What are heterogeneous blockchains?

We have seen the emergence of several generations of blockchains throughout the 14-year history of the cryptocurrency industry, and with each new stage of modernization, they get better and more versatile. Heterogeneous blockchains represent the third generation of decentralized networks.

Blockchains, which appeared at the very beginning of the creation of the cryptocurrency industry, very acutely feel the problem of limited scaling, low bandwidth, and weak mutual integration with other networks.

Sometimes the existing architecture simply does not allow for a transition to a higher-quality level without destroying the original concept or migrating to a different consensus algorithm (as Ethereum did).

Blockchain solutions have been introduced to the market in "waves," so it is best to conditionally divide them into several generations. Each next generation has its own distinct characteristics, solves a specific set of problems, and strives to learn from the mistakes and shortcomings of previous generations. Unfortunately, the first-generation blockchains lacked these features.

The first generation

These are the blockchains of cryptocurrency veterans like Bitcoin, Litecoin, ZCash, and others. These networks were developed to create and maintain decentralized money. The standards at the time were very conditional, and each blockchain platform developed its own, essentially original, methods and approaches to solve its own problems. Bitcoin put all of its efforts and resources into maintaining decentralization, and ZCash, for instance, focused on providing an anonymous transfer feature. The initial blockchain solutions of the first generation started to appear inadequate and constrained as the market gradually started to "grow out of short pants" and the pioneering crypto startups "take their first lumps." The second generation thus took the place of the first.

The second generation

Ethereum, Tezos, EOS, and other blockchain platforms represent the next generation of blockchain platforms. Their decentralized data and assets are already created and managed using some programmed logic. Each platform aims to create its own ecosystems using "fresh" techniques and approaches. However, as the number of users, assets, and transactions increases, second-generation blockchain solutions face the same issues that the first generation did: decreased performance, a critical drop in transaction speed, reduced efficiency, and a significant increase in fees during peak network loads. Therefore, the second-generation blockchain platforms had to be replaced sooner or later by the third-generation blockchains, which were focused on the best solution to the full range of existing problems.

The third generation is heterogeneous blockchains

Cosmos, Polkadot, and Avalanche are examples of this generation's blockchain platforms, and they all have unique blockchain infrastructure topologies. These platforms use an asynchronous heterogeneous network model, which enables different individual blockchains to coexist in a single ecosystem and interact with one another, to achieve horizontal scaling.

Each platform has implemented its own approaches and mechanisms to ensure the security and stability of the blockchain ecosystem's operation, while also establishing effective interaction with other ecosystems. Heterogeneous models aim to create an "internet of blockchains" in which millions, if not tens of millions, of active users can coexist comfortably at the same time.  This approach makes it possible to implement the Web3 concept, which many projects strive for but lack the technical and technological capabilities to meet all user expectations.

Examples of non-standard topologies of heterogeneous blockchains

Examples of non-standard topologies of heterogeneous blockchains

The concept of heterogeneous blockchains

Blockchain platforms such as Cosmos, Polkadot, and Avalanche have built ecosystems in which specialized blockchains with various virtual machines (VMs) can interact with other networks as needed. The new generation of blockchain platforms includes "constructors" that allow you to build your own blockchains and significantly expand your options when designing decentralized applications (dApps) and issuing new assets. Running a project on its own blockchain rather than using a set of smart contracts has three major advantages:

  • High output

Due to the network's isolation from other networks, the autonomous operation of a distinct network ensures the maintenance of high-performance indicators, quick transactions, predictable timing for receiving assets in the wallet, instant block formation, and high levels of user satisfaction. There is always the option to connect to other networks when necessary to conduct transactions outside the blockchain.

  • Low and predictable fees

Networks like BTC and Ethereum can never have a constant fee rate. Individual project activity, large-scale asset sales by miners, or a big number of transactions in the mempool during peak network loads all have an upward effect on the fee size. The presence of a separate blockchain enables low and predictable fees, promoting active transactions between users and decentralized applications.

  • Flexible node and validator management

A separate blockchain enables you to tailor your rules and requirements for node owners, miners, and validators to the needs of a particular ecosystem. These rules can adapt to the requirements of specific jurisdictions or territories (the US, EU, etc.), establish their own criteria for equipment performance or environmental friendliness, or require users to go through certain procedures (KYC) to obtain validator status.

Cosmos allows you to build a distributed network out of multiple parallel independent chains, each with its own block and transaction validation formats. Interaction between these chains is accomplished through the Inter-Blockchain Communication protocol (IBC) and the Cosmos Hub ecosystem's main blockchain. In order to connect to other chains, each chain must implement IBC. At the moment, a bit more than 30 individual blockchain projects supported by the IBC are developing over 250 dApps in areas such as DeFi, smart contract creation using EVM, social networks, confidential transfers, and blockchain games. Bridges to Ethereum, Bitcoin, and other ecosystems are being developed.

Polkadot developed its own ecosystem based on the "internet of blockchains," which facilitates communication between the mother network (relay chain) and subsidiary networks (parachains). Interaction between parachains is accomplished through X-chain messages (XCM) and security from the parent network. The ecosystem currently consists of more than 10 parachains with various specializations that carry out projects in a variety of formats while utilizing the "internet of blockchains" infrastructure. Interaction with other ecosystems and asset exchange is facilitated by X-chain bridges.

Avalanche is a next-generation blockchain platform for building decentralized applications and multi-functional blockchains. The Avalanche network is made up of three distinct chains: the X-Chain for transfers, the C-Chain for smart contracts, and the P-Chain for staking. Each chain has its own narrow-profile specialization, which is fundamentally different from the methods employed by Bitcoin and Ethereum, where each node is tasked with performing a single, constant task: validating all network transactions. With an appropriate level of decentralization, this segregation of computing tasks increases Avalanche's throughput. The ecosystem is actively being built, with new chains and subnets being added all the time. The X-chain Avalanche-Ethereum bridge, in addition to interacting with other ecosystems, is extremely popular and ranks among the top 60 bridges ever built with the Ethereum network.

Final words

Heterogeneous networks such as Cosmos, Polkadot, and Avalanche developed a non-standard infrastructure to create a global X-chain network that is significantly more efficient than Bitcoin and Ethereum. Heterogeneous blockchains are Web3-friendly and capable of serving many more users than previous generations of blockchain platforms while still maintaining a sufficient throughput even under extremely high loads.

The coexistence and collaboration of such architectures are critical in the development of a truly decentralized "internet of blockchains," as these projects have demonstrated radically different approaches to achieving the same goal.