If you observe the market of the cryptocurrency very well then you will find that there is no sign of it slowing down. With time, the important coins are getting more value and so, they are becoming valuable. Hence, it does not come as a surprise that people’s interest in digital assets is rising continuously. There are two reasons behind this sustained interest and they are:
- Some people believe that cryptos have lost their values but the fact is they continue to outstrip customary types of investments and they are also superb means to hedge wealth.
- DeFi has become stronger than the previous times as it proposes an entirely new path of profit-making.
The entire market of cryptocurrency has an integrated value of an impressive $1.3 trillion. The reason behind this hastening adoption is its difference from a centralized regular money system. It also means there is a universal existence between various tokens and coins.
The working of the cross chain swap
Cross-chain swaps get done utilizing small applications-smart contracts that get connected with a couple of different chains. They perform automatic exchanges of tokens when some conditions get met. Though this process seems fairly complicated initially, towards the back end, it becomes very simple for executing with the help of cross chain support. When a couple of people agree for exchanging their assets then they do submit these tokens to HTLC or Hash Time Locked Contract. Every participant is needed to exchange a hash key so that they can make sure that the other party has successfully deposited the ideal amount.
This transaction gets executed when deposits are made at a particular time. This way, a couple of people who have different coins can swap their assets in the absence of a guarantee who can work as an escrow. Although cross chain swaps aren’t new, the current focus on various tokens, particularly because of a high-profit margin in DeFi-oriented farming has resulted in huge demand for tokens from various chains. MintySwap offers cross chain swaps and they turn into the logical choice for people. Though a centralized exchange too proposes swaps, KYC, the tiring effort of registration, and paying the fee is hugely turning this into an obsolete choice.
Challenges that a cross-chain system faces
Transaction rate bottlenecks – Transaction rate bottleneck is a huge challenge that can influence large-scale blockchain interoperability. This does this job by clogging the data capacity of a specific chain when it receives transactions from various chains.
Difference of trust – Although the importance of interoperability can’t be denied at any point of time, the cross chain support or systems remain subject to the challenge of “difference of trust”. In every blockchain ledger, the trust system does not come as equal. A few get backed by one thousand miners while a few remain backed by only five miners. When you shift data from weaker and trustable ledgers to the stronger ledgers then you will make the latter become susceptible to 3rd manipulation besides different other discrepancies.