Multichain Meaning

Dec 6, 2023 | Updated Dec 6, 2023

A multichain is an application designed to operate across isolated chains, allowing them to communicate with each other.

What is a Multichain?

The advent of blockchain technology has revolutionized the financial landscape and how the everyday user goes about their day. However, a persistent pain point is that blockchains are currently siloed, with each operating independently of the other. When blockchains are siloed, it hinders innovation while preventing users from utilizing their digital assets on other blockchains.

For example, if the digital assets are limited to a single chain, developers and users cannot transfer data and assets to other chains without introducing bridges, which can create security concerns.

Multichain technology is built to address blockchain siloes. A multichain or multichain application is a decentralized application (dApp) deployed on multiple chains. Operating on at least two chains simultaneously, a multichain allows users on different networks to communicate and collaborate. It also facilitates the transfer of digital assets across networks without the use of blockchain bridges.

Multichain can also be defined as a cryptocurrency asset available on different blockchains. For instance, a stablecoin such as Tether (USDT) simultaneously exists on Ethereum, EOS, Solana, Tron, and Liquid Network. This makes it a multichain cryptocurrency asset.

How Multichain Technology Works

Blockchains are inherently disconnected from each other and often operate independently. Since they barely interact with outside networks, accessing applications and digital assets on a different chain poses a challenge.Multichain technology aims to solve this blockchain fragmentation setback by enabling transactions across different chains and smooth data and assets exchange. Besides scalability, this approach also enhances functionality and efficiency in the ecosystem.

To achieve this, multichain technology splits the underlying blockchain infrastructure into different layers: the base layer and the application layer.

Base or consensus layer: The base layer is essential in handling the ecosystem’s overall security.
Application layer: This layer is programmable. It allows individual blockchains to co-exist and communicate with outside networks regardless of their structures. This allows developers to create and launch the same application on different networks, which facilitates interoperability without jeopardizing the ecosystem’s security.

Multichain Vs. Cross Chain

How is multichain different from cross-chain technology?

Cross-chain technology describes technology that allows different blockchains to share and access information and value across completely unrelated networks without intermediaries.

Its main difference between cross-chain and multichain technology is that cross-train technology utilizes smart contracts to create “wrapped” versions of a cryptocurrency. This synthetic version can be directly used in outside networks. On the other hand, multichain technology creates an “internet” of blockchains that can seamlessly interact without compromising security.