Overcoming the interoperability challenge in the Metaverse

The metaverse is taking us to a more immersive, augmented, and realistic digital world as it continues to blur the gap between our physical and the virtual worlds. Brands and enterprises actively seek ways to invest in the metaverse and position their business into this virtual space to explore endless opportunities. However, some hurdles still create challenges in the space and impact its mass adoption.

Lack of interoperability is one such hurdle. Lets begin by understanding what interoperability means in the metaverse, before diving into how it will impact the space, mediums being built to bridge the gap and other concerns that may come along. 

Think of interoperability as a ‘communication link’ that allows smooth sharing of information, and cross-chain architecture facilitates that link. 

Let’s take the example of blockchain technology. In the past few years, multiple blockchains have erupted, with each having its own ecosystem, hashing algorithms, consensus models and communities. All these blockchain-based projects are isolated from each other, despite existing within the same industry and working with the same technology.

For instance, the Bitcoin blockchain exists fully independently of the Ethereum blockchain — in the sense that it has no knowledge of any information recorded there — and vice versa. 

Now, in order to facilitate mass adoption of blockchain, it is important for siloed blockchain projects to interact with one another, share data information and utilise each other’s features and services, for the end user to benefit.

The same applies for the metaverse. A metaverse project with interoperability features can interact with a different metaverse project, utilise the services and features, enable cross-chain social connecting, trading, and many other activities that are not possible in a siloed ecosystem.

“We are in a phase of a multi chain ecosystem, where we foresee multiple chains coexisting. How do you communicate from one chain to another? This is basically what we're trying to solve,” says Aniket Jindal, Co-founder, Biconomy, whose multi-chain structure provides interoperability with other blockchains, giving users more options on what crypto tokens they want to use for transactions. 

“Cross chain interoperability is all about abstracting away complexity from the user and giving them a seamless user experience,” says Ramani Ramachandran, CEO at Router Protocol. Ramani strikes a simple example of booking a flight ticket by logging into a single travel portal without needing to worry about money transfer or what software the app is running on, or underlying servers and so on. “It's all about different networks communicating with one another and sharing data to benefit the user,” he adds. 

Router Protocol has been building cross-chain infrastructure that enables the communication between current and emerging Layer 1 and Layer 2 blockchain solutions.

Current state of affairs 

Being one of the handful of players in the space building cross-chain infra, Aniket and Ramani are now anticipating more solution providers and ventures building beyond prime use cases like transfer of tokens, as the ecosystem evolves. 

“This includes cross-chain smart contracts, how can we move the user instead of just value transfer. This year we will see a lot more of such things happening in the space, and a lot of it will be coming from India. 2021 saw the emergence of different kinds of chains, creating their own economy or ecosystem. Now, it's more in terms of how you make these chains useful. That is where it becomes really strong,” says Aniket.  

This is not a winner takes it all market, he continues, rather a collaborative effort as the space is looking at a much bigger problem and different players will come up with their own thesis around interoperability. 

Also, the market is at a very early stage where different approaches are being experimented. Terming cross chain communication as the “base template”, Ram adds how we can build interesting applications around cross chain lending and borrowing among others, with no restrictions.

“It's like building bridges between islands, which are the blockchains. The blockchains themselves are shifting and growing. Also, there is a lot of caution as much as excitement with a lot of emphasis on security and auditing. Every big bridge out there has a rite of passage that can get hacked. It’s scary,” says Ram, giving an example of Wormhole and its likes recently getting hacked. 

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Security concerns 

Ram explains the whole security issue in an interesting manner. Lets say, a user wants to send $100 from chain A to chain B. The user locks up the dollars in chain A, and transmits a message to chain B, saying there is X number of dollars locked up on chain A and now releases an extra $100 in chain B.

Now, there are so many things that can go wrong here. Somebody sitting in the middle of this bridge, like a messenger, relaying this communication can falsely say that the $100 is locked in the origin chain, when actually it isn’t or he can start inserting his own $100 and claim that those have been locked. 

“This is exactly what happened in the Wormhole scenario. Somebody came into the Solana side of things. The Etherium that was locked on the bridge was removed or replaced, or actually was just taken up by these guys. With the heavy amount of traffic, these bridges become potent honey traps,” says Ramani. 

Ankit emphasises on a new set of bridges that might come up in the future, something his team is closely working on as well, that would bring in capital efficiency. 

“You lock up a significant amount for a transfer of mere $10 from one chain to another. This gives an opportunity for a lot of bad actors to come into play and take a part of that pie. We need to make this transfer more capital efficient.  Like the way bridges work that have liquidity pools. So it's like third parties putting in liquidity and people can get a decent Annual percentage yield (APY) out of it,” explains Aniket. 

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Other building blocks 

Apart from the interoperability and cross chain, the primary focus of stakeholders is on making the space mainstream.

For Aniket, one of the key focus areas is building a solution for enabling Web2 companies to get into the Web3 ecosystem, and onboard the existing user base into the latter. 

“Another major area is enabling brands to help interact with their followers and customers in an effective manner and gain more followers. This is where NFTs come into play and we have more and more brands adopting the same,” says Aniket. 

Making DeFi more “user friendly” is another area the founders are looking forward to. 

“From the Metaverse perspective, it is ultimately about getting the user experience right. And that necessitates a lot of hardware changes, higher bandwidth and accessible hardware. Only the top 1 percent can afford Oculus right now,” he adds.