Digital assets are typically restricted to their native blockchain networks, and existing methods of transferring tokens from one blockchain network to another are highly vulnerable to hacking or involve using a trusted third party. However, multichain tokens enable users to transfer their assets to another blockchain directly without giving up custody of their tokens. Experts in the blockchain space believe that cross-chain tokens can positively impact the industry by enabling greater user participation over multiple networks. Marius Ciortan, director of product engineering at Bitpanda and Pantos, a European crypto exchange, told Cointelegraph, “Multichain tokens can establish a more fluid and connected environment in the context of decentralized finance.” Ciortan continued, “Multichain tokens, for example, can aid in developing more efficient decentralized exchanges by allowing users to trade assets across several blockchain networks. This can aid in improving liquidity and decreasing fragmentation in the DeFi ecosystem.” Multichain tokens can also help connect blockchain networks, assisting developers in deploying their applications on multiple blockchains.
Full analysis : Connecting DeFi: How multichain token systems can improve liquidity.
