Regulators Bring the Multichain Era to an End: What Now?

• Regulators are making it difficult for enterprises to understand and implement multiple blockchain networks.
• It costs a lot of money to stay up-to-date with different blockchains, as they continuously evolve and change.
• There is also a lack of liquidity when transferring tokens between different chains.

The High Cost of Understanding Multiple Chain Environments

Regulators are bringing the multichain era to a close by making it difficult for enterprises to understand and implement multiple blockchain networks. EY (Ernst & Young) estimates that it costs around $500,000 to add a new chain to their Blockchain Analyzer platform and 10%-20% of that amount each year just to ensure they stay up-to-date with changes in the network. Ethereum has two to four hard forks a year which can make staying on top of updates challenging.

Lack Of Liquidity Between Chains

Liquidity is also an issue when transferring tokens between different chains. Polling Automated Market Makers (AMM) reveals how quickly liquidity declines when users move away from the Ethereum blockchain. Even though setting up network nodes isn’t too complicated, understanding how payments and transfers work within these networks requires further investment in time and resources from enterprises.

Transactions And Cryptography

When adding a new network, firms must look into the transaction processing model (how transactions are initiated, recorded, processed & reported), the cryptography that underpins those transactions and any associated risks with different steps in the process. If businesses want to audit their activity then control points need to be identified so verification can take place.

EY’s Approach To Adding A New Chain

At EY, teams take an in depth look at all aspects of adding a new chain including transaction processing models, cryptography underpinning those transactions as well as risk identification across each step in the process so audits can be performed successfully if needed.

Conclusion: The Multichain Era Is Coming To An End

The cost associated with understanding multiple chain environments means enterprises are likely going become reluctant when it comes to exploring new chains or updating existing ones which will unfortunately bring an end to this multichain era we’re currently experiencing