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Solving cross-chain transfer challenges with the Asset Hub: Insights from Polkadot’s Engineer



At the Sub0 conference by Polkadot, Emiliano Zapata Application Engineer at Polkadot, unveiled a new solution that streamlines cross-chain asset transfers. Cross-chain transfer in Web3 refers to the ability to transfer data and tokens between different blockchains.

Polkadot is a next-generation blockchain platform that enables interoperability between different blockchain networks. It is designed to provide a scalable and secure environment for decentralized applications (dApps) to run on. 

Polkadot uses a unique architecture that consists of a main relay chain and multiple parallel chains called parachains. Parachains are independent blockchains that are connected to the Polkadot network and can host smart contracts. 

They are designed to be specialized and unique for their use case, such as smart contract platforms, DeFi, scaling, gaming, NFTs, and more. 

Parachains can also act autonomously based on the will of their communities to participate in Polkadot governance and allocate on-chain treasuries

As the Web3 landscape is increasingly becoming multi-chain, cross-chain interoperability enables developers to build one natively cross-chain application where a single unified dApp can function across multiple different smart contracts deployed across multiple blockchains instead of having to deploy multiple individual versions across distinct networks.

Problem of interoperability

Presenting the solution, Emiliano’s argument revolved around the idea that traditional blockchain systems face difficulties when it comes to interoperability. Interoperability refers to the ability of different blockchain networks to communicate and interact with one another effectively.

Because many blockchain ecosystems lack this seamless interoperability, it becomes complicated to move digital assets (like cryptocurrencies) from one blockchain to another. 

This interoperability issue has significant consequences, particularly for decentralized finance (DeFi) projects. 

He added that deeper into the crypto space is DeFi, which is all about creating financial services and applications using blockchain technology without relying on traditional banks or intermediaries. 

To achieve this, DeFi projects often need to interact with various blockchain networks, and if those networks cannot communicate with each other, it hampers the growth and functionality of DeFi.

The Solution

He went on by saying  that Parity Technologies developed a solution for this challenge known as Asset Hub. Asset Hub acts as a bridge, facilitating the transfer of assets between various blockchains.

Explaining how Asset Hub functions, he said that the first step is the creation of the derivative of the asset to be transferred to  the destination blockchain. This asset is registered on the Asset Registry, effectively mapping it to a multi-location identifier.

Afterwards, a small amount of the native token is transferred to the destination chain as part of the Reserve Transfer procedure. This step allows for the creation of an autonomous account, also known as the sovereign account, within the destination blockchain. 

These accounts are owned by a single consensus system but managed within a different one.

Once the sovereign account is established, assets can be teleported from the source blockchain to the destination blockchain. An important aspect to note is that the native token is used to cover execution costs on the destination chain.

Upon completion of the process, the assets become available on the destination blockchain, ready to be utilized within its ecosystem. 

Having such solutions in the Polkadot ecosystem is essential and beneficial, as they enable seamless communication and value transfer between blockchains in the industry.

Read also; How BEEFY brings efficiency for light clients and bridges on the Polkadot network

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