What Is Chain Abstraction?

Blockchain interactions can often be confusing and difficult, especially for newcomers. In this article, we will explore chain abstraction, how it works, some of its benefits and challenges, and common misconceptions about it.  

What Is Chain Abstraction?

Chain abstraction is NEAR’s idea of simplifying how users interact with blockchain technology by separating it from the user experience (UX). The goal is that users should not be aware of the specific blockchain they are interacting with or even realize that they are using a blockchain.

How Does Chain Abstraction Work?

Efficiency

Imagine if you could only send messages from an iPhone to another iPhone but not to Android phones. That would be inefficient and impractical. Similarly, users should be able to interact with decentralized applications (DApps) across different blockchains without unnecessary hurdles.

The goal of chain abstraction is to remove or hide the complexities of blockchain technology, allowing users to focus on the functionality and benefits of the DApps they use. For instance, if Sarah wants to use a new DApp called XYZ, she should not have to worry about which blockchain it is built on. From a user perspective, she just wants it to work well and fulfill its purpose.

Similarly, millions of people use the internet every day, but only a smaller percentage understand the technology behind it and how it works. As long as it works as intended and adds value to users, there is no reason for the average user to fully grasp its technical details.

Transactions

Imagine using a DApp that allows you to easily transact across multiple networks and navigate different services. For instance, imagine that Sarah opens the XYZ app on her phone, orders a coffee, and sees a discount for her favorite clothing store. She buys a pair of shoes, earning rewards that are stored as non-fungible tokens (NFTs) on Ethereum. Later, she notices a special offer tied to her reward and buys tickets to an event, which are also NFTs, but on BNB Smart Chain (BSC).

All these transactions could happen in a single app, removing the need for Sarah to manage multiple wallets, switch networks, or directly handle transaction fees. This level of cross-chain interaction is the ultimate goal of chain abstraction.

Benefits of Chain Abstraction

Defragmenting liquidity

Liquidity is often isolated within specific blockchains, making it difficult for users and developers to access and use it. Chain abstraction addresses this by enabling access to liquidity across various blockchains.

Imagine that John wants to lend his tokens to earn interest. If liquidity is isolated, he would need to find a platform on the specific blockchain his tokens are on. However, with chain abstraction, John could lend his tokens on a platform that integrates liquidity from multiple blockchains. This may result in more users for the platform and more competitive interest rates for John.

Simplified development

For developers, chain abstraction offers the flexibility to build DApps without being limited to the constraints of a specific blockchain. 

A developer might use Ethereum for its smart contract capabilities while utilizing Polygon for its cost efficiency. For instance, Decentraland uses the Polygon network to allow its users to claim, buy, sell, and trade wearables for their avatars with no transaction fees. It’s important to note that Decentraland utilizes multiple features to completely remove the fees. Transactions in Polygon have small fees but are not entirely free.

Challenges of Chain Abstraction

Centralization risks

Chain abstraction could be implemented through the creation of an interface that would allow users to interact with all kinds of blockchain applications from a single place, enhancing user experience. However, there is a concern that this interface may potentially become a single point of failure.

Security risks

Each blockchain has its own security protocols. If they are combined into a single interface, ensuring that all security measures are upheld is challenging. If not implemented carefully, the new interface of chain abstraction could bring risks to individual blockchains.

Interoperability issues

Ensuring interoperability across various blockchains is another challenge. Different blockchains have unique consensus algorithms and smart contract languages, making it difficult to create a single interface that works flawlessly across all networks. For instance, a smart contract written for the Ethereum network is not directly compatible with Solana due to differences in their programming language and underlying technology.

Common Misconceptions About Chain Abstraction

Chain abstraction eliminates blockchain differences

While chain abstraction involves simplifying cross-chain interactions, each blockchain’s unique features remain intact. Chain abstraction simplifies and automates the technical processes to improve user experience but does not directly change the blockchain infrastructures.

Chain abstraction is only about cross-chain transactions

Facilitating transactions across different blockchains is a significant feature of chain abstraction, but not its only utility. Chain abstraction also involves simplifying the use of DApps, deployment of smart contracts, and data retrieval across blockchains.

Closing Thoughts

Chain abstraction refers to the simplification of interactions across different blockchain networks. Benefits of chain abstraction include liquidity defragmentation and simplified development. It faces challenges in the form of centralization and security risks, and potential interoperability issues. Still, it could pave the path towards interoperable and user-friendly blockchain ecosystems.