The Importance Of Cross-Chain NFT Technology
Scalability, user-friendliness, and improved chain efficiency are only some of the reasons why cross-chain technology implementations are awaited among the NFT community.
Most of us believe NFTs to have a huge potential. However, in order to boost this potential, NFT space requires more interoperability as higher connectivity and simplicity in transferring assets are the two things users have been asking for ages.
The solution lies in cross-chain NFTs that have the ability to enhance NFT liquidity and allow NFTs to be migrated from one blockchain to another.
In this article, we share insights into why multi-chain NFTs are in such big demand and how it’s possible at the moment to move your NFTs from one chain to another.
Why are cross-chain NFTs needed?
With so many NFTs circulating the market and the number of blockchains currently available, the issue of interoperability between blockchains arises. For now, NFTs are minted on one specific blockchain and can then be transferred to other users on the same blockchain.
Therefore, when you browse an NFT marketplace built on the Solana blockchain, such as Magic Eden, the NFTs listed there will be on Solana, which means you will be able to buy and sell NFTs that are minted on this blockchain only.
Perhaps you’re loyal to your favorite blockchain and don’t see the fuss about NFTs being cross-chain. So let’s take a look at what benefits introducing multi-chain accessibility gives to platforms and their users to bring some clarity to the matter.
- Reaching a wider user base by going blockchain-agnostic. As blockchain-agnostic refers to applications and platforms that can be used on all blockchains, the platform becomes available for new potential market shareholders. The more access points there are to an application, the higher the chances of bringing in more users and network value.
- Building a bridge to fiat currency and NFTs nudging NFTs more into the mainstream. Even though fiat currencies are not on a chain, the interoperability between traditional finances and NFTs must be considered, as it can bring significant growth into the NFT space. By introducing a cross-chain approach, a platform ensures being available to everyone.
- Unlocking additional liquidity. Some isolated chains have millions or even billions of dollars of liquidity just sitting idly and waiting for their time for the right application to come along and unleash it.
For instance, BSC, which hosts BNB native assets, has limited NFT applications, especially when compared to the booming NFT market on Ethereum. With a cross-chain NFT platform, the BSC users could put their BNB assets to use on Ethereum-based NFTs and give quite a substantial liquidity injection to the market.
- Reducing transaction fees. With the introduction of multi-chain NFT interactions, it is possible for users to mint their NFTs on one chain with lower fees and then migrate it over to another, more popular network to sell the same NFT.
To sum these points up, the cross-chain approach helps creators and collectors to do both NFT minting and NFT trading over different blockchains making more collections available to the users with lower fees and helping platforms to boost the overall liquidity of the NFT ecosystem.
How To Move NFTs Between Blockchains Today
While many people assume transferring NFTs from one chain to another is impossible, as blockchains were initially meant to operate separately from one another, there’s a way for it. However, the method is anything near perfect and simple.
Currently, moving NFTs from one chain to another is limited to using blockchain bridges or otherwise known as cross-chain NFT bridges.
A blockchain bridge is a software that allows users to transfer cryptocurrency or tokens from one blockchain to another. These are third-party applications that monitor the network you are on and the network you wish to connect to at the same time.
To understand a bit more about how bridges work, let’s take the bi-directional bridge Wormhole as an example that is a communication bridge between Solana and other major networks.
If you wish to move NFTs from Solana to Ethereum, Wormhole allows to do so by wrapping the Solana token, which can then operate on Ethereum
During the process, Wormhole locks your NFT on the Solana blockchain, placing it in a “vault” and mints a wrapped version of your NFT on Ethereum.
If you wish to bring the NFT back to its original blockchain (or to unwrap it), the bridge software unlocks your original token and burns the wrapped one. This is done because NFTs are one of a kind, meaning only one specific NFT can exist simultaneously.
Some things to keep in mind when using bridges:
- Crypto wallet and cryptocurrency are needed to use a blockchain bridge.
- Wrapping and unwrapping tokens ask for gas fees.
- Always research the bridge you wish to use, as they hold your original token for you. Therefore, it’s crucial to use a trusted platform.
- And even when using a trusted platform, it’s important to understand that bridges expose you to additional risk, as they can be unsafe - bridges have been hacked in the past regardless if they are trusty or not.
Projects developing cross-chain technologies
Naturally, as cross-chain is something that the NFT space needs, various projects are already working on developing cross-chain technology.
- Polkadot allows both arbitrary data and tokens to be transferred across blockchains. With them, it’s possible to transfer this data across public, open, permissionless blockchains as well as private, permissioned blockchains.
- Enjin recently launched Efinity’s parachain - a next-generation blockchain for digital assets built on Polkadot. They aim to enable creators, developers, and gamers to create metaverse games that have full interoperability across Parachains.
- Wanchain works on creating cross-chain interoperability by developing decentralized direct bridges connecting to multiple blockchains and eliminating the need for a third-party exchange.
Cross-chain is definitely an interesting topic in the NFT space, and many are eager to see the advantages this technology can bring to the industry.
If all goes well, we’ll soon witness improved chain efficiency and more users across the blockchain - from other chains and entirely newcomers alike who all will contribute to more blockchain transactions and the NFT adoption overall.
The development of cross-chain NFT platforms and applications is a hot topic as it can bring scalability, user-friendliness, and improved chain efficiency, among other benefits, to the NFT space.