The distributed technology called “blockchain” has succeeded to become one of the most prominent innovations of recent years. Non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), and decentralized finance (Defi) are all achievements of this technology. Aside from these, now we are facing a new concept called “multichain” that has a vast range of functions. In this article, we are going to cover what multichain is, and what advantages and functions it has. Stay with us.
What is Multichain?
Multichain is a platform that lets its users develop private blockchain networks that can be used by organizations for their financial transactions. A specific API is what multichain provides you with. To explain Multichain in more detail, we can say that it is an open-source blockchain platform that is used to develop private blockchain-based applications. It is a foundation for a multichain ecosystem that is designed to act as web 3.0’s final router. Using Multichain, organizations can develop their desired decentralized applications with the least amount of challenge. In Multichain, users can decide who can connect, send, and receive the transactions. Also, this is you as the user who decides who creates the blocks and assets. In short, Multichain can be open or close, based on your will and needs. Multichain supports more than 42 chains, including Binance Smart Chain, Fantom, and Harmony. This platform also has its native coin called MULTI. It is worth mentioning that Multichain was previously known as Anyswap, and its native token was called ANY. Multichain seems to have a promising future. Generally, the multichain ecosystem is of great importance today, to the extent that Vitalik Buterin, Ethereum’s founder, believes the future belongs to multichain.
How does Multichain work?
Multichain uses two ways to bridge the tokens:
- First, it uses smart contracts for locking the tokens in a blockchain and minting wrapped tokens on other blockchains;
- If this isn’t possible, it uses a network of liquidity pools for trading the bridged tokens.
This is usually done in less than 30 minutes. Multichain supports networks based on the Ethereum Virtual Machine (EVM), and a number of other blockchain networks, using technologies like Cosmos. The same bridging process is done for NFTs. To do so, Multichain uses a network of secure nodes called “SMPC” that is run by different parties. Let’s cover these concepts in more detail in the following parts.
By bridging, we mean transferring assets between different chains using specific cryptography mechanisms. Imagine you want to transfer some BNB from Binace to Ethereum. Multichain first locks your BNB in BNB Smart Chain and then creates some pegged BNB in Ethereum. There is no need to mention that this is done in a 1:1 ratio.
Not all digital assets can be bridged using the method explained above. For example, USDC now exists on different blockchains. For bridging such assets, you need to trade them. And you know that trading needs liquidity. Liquidity for trading these assets is provided using liquidity pools. Users can stake their assets, provide the platform’s liquidity, and gain interest instead.
Cross-chain routers take the user’s request and then choose one of the above-mentioned methods for bridging the asset. This facilitates the process of bridging. Some assets even can be bridged through a combination of these two methods.
SMPC stands for Secure Multi-Party Computation. These nodes are entities that can sign transactions collectively. Using the Distributed Key Generation algorithm, each node can own a part of the private key. The complete set of private keys is never revealed. SMPC nodes in Multichain eliminate the single point of failure challenge and assure decentralization and improved functionality.
Why do we need Multichain?
The main reason we need a platform like Multichain is that it facilitates the interaction of different blockchains. Multichain lets projects transact their tokens over a various range of blockchains. It supports more than 2,000 bridges belonging to different cryptocurrencies, NFTs, Defi projects, and decentralized exchanges like SushiSwap. As we mentioned earlier, it supports more than 42 blockchain networks. It is also very cheap and frictionless.
Wallets supporting Multichain
Like all cryptocurrencies, you need digital wallets to store MULTI. You can use Trust Wallet, MetaMask, or Binance Chain Wallet for this purpose.
Frequently Asked Questions (FAQ)
In the final part, we would like to cover some frequently asked questions regarding Multichain.
What is Multichain?
Multichain is a blockchain platform that is used to create private applications and facilitates the interaction of different blockchain networks.
What is the trading sign of Multichain in cryptocurrency markets?
MULTI is the trading sing of Multichain in cryptocurrency exchanges and platforms.
Multichain is a platform that can be used to create customizable applications. It is appropriate for organizations that want to have a fast, cheap, interactable network for their financial transactions. In this article, we tried to cover Multichain’s main functions like bridging, liquidity pools, and cross-chain routers. Feel free to ask your questions or share your opinions about this blockchain network with us.