What is Omnichain? Shared Vision of LayerZero, Chainlink & Circle

Recently, the market has begun to popularize terms such as Omnichain NFT, Omnichain dApp,… to talk about a new market trend, the multi-chain trend. But the terminology about Omnichain is quite new and there is little documentation to read. So this article was born to help you understand what Omnichain is? Advantages and disadvantages of Omnichain.

To understand more about Omnichain, people can refer to some of the articles below:

• With CCIP Technology, Chainlink Aims for the Omnichain Trend
• What is LayerZero? LayerZero Cryptocurrency Overview
• What is Cross-Chain Interoperability Protocol (CCIP)? Chainlink Officially Joins the Cross-chain Wars
• What is Cross-Chain Transfer Protocol (CCTP)? Circle’s Ambition To Acquire Market Share

Omnichain Overview

What is Omnichain?

The term “Omnichain” was coined in 2019 by the famous data technology and blockchain software company ArcBlock. This term combines two concepts: “Omni” (meaning “all” in Greek) and “Chain” (i.e. Blockchain), to form a new term to describe an interconnected ecosystem of different blockchains. Omnichain allows data and assets to transfer across different blockchains seamlessly and securely, improving interoperability.

Omnichain can be understood as including Multichain and Cross-chain. Because Multichain is multi-chain, and Cross-chain is cross-chain interaction, when we combine these two features, it is Omnichain. Omnichain is a chained connection and between chains can interact with each other.

Omnichain is also the premise for other new terms to be born such as Omnichain dApp and Omnichain NFT.

• Omnichain dApp: It is a dApp for blockchains, allowing users on all chains to interact with the dApp and can use assets on one chain to display or interact with products on another chain.
• Omnichain NFT: Is an NFT issued on all chains and can move back and forth between chains.

Structure of Omnichain

Omnichain is a Multichain distributed Blockchain system built on Blockchain technology platform. It consists of multiple independent blockchains connected to each other via a Mainchain, creating an interconnected blockchain network.

These independent blockchains can be customized to suit the different needs of different applications and technologies. The Omnichain system also has security and trust features, which come with the use of cryptographic algorithms and decentralized authentication mechanisms.

Omnichain’s operating mechanism

Omnichain allows different chains to communicate and interact with each other. Omnichain’s operating mechanism includes:

1. Create a control software layer to manage and connect different Blockchain chains.
2. Use tokens to enable transactions and services on the platform.
3. Provides tools to store, convert and manage digital assets on different Blockchain chains.
4. Integrate technologies compatible with various Blockchain chains to realize real-time asset management functions.
5. Supports various Blockchain chains such as Ethereum, Binance Smart Chain, Polygon and HECO.

Some applications of Omnichain

Omnichain applications include:

• Cross-platform supply chain management: helps track and manage information about product origin, transportation, storage and sales on a single platform.
• Digital asset management: helps manage and monitor digital assets such as cryptocurrencies, tokens, digital media and others across the entire supply chain from origin to end customer.
• Support comprehensive shopping platform: connect sales channels and provide customer purchase history information to improve shopping experience.
• Digital asset security management: using Blockchain technology and encryption to ensure transactions are authenticated and absolutely safe.

Advantages and disadvantages of Omnichain

Advantage

Some of the advantages of Omnichain technology include:

• Comprehensive: Omnichain delivers end-to-end digital asset and supply chain management solutions, from origin to end customer, helping improve reliability, accuracy and transparency.
• Breakthrough: Omnichain uses Blockchain technology and encryption to ensure high safety and authenticity, helping users feel secure in managing digital assets.
• Increase transparency: Omnichain helps increase transparency in the supply chain and digital asset management process, helping businesses increase customer trust.
• Highly customizable features: Omnichain is designed to meet the needs of each specific business, and can be customized to suit the needs of each business.
• Connectivity: Omnichain connects sales channels and stakeholders in the supply chain, thereby helping to improve the shopping experience and strengthen the connection between parties.

Defect

Besides the advantages, Omnichain technology also has some disadvantages including:

• High cost: Omnichain can require businesses to pay a large amount of money to deploy the system, especially when it needs to be customized to specific needs.
• Difficulty in implementation: Omnichain system is highly complex, and implementation is not simple, requires IT experts with highly specialized skills, and takes a lot of time and resources.
• Dependence on technology: Omnichain uses Blockchain technology and encryption to ensure security and authenticity, so if this technology fails or is attacked, the Omnichain system will also be affected.
• Popularity: Since Omnichain is a new and high-cost technology, it is not yet widely available in industries, so its use may face difficulties in finding human resources and interacting with partners other.
• Prejudice about information sharing: Some partners feel insecure and face concerns about sharing their information with other partners in the supply chain when using the Omnichain system.

Some Outstanding Projects About Omnichain

LayerZero – Pioneer project for the Omnichain trend

LayerZero is a decentralized omnichain or Communication Protocol that allows different blockchains to communicate and interact with each other securely and efficiently. It is developed by LayerZero Labs, a blockchain startup headquartered in San Francisco, California.

LayerZero is based on an intermediary system called Relayers, which are responsible for transferring data and messages between blockchains. Relayers are operated by a network of independent nodes, ensuring the decentralization of the system. In addition, LayerZero also uses Oracle Chainlink to participate in independent authentication with Ralayer.

LayerZero is developing its ecosystem very well, especially with the proliferation of Omnichain dApps. With first-mover advantage and friendly products, LayerZero is at the forefront of this Omnichain segment.

Chainlink launches CCIP to compete with LayerZero

Cross-Chain Interoperability Protocol (CCIP) is a decentralized cross-chain communication protocol developed by Chainlink. CCIP allows different blockchains to communicate and interact with each other securely and efficiently.

CCIP uses data from Oracle to confirm credentials and it is vetted by the Risk Management Network. Therefore, CCIP also brings very high security and peace of mind to users with what Chainlink has done.

CCIP is targeting customers who are projects that have used Oracle Chainlink services, which are also large projects. Chainlink’s CCIP has more complex technology and less connectivity in terms of number of Blockchains and dApps. But CCIP is at the forefront of technology in terms of connecting Blockchain with traditional infrastructure like banks.

Comparing Omnichain With Multichain And Cross-chain

Through the comparison table above, we can clearly see that Omnichain was born to completely overcome the limitations of Multichain and Cross-chain. It opens up a new environment where users interact with dApps regardless of the network used.

Personal Projections About Omnichain

Omnichain is one of the trends for the future, is a high-level version of Multichain and Cross and has very high applicability. We cannot predict the distant future, but in the next cycle, Omnichain will prove its usefulness and become a new trend.

Omnichain is a promising technology that has the potential to revolutionize the way blockchain and cryptocurrencies work. Omnichain can help create a global blockchain ecosystem connecting all types of data and assets.

Omnichain was born to solve the limitations, barriers and challenges that Blockchains are facing in terms of interoperability. When chains are connected together, trading becomes easy, transferring assets, interacting, and using networks. Especially the ability to update data on all networks is consistent.

Omnichain dApps will be the most anticipated product in the next cycle. Where users on all networks can interact under a common interface. For example, users can mortgage assets on the Ethereum network but borrow assets on the BNB Chain and then farm on Solana in a few clicks on a single dApp and there are many other applicable products.

Omnichain domain names are also a potential niche when you can use one domain name on all networks. Transferring Tokens and NFTs between Chains also does not require intermediaries or liquidity. In addition, the appearance of a Token on multiple chains also creates a new need to pool liquidity on all Chains together, helping to increase liquidity. To solve that problem, the market needs an AMM DEX Omnichain.

Summary

In the next cycle, Omnichain will be the key for you to find potential projects in your portfolio. Omnichain dApps will be Hidden Gems and communication protocols will be safe investments. Although we appreciate Chainlink’s LayerZero and CCIP, in the future it is possible that another protocol will emerge and take the market share of these two projects because they are really not the most perfect.

So I have clarified what Omnichain is? Hope this article provides you with a lot of useful information and knowledge!