problems in the industry in the near future: the dependence of many platforms on so-called blockchain bridges.
In Web 3.0, different blockchains such as ETH or Solana often have to interact with each other. They are not inherently able to do this due to several differences in their design. Many platforms use blockchain bridges for this. They allow communication between native blockchains using different tricks. And at a very high price.
Polkadot vs Blockchain Bridges
The gigantic security risk of these bridges has recently been revealed, especially in the DeFi sector. According to the analytics platform decentralizefinance.com there are now over 70 pieces here. It has $25 billion worth of cryptocurrency flowing through it.
With just three attacks on such bridges, hackers stole nearly $1.5 billion in the last few months, such as $625 million in the worst DeFi heist in history in March 2022, the hack of the popular Play-To-Earn video game , Axe Infinity. You can read all the background information about this unprecedented raid and the danger of blockchain bridges for the industry in the current issue.
All of the security experts spoke to over the past few months agreed: The hacks on bridges will continue and continue to have disastrous consequences. They are an easy and very lucrative target. Vitalik Buterin, the founder of ETH, warned most drastically of the consequences in a blog post in January 2022. In his view, they could endanger the entire ecosystem in the long term:
If there are a hundred blockchains with their own dApps and these become dependent on each other through bridges, then an attack on one of these chains is enough to infect the entire system.
Polkadot shows a way out of this fateful situation. Since its invention in 2016, the project around ETH co-founder Gavin Wood has been working on a secure and fast platform for exchange among blockchains – without any bridges, via so-called parachains.
Polkadot and its community are already hailing XMC as the future of Web3.0, the dawn of a new blockchain era. Regarding the release on Wednesday, May 4th, 2022, one of the technical leads of the Parachain system, Hoon Kim, explained:
I see traditional smart contracts on isolated blockchains as a kingdom surrounded by walls. Then we have bridges that are like a trade route that connected these nations together. Now we have XCM. It is the blockchain free trade agreement.
Hoon Kim, Technical Lead at Polkadot
Unlike Polkadot’s community, the market has not reacted significantly to the historic milestone so far. The Polkadot price has risen by ten percent since the release of XCM on Wednesday and has thus performed well on average in the general upward trend.