Every day new cryptocurrencies are coming into existence and with them new blockchains. The idea that one or few blockchains would rule and cater to all use-cases — is proving to be impractical. A much more likely future is many smaller blockchains built for specific use-cases and specific user-bases. But, this introduces a new problem -value is getting locked into disconnected silos. There are two aspects of the problem — lack of information flow and lack of value flow. Try to think about this problem as there are many financial organizations that cannot communicate with each other or transfer funds among themselves. It is like you cannot transfer funds from your bank to someone who has an account with another bank or you cannot take a loan against your assets deposited with another bank or cannot buy financial assets from another bank than your bank. In the case of traditional finance, central banks guarantee cross-institutional communication and fund transfers. In the case of blockchain and DeFi, there are no central authorities like that. Yes, some intermediary can be used to create swaps or issue wrapped coins, but that approach fundamentally defeats the purpose of decentralized finance. This is where cross-chain interoperability comes into play. Cross-chain is a technology that enhances interconnection between blockchain networks by allowing the transfer of information and funds. Now, let us talk about some use cases of cross-chain interoperability.
