The Cross-Chain Roundup #5

Week Roundup ( 19-25 December 2022 )

Dec 26, 2022

Welcome to the final Swing newsletter of 2022. If you’re reading this, congratulations: that means you survived crypto’s toughest level yet. This was the year when the game hit hard mode and everyone lost at least one life along the way. If you’re not currently under house arrest or on the run, that means you performed better than the industry’s biggest players.

While exchange bosses and VCs lick their wounds, it’s a chance for the rest of the industry to catch its breath, glance over its shoulder, and then ready itself for an assault on 2023. While it’s anyone’s guess what the next year will bring, it hasn’t stopped crypto’s Imagineers from trotting out their end-of-year predictions.

We’ll get to them shortly but first, let’s run through some of the stories that caught our attention this week. It takes more than Christmas to close down an industry that never sleeps.

📰Cross-Chain Updates

1. Solana Gears Up for Its Make or Break Year

More than any blockchain, Solana was battered this year by the fallout from the FTX and Alameda implosion. In 2023, Solana will need to prove that it can survive and thrive in a post-FTX world. Justin Barlow, who is deeply invested in Solana it should be noted, has listed 10 reasons to be bullish on the network’s prospects next year. These include cheaper NFT minting, major game studios releasing titles, and the Solana Mobile Stack.

Justin.sol @JustinBarlow

This has been a massive year for @solana, filled with peaks and troughs. As 2022 draws to a close, here are just 10 of the hundreds of things to look forward to in the Solana ecosystem in 2023 🧵

2. Polygon Moves Closer to zkEVM Launch

It’s no secret that Polygon’s developing a zkEVM. The rumored launch date is Q1 2023 but in the meantime there’s a testnet to move forward. On December 21, Polygon announced its final testnet. Features being introduced include the use of recursion for the first time in a zkEVM, enabling batch aggregation. In addition, an optimized prover will generate proofs for a batch in under 4 minutes (down from 10). Speed and cost improvements, in other words.

3. Multichain Recounts Record Year That Saw $94B Bridged

One year ago, AnySwap rebranded as Multichain and set its sight on cornering the cross-chain market for token transfers. In a post to mark its one-year anniversary, Multichain reeled off a list of highlights including a total bridging volume of $94B for the past 12 months, 4.54M total transactions, and the number of supported chains ballooning from 29 to 80.

4. Aave Approves Proof of Reserve With Chainlink

The Aave community has approved the release of Aave Chainlink’s Proof of Reserve, scheduled to be activated initially on Aave Avalanche in January. This will provide increased security and transparency, making it easier for assets like WBTC or entities like network bridges to prove their reserves in real time onchain.

5. Avalanche Launches Cross-Chain Messaging Feature

Avalanche Warp Messaging (AWM) is a subnet-to-subnet communication protocol that allows any Avalanche blockchains running on different subnets to send and verify arbitrary messages sent to/from each other. It bears similarities to the cross-chain messaging system that’s in place on Polkadot. According to Avalanche founder Emin Gün Sirer, “this is a breakthrough that enables any Avalanche chain to perform arbitrary communication with other subnets.” Think full interoperability.

Patrick O'Grady 🔺 @_patrickogrady

At 6:42:29 AM UTC (1:42:29 AM ET) this morning, December 22nd, 2022, the first native Cross-Subnet Message was sent on #Avalanche Mainnet using **Avalanche Warp Messaging**.

6. Synthetic Launches Perps v2

V2 of Synthetix’ eagerly awaited perpetual swaps protocol is now live. It introduces 5-10 bp trading fees and deeper liquidity for traders. Kwenta, Decentrex, and Optimism are all supporting v2, whose novel exchange engine efficiently matches buyers and sellers, with SNX stakers serving as a temporary counterparty as required.

Where We’re Headed in 2023

Given the proliferation of end-of-year reviews and the quality of analysis contained therein, it behooves us to highlight the best bits, particularly as they apply to multi-chain. Here’s what the industry’s heavy hitters have to say about the current health of the blockchain ecosystem.

7. Multi-Chain Projects Outstrip Ethereum for Funding

The Block’s Digital Asset 2023 Outlook highlights the level of interest in projects pursuing multi-chain solutions. It reports (P39): “In the last two years, multi-chain projects raised the highest number of deals, dethroning Ethereum. Since 2021, multi-chain projects also lead the way regarding the total amount raised. 92% of the total multi-chain investment occurred since 2021.” It cites Polygon, Solana, Flow, and ImmutableX as all gaining momentum with the aid of VC funding.

8. The Importance of Bridge Security

The topic of bridge security crops up in Messari’s Crypto Theses for 2023 report. It quotes Vitalik’s concerns about the limitations of cross-chain bridges (P103): there are “fundamental limits to the security of bridges that hop across multiple zones of sovereignty…you can’t just pick and choose a separate data layer and security layer. Your data layer must be your security layer.” Lead report author Ryan Selkis speculates that “the L1 “blockchain wars” will look similar to the browser wars and mobile OS wars. That is, the EVM and one or two others might win at scale, but we won’t see dozens of L1 blockchains proliferate.”