Why Chain-Agnostic?
The multi-chain ecosystem has become a reality, with an increasing number of blockchains introduced and over half of top DeFi protocols existing on two or more chains (DeFiLlama, August 2023).
Consequently, multi-chain tokens are widely adopted, as protocols deploy their tokens or NFTs on multiple blockchains instead of limiting themselves to a single blockchain.
Protocols expanded to multiple blockchains for a number of reasons, including;
Reaching new user bases
Accessing markets with greater liquidity
Leveraging the benefits of another blockchain, such as scalability, security or lower transaction fees
However, the existing methods for tokens and NFTs to exist on multiple chains are fundamentally flawed.
The Current Problem with Multi-chain Tokens
The current methods in which projects take their tokens multi-chain causes long-term complexities and problems;
Separate, native tokens: Contracts are native on each blockchain but entirely incompatible and exist in silos.
Wrapped assets: Using wrapped assets has been beneficial in compatibility across blockchains. However, they carry inherent risk, resulting in 64% of $3.1B lost in DeFi exploits in 2022 (Chainalysis, 2023).
This scenario illustrates the typical methods combined;
A project will have a parent chain, Blockchain A, where their Token XYZ exists
They want to expand to Blockchain B and Blockchain C;
The tokens that created here may have the same ticker 'XYZ', however the token contracts are completely different on each blockchain.
The tokens from each chain are distinct, separate and unrelated to each other.
The project has 3 different tokens of the same name, which are native to different blockchains and exist in their own silos.
If Token XYZ on Blockchain A is sent to Blockchain B, it is not recognised as the same token. The only solution would be to create a Wrapped Token XYZ (from Blockchain A) on Blockchain B. This problem is further exemplified with more chains, such as Wrapped Token XYZ (from Blockchain C) on Blockchain B. As such, there are now 3 different project tokens on Blockchain B.
These causes a lot of complexities, such as;
Fragmented liquidity across multiple chains
No possibility of transferring the token from one chain to the other without wrapping
No possibility to provide three different tokens on the same chain with meaningful utility
Wrapped tokens not necessarily sharing the same functionality as native tokens
User frustration and confusion
What if a token could exist across multiple blockchains, and be recognised as the same token on each blockchain? Our solution is the Chain-Agnostic Token (CAT) standard.
Chain-Agnostic Tokens solve the complexities of wrapping or double wrapping when a token is transferred across chains. With the CAT standard, when Token XYZ is sent from Blockchain A to Blockchain B, it is acknowledged as the same token.
Token supply of the CATs also exists dynamically across all blockchains. When tokens of any type are transferred from one chain to another, an equal amount is burned on the origin chain while being minted on the destination chain.
The CAT standard allows for developers to build in a unified, cross-chain ecosystem, where people are not limited to the experience of individual blockchains and can take advantage of Web3 on a broader scale.
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