Veteran blockchain project Syscoin has announced the launch of a new protocol for interoperability with the Ethereum blockchain. Dubbed Syscoin Bridge, it enables Ethereum and Syscoin developers to move their tokens back-and-forth between the two ecosystems without any impact on overall supply. The move comes as many 2020 predictions foresee that interoperability and DeFi adoption will be significant trends in the coming year.
Syscoin’s zero-confirmation DAG (Z-DAG) achieves throughput far higher than standard blockchains - up to 60,000 transactions per second according to one independent test. It's quite impressive, considering that it's based on Bitcoin's core codebase and compliant with its Proof of Work. It means, by the way, that Syscoin is merge-mined with Bitcoin and powered by its security.
The Syscoin Bridge now allows Ethereum developers to benefit from these transaction speeds. Along with increased throughput, Syscoin also offers lower transaction costs and near-instant transaction confirmation. While Ethereum is still working through its scalability challenges, developers opting to use the Syscoin Bridge could help to reduce the incidences of bottlenecks on the Ethereum network.
The benefits of the Bridge protocol could be applied in various use cases. Syscoin points to the recent news that Burger King started accepting cryptocurrencies as payments in Venezuela, highlighting point-of-sale transactions as a potential use case for the Bridge.
Supporting Decentralization
In the cryptocurrency space, everyone is so used to the idea of using an exchange that the lack of interoperability between tokens on different platforms has become taken for granted. However, the most popular exchanges aren’t decentralized.
Other solutions include using a third-party token, as in the case of Uniswap, which uses Ether as a medium of exchange between ERC-20 tokens. However, the Syscoin Bridge is the first truly decentralized instance of a direct swap between tokens on different platforms.
The news is certainly welcome at a time when many are making bold predictions about the role that interoperability will play in the evolution of the blockchain sector in 2020, and DeFi in particular. Lawrence Lundy, Partner and Head of Research at venture funding firm Outlier Ventures, believes that development on DeFi could extend out from Ethereum this year, and speculates on the possibility that interoperability projects could ultimately reduce DeFi’s dependence on the platform that spawned the entire movement.
Another predictions roundup published on Medium publication Wave Financial also forecasts that interoperability will become embedded in DeFi during 2020, driven by the launch of Polkadot and a growing Cosmos ecosystem, among others. The writer goes as far as to predict that interoperability will ultimately drive Bitcoin to become the primary value locked in DeFi. This would represent a significant transformation, given that the vast majority of the nearly $800m locked in DeFi currently is Ether.
“Alt-DeFi”
When it comes to reading the crypto markets, Binance has proven itself more capable than most. In a recent report examining the potential of the DeFi markets in 2020, Binance also points to interoperability as a critical enabler for the expansion of the DeFi markets.
It even goes as far as giving interoperable DeFi solutions the moniker of “alt-DeFi.” While the report describes the current state of alt-DeFi as “lagging,” it points to the growing prevalence of interoperable decentralized exchanges and protocols such as Switcheo, which straddles the Ethereum and NEO blockchains.
Intriguingly, the Binance report also predicts that interoperable solutions will enable Bitcoin to play a more significant role in the DeFi ecosystem. Whether or not 2020 will end up with BTC having overtaken ETH as the DeFi coin of choice remains to be seen.