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The incident involving the decentralized mixer Tornado Cash being sanctioned continues to escalate, once again bringing the "privacy" issue of the cryptocurrency industry to the forefront of discussions. Although users can protect their real identities to some extent through decentralized crypto wallets and applications, this privacy also brings regulatory pressure to the entire crypto industry. For instance, criminals can use decentralized protocols for money laundering and other illegal activities, which is a primary reason for the U.S. Treasury's actions against Tornado Cash.

While regulatory efforts target anonymous transactions by illegal actors, the crypto world, like real life, also requires a certain level of privacy. Just as no one in the real world wants their financial status or activity trails to be known by others, this applies equally to crypto users. In addition to users having a certain demand for privacy, decentralized protocols also face this issue. For example, the clear and transparent lending situations on lending protocols can give large holders the opportunity to maliciously short or long, seizing liquidation profits through "precision strikes."

Recently, leading DeFi protocols such as dydx, Aave, and Uniswap have successively banned certain wallets associated with Tornado Cash. This includes wallets belonging to well-known crypto figures like Shen Yu and Sun Yuchen, which were implicated due to anonymous "poisoning." Although Aave has lifted the ban and Uniswap has implemented it on the front-end interface, it undoubtedly serves as a warning, highlighting the importance of privacy protection for users in on-chain activities.

Due to the traceable nature of blockchain ledger data, along with the still-maturing development of related technologies (such as zero-knowledge proofs) and insufficient user awareness, the aforementioned privacy issues have not been effectively resolved. Compared to other sectors, the privacy sector has developed relatively slowly. However, from the perspective of institutional financing, this sector has consistently performed well and has attracted the attention of top VCs in the industry. For instance, the privacy system Espresso Systems completed a $32 million financing round in March 2022 with participation from Sequoia Capital, the L2 privacy solution Aztec Network raised $17 million in a Series A round led by Paradigm in December 2021, and the data privacy platform Aleo secured $28 million in a Series A round led by a16z in April 2021.

The core spirit of the internet lies in equality, openness, sharing, interaction, and innovation. This is the essence of internet technology and the charm of the knowledge economy in this era. The early builders of the internet adhered to this spirit, creating the Web 1.0 era. Over time, with the rise of Web 2.0 and the mobile internet, nearly a billion users have entered the internet. However, leading internet companies are weaving increasingly large and closed information cocoons, and some emerging products merely continue to draw circles around users. Openness and interaction increasingly depend on the interests of oligarchs.

Now, with the arrival of the Web 3.0 era, decentralized and distributed technologies have made information and data completely transparent and public. Although different public chains are technically independent due to their different code bases, the spirit of the internet has led more and more Web 3.0 developers to solve this problem through technology.

Cross-chain technology has emerged as a "bridge" in the Web 3.0 world, providing great convenience for the secure intercommunication and sharing of data and assets. At the same time, the ecosystems of major public chains have become more decentralized due to the application of cross-chain technology.

1. Background and Current Status of Cross-Chain
   With the development of blockchain technology, a state of multi-chain coexistence has emerged. Despite the continuous emergence of new public chains, Ethereum remains the preferred choice for most DeFi projects, mainly due to the network's high liquidity and trading volume. It can also be observed that in the current DeFi era, where "liquidity is king," public chains are leveraging high APY to attract users. According to statistics from DeFi Llama, there are currently over 110 Layer 1 public chains in the market, with a TVL of $34.4 billion on Ethereum. Other public chains include BSC at $4.9 billion, Solana at $1.9 billion, Avalanche at $2.3 billion, TRON at $4 billion, and Polygon at $1.5 billion. The TVL of Layer 2 has grown from $480 million in June 2021 to $5 billion in June 2022, a 10.4-fold increase. With the release of Optimism's token incentive program and the continuous improvement of the Arbitrum, Zksync, and StarkNet ecosystems, the TVL of Layer 2 will continue to increase.

For some non-EVM public chains, interoperability between assets is very important, and the lack of interoperability between multiple public chains has led to sluggish liquidity. Therefore, cross-chain bridges are essential for the crypto market. From the perspective of the cross-chain bridge market, there are at least 100+ cross-chain bridge projects.

Currently, the core of cross-chain in the market includes Cosmos's IBC modular ecosystem for internal cross-chain, Polkadot's cross-chain behavior completed by relayers, and cross-chain bridge applications based on different public chains and asset transactions. The problems solved by cross-chain bridges mainly focus on asset cross-chain, but the transmission between blockchains includes not only assets but also contract calls, transaction cross-chain, and data and state interactions of smart contracts. As a foundational infrastructure for achieving information interoperability between blockchains, cross-chain has also become a hot product.

2. What is Cross-Chain
   Cross-chain refers to the use of certain technologies to allow value to flow directly across the barriers between chains, which can also be understood as achieving value exchange between different blockchain systems, transmitting data and information between two or more blockchains. It is most commonly used to exchange assets from one blockchain ("source" chain) to assets on another chain ("target" chain).

The core mechanisms of cross-chain include: monitoring, relayers, consensus mechanisms, signatures, security, speed, scalability, convenience, and caching.

• Monitoring: Responsible for monitoring the state of the source chain through oracles, relayers, or validators.
• Relayers: After receiving information from the monitoring role, they transmit the information from the source chain to the target chain.
• Consensus Mechanism: Participants or validators monitoring the source chain need to reach a consensus and pass the information to the target chain.
• Signature: Requires participants to sign the information sent to the target chain, which can be done with single or multi-signatures.
• Security: Trust and activity levels act as risk control against malicious actors, ensuring the safety of user funds.
• Speed: The latency and finality of completing transactions need to balance speed and security.
• Scalability: Multi-chain deployment supports various asset transactions and transfers while allowing users and developers to choose target chains and integrate additional target chains.
• Convenience: Compatible with processing transactions and compiling files, providing a more user-friendly and streamlined front end through automated processes.
• Caching: When uploading in batches, allows users to upload files to storage networks, facilitating quick access to files, reducing hops between chains, and improving efficiency.

3. Different Classifications of Cross-Chain
   (a) Classification Based on Cross-Chain Behavior

4. Transaction Cross-Chain Behavior
   (1) Token Transactions: Using hash time locks, technology can directly exchange native tokens across various public chains on-chain to achieve transactions.
   (2) Token Transfers: Public chains are closed, and native assets on one chain cannot be directly transferred to another chain. With cross-chain bridge technology, users lock native assets on the source chain and issue an equivalent mapped asset on the target chain to achieve token transfers.

5. Message Cross-Chain Behavior
   The essence of cross-chain behavior is a combination of a series of message transmissions. Information is transmitted across chains, such as Chain A reading the state and information of Chain B, using the state and information of Chain B as execution trigger conditions. Therefore, two operations are required: while locking on Chain A, information about the lock needs to be transmitted to Chain B. After Chain B verifies the authenticity of the message, it mints the mapped token and then feeds this state information back to Chain A. This enables cross-chain lending, cross-chain NFTs, cross-chain aggregation, cross-chain governance, and cross-chain derivatives.

(b) Classification Based on Bridge Types

1. Specific Assets: A way to access specific assets from external chains, where the assets are wrapped assets fully collateralized by the underlying assets in a custodial or non-custodial manner. BTC is the most common asset bridged to other chains, such as xBTC, with various different bridges available on Ethereum. This type of cross-chain bridge is relatively easy to implement, has strong liquidity, but limited functionality, requiring redeployment on each destination chain.

2. Specific Chains: Cross-chain bridges between two specific chains operate by locking and unlocking tokens on the source chain and minting wrapped assets on the target chain. The complexity of this type of cross-chain bridge is limited, allowing for quicker market deployment, but it is not easy to scale to a broader ecosystem.

3. Specific Applications: Applications accessed between multiple blockchains, intended for use within a single application. The application itself benefits from a smaller codebase, not having a complete application on every blockchain, but having lighter modular adapters on each blockchain. Blockchains deploying adapters can access all other blockchains connected to the application, but expanding its functionality can be challenging.

4. General Type: Provides information transmission between chains. DApps can use this type of bridge to achieve cross-chain communication, such as calling smart contracts on another chain. Based on this cross-chain communication protocol, developers can enhance the user experience in multi-chain scenarios.

(c) Classification Based on Bridge Connection Objects

1. L1 - L1 Bridge: Can connect two different L1 chains and transfer assets.
2. L1/L2 - L2 Bridge: Can connect L1 blocks with L2 networks or connect two different L2 networks for transactions.

(d) Classification Based on Security

1. Trustless: The security of the cross-chain bridge is the same as that of the underlying blockchain it bridges. In fact, most are not trustless; the system has security in its economic and cryptographic components.
2. Insurance: Malicious actors can steal user funds, assuming they need to provide collateral and be fined in case of errors or misconduct. If user funds are lost, they will be compensated by confiscating part of the collateral.
3. Bonded: Similar to the insurance model, but users will not recover funds in case of errors or misconduct, as the fined collateral may be destroyed. The type of collateral is crucial for the insurance model; endogenous collateral carries greater risks, as if the cross-chain bridge fails, the token value may collapse, further reducing the security guarantees of the cross-chain bridge.
4. Trusted: Validators do not provide collateral, and users will not recover funds in case of system failures or malicious activities; core users mainly rely on the reputation of the cross-chain bridge operator.

(e) Classification Based on Validation

1. External Validation: Through single-node or multi-node validation, its core includes sending, locking, validating, consensus, minting, and other elements. This method also improves transaction speed, reduces gas fees, and allows for the transmission of generic data and interaction with any number of target chains, making it easier to connect with more chains. However, its security is weaker, requiring users to trust external validators. This solution requires validators to over-collateralize to ensure collateral assets > validation amounts, increasing overall liquidity and throughput while enhancing security as the collateral threshold rises.

2. Native Validation: The core can be understood as relying on nodes and miners on the source chain for validation, eliminating third-party validators. In this method, the data transmitted between chains is entirely validated by the validators of the underlying chain, and no collateral assets are required, enhancing the trustless nature. However, this also affects scalability, reduces validation speed, and increases gas fees.

3. Local Validation: Using a liquidity network model, it employs local validation without requiring global validation to maintain faster speeds and lower costs while remaining trustless, relying on the underlying chain for support. However, it has limitations in information transmission and cannot achieve generalized information transmission.

4. Subdivided Tracks of the Cross-Chain Ecosystem
   Based on the above research on the cross-chain track, 7 O'Clock Capital believes that the cross-chain track is still in its early stages, with its security, scalability, and other aspects not yet fully realized, remaining in a state of void. This has led to incidents where some cross-chain projects have been attacked and lost assets. However, continuously improving cross-chain technology can truly enable infinite connections between blockchains. Based on our understanding, we have subdivided this track into original cross-chain bridges based on public chains, cross-chain bridges that diversify asset intercommunication based on transactions, third-party cross-chain bridges, and aggregator-type cross-chain bridges.

(a) Public Chain Bridges
Public chain bridges refer to cross-chain application products developed by public chains themselves to increase ecosystem liquidity, such as NEAR's Rainbow Bridge and Solana's Wormhole.

1. Wormhole: An asset cross-chain tool developed in collaboration between Solana and Certus.One, launched on August 10, 2021, primarily used to achieve cross-chain transactions between Ethereum and Solana assets. With the release of V2, Wormhole added support for asset transfers on chains such as BSC, Avalanche, Fantom, Polygon, Oasis, Karura, and Celo. It also supports cross-chain transfers of NFT assets ERC-1155 and ERC-721.

Cross-Chain Mechanism: It works through two smart contracts—one on Solana and one on Ethereum. The Ethereum token is locked in a contract on one blockchain, and then a parallel token is issued on the other side of the bridge. The parallel token is pegged to the value of the original token and can interoperate with other blockchains.

2. Rainbow Bridge: A cross-chain bridge officially launched by Near, mainly used to connect assets on the Ethereum chain. When users cross-chain their assets, they need to switch their wallets to the target network, generally only supporting connections to the same wallet address. However, in Rainbow Bridge, users only need to log in with their Near account, fill in the desired on-chain wallet address and amount for transfer, and the system will execute the operation automatically.

Operational Mechanism: It tracks the state of a given blockchain and verifies it in a trustless manner without requiring extensive computations. For example, Ethereum smart contracts on the NEAR chain can track the state of the Ethereum chain within NEAR smart contracts, allowing NEAR applications to access and verify Ethereum states and read data information, such as contract balances and transaction histories. Currently, it supports ETH, Aurora, and NEAR.

3. Avalanche Bridge: The official cross-chain tool launched by Avalanche in July 2021, replacing the previous Avalanche-Ethereum Bridge (AEB). It primarily addresses the issue of transferring assets under the ERC-20 standard on the Ethereum chain to Avalanche network assets. In the Avalanche ecosystem, Ethereum ERC-20 assets that cross-chain through the AB bridge are marked with the suffix ".e," such as WETH.e, which indicates WETH's state after crossing to the Avalanche network.

Core Technology: Its core technology is Intel SGX, which Intel introduced as an instruction set extension for hardware security, not relying on the security state of firmware and software, providing trustworthiness in user space, a new set of instruction set extensions, and access control mechanisms to achieve isolation between different programs, ensuring the confidentiality and integrity of critical code and data against malicious software. Unlike other security technologies, SGX's trusted computing only includes hardware, avoiding the flaws of software-based TCB that may have security vulnerabilities and threats, enhancing system security guarantees. SGX can ensure a trusted execution environment at runtime, preventing malicious code from accessing and tampering with the protected content of other programs during runtime, further enhancing system security.

(b) Asset Trading Bridges
Asset trading bridges refer to cross-chain wrapping based on mainstream assets (BTC), focusing on maximizing the circulation of mainstream assets and asset stability.

1. Keep Network: Establishes a bridge between public chains and private data without compromising reliability or transparency. The main focus is on BTC asset cross-chain. tBTC is a cross-chain project of a decentralized relay solution. In terms of security, tBTC has three layers of protection:
   • Uses threshold EC-DSA signature encryption (threshold EC-DSA signature: a distributed multi-party signature protocol).
   • Random beacons.
   • Signers need to over-collateralize ETH, increasing the economic cost of malicious behavior.

Its security technology is among the industry's forefront in BTC asset cross-chain, but it requires 450% over-collateralization, performing poorly in capital efficiency. However, the team has included this as an improvement point in the subsequent tBTC v2 version.

2. pNetwork: A fully decentralized and open system that connects various blockchains, providing the freedom of liquidity flow for cryptocurrencies.

Core Mechanism: Primarily utilizes TEE and MPC to support cross-chain functionality, allowing the issuance of cross-chain composable or pToken assets to protect underlying assets using trusted execution environments (TEEs) and MPC-supported networks. pBTC is a BTC-pegged asset issued by pTokens, representing a decentralized witness cross-chain solution. pBTC uses trusted computing for security, with BTC addresses managed by a group of validators running trusted execution environments, also employing a threshold signature scheme for coordination. Currently, it supports usage on Ethereum, BSC, Polygon, xDAI, Arbitrum, Telos, and other chains. Its V2 version is a cross-chain routing protocol that introduces a universal messaging system called Postman for cross-chain data transmission, allowing users and smart contracts on any blockchain platform to send and receive assets and data across chains, improving and expanding the applicability of the previous version.

3. WBTC: WBTC was jointly initiated by Kyber, Ren (Republic Protocol), and BitGo. Kyber and Ren exchanged an initial amount of tokens by custodially holding Bitcoin to provide initial liquidity, enabling immediate swaps with users.

Core Mechanism: WBTC compensates for centralization issues through Chainlink's proof of reserves mechanism. DApps on Ethereum can connect to the proof of reserves contract, which is checked every 10 minutes by Chainlink's supported oracle network against the balance of BitGo's WBTC custodial wallet. When deviations exceed defined thresholds, Chainlink will use the new balance and push on-chain data.

Core Roles:

• Custodian: The institution holding the assets.
• Merchant: The entity or trading party responsible for minting and burning WBTC tokens.
• User: The holder of WBTC tokens.
• DAO: Contract updates, additions, and removals of custodians and merchants need to be controlled by multi-signature contracts.
• Regulators: WBTC's smart contracts are audited by several trusted third-party auditing firms, including Solidified, Technologies, ChainSecurity, and Coinspect.

(c) Third-Party Bridges
Third-party bridges refer to individual cross-chain application products that provide interoperability for users from different perspectives of security, scalability, efficiency, and low cost.

1. Multichain: Primarily targets cross-chain interactions between platforms supporting the Ethereum Virtual Machine, established on July 20, 2020, as a multi-chain platform developed by the Anyswap team and Andre Cronje, the founder of yearn.finance (YFI). The base chain is Celo, and it currently supports the transfer of over 2,000 assets across multiple blockchains, including Fantom, Ethereum, BSC, Polygon, Avalanche, Moonriver, Harmony, and Arbitrum.

Core Advantages: Supports developers in deploying cross-chain tokens independently, offering extensive compatibility, which is the main reason why Multichain.xyz can support so many public chains and cross-chain assets. However, Multichain.xyz's cross-chain solutions typically cannot independently form universal assets on the target chain.

Core Mechanism: Router: Anyswap's latest non-custodial cross-chain solution enables token exchanges between chains. Bridge: A custodial mapping solution allows tokens to be exchanged between chains. Anyswap working nodes: Users can stake any token by delegating or running their own nodes.

2. Hop Protocol: Developed by the smart contract wallet team Authereum, Hop Protocol is a cross-chain bridge launched in July 2021. The solution designs a universal asset bridge for Rollup-to-Rollup to facilitate asset transfers between Layer 2 networks and the Ethereum mainnet.

Core Mechanism: Hop Protocol consists of two core components: an automated market maker (AMM) component and a connector (Bonder). When using Hop, assets need to flow through Hop into the Layer 2 network; for example, assets entering Layer 2 via Hop's asset bridge are referred to as Hop ETH (or hETH). hETH and ETH are theoretically equivalent, but liquidity instability can create price discrepancies, thus introducing the AMM component and connector.

The AMM addresses short-term price discrepancies between ETH and hETH, while the connector provides liquidity for users needing to release liquidity in advance, helping users convert hETH back to ETH while also earning some returns (7-day withdrawal time). It has been launched on Polygon, xDai, Optimism, Arbitrum, and ETH, Gnosis mainnets.

Core Functions:

• Cross-Chain: Supports asset transfers (DAI, USDT, USDC, MATIC, ETH) between the Ethereum mainnet, Polygon network, Arbitrum, Optimism, and xDai.
• Liquidity Pool: Provides liquidity for the native assets of the above networks and their corresponding h-assets.
• Token Conversion: Facilitates back-and-forth conversions between tokens and h-tokens.
• Staking Liquidity: Allows staking of provided liquidity tokens (LP) to earn returns, currently supporting assets like Polygon, Gnosis, etc.

3. ClassZZ: Class ZZ is a public chain supporting decentralized cross-chain trading, achieving cross-chain transactions through a native token cross-chain protocol (Te Waka). The Te Waka protocol is fully open-source and decentralized, enabling tokens to switch freely across any mainnet supported by the protocol.

Core Functionality: The core functionality is cross-chain trading. By employing techniques from elliptic curve algorithms, it supports cross-chain transactions, enabling trading of external chain assets to CZZ; and using staking to facilitate trading from CZZ to external chain assets. Cross-chain trading is achieved in a decentralized manner for transactions like BTC/USDT and DOGE/LTC.

4. Aggregators
   Aggregators refer to a derivative of multiple chains for cross-chain and scalability, providing comprehensive asset interoperability while presenting users with optimal cross-chain solutions.

5. O3 Swap: A cross-chain aggregation trading protocol incubated by the O3 Labs team, currently supporting cross-chain interactions with a total of 8 chains, including Ethereum, BSC, Polygon, Arbitrum, Heco, Neo, OKX, and Avalanche. By deploying a model of "aggregator + asset cross-chain pool" across different public chains and Layer 2 networks, it enables the free exchange of mainstream assets across different chains. Investors include NGC Ventures, OKEx Blockdream Ventures, 7 O'Clock Capital, SevenX Ventures, FBG Ventures, and others.

Core Functionality: The main functional modules of O3 Swap consist of two parts:

• O3 Aggregator (Trading Aggregator): Deployed across various mainstream networks, this aggregator helps users find the best prices and the most efficient trading paths.
• O3 Hub (Cross-Chain Trading Pool): The hub for cross-chain trading, aggregating mainstream assets from various public chains and Layer 2 networks within the Cross-chain Pool through the cross-chain protocol Poly Network, creating a cross-chain asset trading pool to facilitate cross-chain trading of assets across different chains.

2. XY Finance: This protocol is a cross-chain trading aggregation protocol incubated by the Taiwanese crypto startup Steaker, established in 2021, aimed at solving liquidity barriers in multi-chain ecosystems, allowing crypto assets to be more conveniently and quickly converted between various ecosystems.

XY Finance is mainly divided into two solutions:

• X: Refers to X Swap, which allows cross-chain trading and integrates various cross-chain bridges and DEXs to create a cross-chain aggregation trading platform.
• Y: Refers to Y Pool, a cross-chain bridge built on multi-chain liquidity pools.

3. Socket: Socket unifies the multi-chain ecosystem by connecting all chains and enabling seamless bidirectional transmission of assets and information. It aggregates Bungee (formerly Fundmovr), Zapper, Zerion, Ambire Wallet, Orange Wallet, Atlantis Loans, OnDefy, Tetu, Mushroom Finance, and others.

Operational Method: Socket interoperability consists of a liquidity layer and a data layer. The liquidity layer aggregates all asset bridges into a single collection bridge for efficient cross-chain asset transfers, dynamically selecting the best bridging/routing and optimizing for developers' preferences. It currently supports chains like Arbitrum, Avalanche, BSC, Ethereum, Fantom, Optimism, Polygon, xDAI, Aurora, and others.

5. Future Outlook for Cross-Chain
   According to Vitalik Buterin's post on Reddit, he is optimistic about the future of multi-chain but pessimistic about cross-chain. Some believe that without bridges, there can be no diverse development in the crypto world, but the emergence of bridges has also led to centralization and vulnerabilities.

As more public chains emerge, the realization of cross-chain paths must not only facilitate the free flow of assets across chains but also provide possibilities for information cross-chain transmission and interoperability between DApps. For example, many DeFi projects in the market require not only interoperability between assets but also the transmission of information and data alongside asset cross-chain activities. Therefore, the main body of cross-chain can derive different cross-chain information transmission and interoperability between DApps to achieve more linkages.

In summary, in a multi-chain ecosystem without interoperability, asset transfers between chains can only rely on centralized trading platforms, while the principle of decentralization makes cross-chain an indispensable part. In the fragmented consensus system of the multi-chain era, cross-chain bridges are undoubtedly a necessity. In the history of the development of the internet and blockchain, technologies that possess composability, low cost, security, and convenience are one of the paths to success.

Currently, various mainstream blockchain consensus algorithms (the discussion in this article is limited to public chains) mainly include:

1. PoW (Proof of Work)
2. PoS (Proof of Stake)
3. DPoS (Delegated Proof of Stake)
4. PoC (Proof of Capacity)
5. FBA (Federated Byzantine Agreement)

2 Analysis
2.1 Pros and Cons of PoW
The operation process of the PoW consensus algorithm involves using computational power to run hash functions (e.g., Bitcoin runs the SHA256 hash function) and obtaining the hash function's output: the hash value. If the obtained hash value meets the difficulty constraints for block generation, then this hash value is a "lucky number." Whoever calculates the "lucky number" first gains the right to produce the block, known as the block reward. On the other hand, the PoW consensus algorithm requires a significant amount of electricity to perform hash calculations, thus consuming enormous energy, which is a clear drawback of PoW. However, this does not completely negate the PoW consensus algorithm. Since Bitcoin mining requires substantial resources (including human and financial resources, such as mining machines and electricity), the entry threshold for Bitcoin mining has significantly increased. Attacking the Bitcoin blockchain is not something an average person can achieve, meaning that the PoW consensus algorithm has strong anti-attack capabilities, building a solid barrier that protects the secure operation of the Bitcoin blockchain.

Thus, it can be said that the advantages of PoW are: relatively fair and high security. The disadvantages are: energy consumption, not environmentally friendly, and slow block generation speed.

2.2 Pros and Cons of PoS
The operation process of the PoS consensus algorithm involves staking tokens and calculating the product of the number of staked tokens and the staking duration, known as coin age. Each time a block is produced, the miner with the largest coin age gains the right to produce the block. After generating a block, the miner receives a block reward, and the coin age resets to zero, starting the calculation anew.

The PoS consensus algorithm does not rely on computational power to gain block production rights, thus not requiring ample time for hash computation competition, resulting in faster block generation speeds. It also has lower hardware requirements and does not consume vast amounts of energy, making it very environmentally friendly. This is a clear advantage of the PoS consensus algorithm. However, its drawbacks are also evident: the rich get richer, and the poor get poorer! The more tokens one holds, the easier it is to gain block production rights and rewards, leading to an increasing wealth gap, concentrating wealth in the hands of the rich and diminishing the voice of the poor, which is not conducive to decentralization.

On September 15, 2022, Ethereum transitioned from PoW to PoS, reducing energy consumption by over 99% while optimizing operational speed and transaction fees. However, according to http://BTC.com Ethereum staking data, the top three staking amounts in Ethereum staking account for over 50% of the total staking amount.

In simple terms, the advantages of the PoS consensus algorithm are: low hardware requirements, no need for massive energy consumption, and faster block generation speed. The disadvantages are: low degree of decentralization.

2.3 Pros and Cons of DPoS
Notable blockchain projects using the DPoS consensus algorithm include BitShares (the predecessor of EOS) and EOS (which uses both DPoS and aBFT asynchronous Byzantine fault tolerance algorithms). The operation process of the DPoS consensus algorithm is similar to that of a joint-stock company. Token holders vote to elect several witnesses (also known as supernodes), who then take turns producing blocks. This approach balances operational efficiency and decentralization. Witnesses are akin to board members in a joint-stock company. Ordinary token holders only have voting rights, and the more tokens they hold, the more votes they can cast. The candidates receiving the highest number of votes are elected as witnesses. Witnesses have terms, typically lasting one week, after which new witnesses are elected. Each block must receive the agreement of a certain proportion (greater than 2/3 for EOS) of all witnesses to be considered valid. All upgrades and proposals on the blockchain must be approved by a committee composed of all witnesses before execution.

The DPoS consensus algorithm does not rely on computational power to gain block production rights and does not require massive energy consumption. Since a limited number of witnesses are responsible for block production, the block generation speed is faster than PoS. BitShares can set its block generation speed, which can reach up to 1 second, typically set at 3 seconds. BitShares has a high TPS, reaching up to 100,000 transactions per second. EOS's block generation speed even reaches 0.5 seconds. Although the DPoS consensus algorithm has a certain degree of centralization, witnesses are elected and not lifetime positions, which relatively prevents the phenomenon of the rich getting richer and the poor getting poorer. Witnesses receive block rewards, which are generally substantial, motivating everyone to compete to be elected as witnesses. However, this raises another issue: vote-buying.

Regarding the issue of vote-buying, discussions can refer to this article: <>. Under normal circumstances, blockchains using the DPoS consensus algorithm do not produce forks. If a fork occurs due to downtime or network issues, the DPoS consensus algorithm will automatically consider the longest chain in the fork as the main chain.

In summary, the advantages of the DPoS consensus algorithm are: no need for massive energy consumption, higher operational efficiency, faster block generation speed, and less likelihood of forks. The disadvantages are: low degree of decentralization and susceptibility to vote-buying issues.

2.4 Pros and Cons of PoC
The operation process of the PoC consensus algorithm is somewhat similar to PoW, as it also involves computing hash functions to obtain hash values and checking if the obtained hash value meets the difficulty constraints for block generation to become a "lucky number," thus gaining block production rights. Unlike PoW, the PoC consensus algorithm runs hash functions in advance and writes the different hash values obtained to disk until the set disk capacity is filled. Mining then involves searching through all the hash values on the hard drive to see if a "lucky number" that meets the difficulty constraints can be found. The competition is based on hard drive capacity; the larger the hard drive, the more hash values stored, increasing the chances of "winning." At the same time, the PoC consensus algorithm does not have high requirements for the IO performance of hard drives.

Compared to PoW, PoC pre-computes hash functions until the disk is filled with hash values, eliminating the need for continuous hash function computations for each block as in PoW. Therefore, PoC does not require massive energy consumption (the power consumed by running hard drives is almost negligible) and does not require high hardware configurations; even a regular computer can run it.

The PoC consensus algorithm was proposed in 2014, with representative blockchain projects including BHD (block generation time: 5 minutes) and BURST. As more projects based on PoC mining emerge, a single hard drive can even mine multiple tokens using the PoC consensus algorithm simultaneously.

Currently, the PoC consensus algorithm is a good choice, but it still needs time to be tested. If capital forms hard drive mining pools through stacking hard drives, it may lead to mining monopolies. Most PoC projects have introduced collateral mechanisms to increase the mining costs for large holders, thus avoiding the emergence of super miners to some extent.

The TPS of the PoC consensus algorithm is higher than that of PoW but lower than that of PoS and DPoS. The block generation interval is generally a few minutes.

2.5 Pros and Cons of FBA
The Byzantine consensus algorithm has the following versions:

• Practical Byzantine Fault Tolerance (PBFT)
• Federated Byzantine Agreement (FBA)
• Delegated Byzantine Fault Tolerance (dBFT)

For detailed information, please refer to this article: <>. Among them, the Federated Byzantine Agreement (FBA) is particularly suitable for public chains. A well-known blockchain project, Stellar (XLM), founded by Ripple's original creator McCaleb, which once ranked in the top 10 by market cap and currently ranks 26th, uses the Stellar Consensus Protocol (SCP), which is based on FBA. SCP is a consensus algorithm based on a trust mechanism that allows anyone to participate. SCP does not rely on any hardware resources (including computational power and storage space) and has no voting election mechanism. SCP is the first provably secure consensus mechanism, possessing four key attributes: decentralized control, flexible trust, low latency, and progressive security. Another blockchain project, Pi Network, also uses the SCP consensus algorithm.

From the perspective of decentralization, FBA is superior to the previously mentioned PoW, PoS, DPoS, and PoC. The block generation speed of FBA is also relatively fast, with Stellar's block generation speed being around 5 seconds. The downside is that each transaction requires extensive communication to confirm its validity, making it slower than DPoS.

In summary, the consensus algorithms discussed in this article (PoW, PoS, DPoS, PoC) all have the potential for capital investment to achieve monopolization of computational power, thus undermining the goal of decentralization. FBA can be considered the most decentralized distributed consensus algorithm currently available.

In terms of block generation speed, the order is DPoS > FBA > PoS > PoC > PoW, with DPoS having the fastest block generation speed.

Regardless of the consensus algorithm, each has its advantages and disadvantages, and it cannot be said that one is the best; what we pursue is which is more suitable for our scenario.

Looking at the market capitalization rankings, among the top eight by market cap, aside from Bitcoin, the other five major public chains—ETH, ADA, BSC, DOT, and SOL—are the most searched for.

Today, we will summarize the characteristics of these five major public chains from the perspectives of ecosystem development, policies, and regulations.

1. Ecosystem Perspective
   Ethereum has been at the forefront of innovation since its launch in 2015. It is an open-source public chain platform aimed at becoming the "world computer." To achieve this goal, Ethereum has become the most developer-friendly platform among all public chains, making it more suitable for building and running DApps on-chain. For instance, promising projects like NFTs, DeFi, and Layer 2 are all built on Ethereum. Undoubtedly, Ethereum is the king of public chains.

ADA was once considered the most formidable competitor to Ethereum in the crypto community. Although Cardano faced criticism for the slow progress of smart contract development, it has accelerated its development speed this year and officially completed the Alonzo hard fork upgrade on September 13, Beijing time, marking Cardano's entry into the "smart contract era." The number of projects in the Cardano ecosystem has grown to over 130 in just four months from May to September 2021, showcasing a variety of ecosystem applications poised for launch.

BSC: Binance Smart Chain, as a parallel running chain of Binance Chain, enables the creation of smart contracts and BNB staking mining. Launched in April 2020, it not only allows the creation of token smart contracts but has also leveraged Binance Exchange's strong financial support to gain a significant advantage in the current bull market. BSC quickly captured the traffic of DeFi and NFTs, providing the most convenient wallet and contract migration features while also facilitating interoperability with Ethereum to capture the value overflow from the Ethereum ecosystem, alongside implementing a series of incentive measures to promote the prosperity of its own ecosystem.

DOT: Polkadot is a key project under the Web3 Foundation, characterized by its ability to connect and interact between different blockchains, enabling cross-chain transmission of information and value. Earlier this year, Polkadot's ecosystem was thriving, with many communities participating in its governance and deepening engagement with community users. If the Polkadot ecosystem continues to develop, it will create significant demand for DOT in terms of governance, security, and utility. Currently, there are no strong competitors in the cross-chain field.

SOL: The Solana public chain can be considered a "dark horse" that has been unaffected by market fluctuations, recently surging in market capitalization to sixth place in the crypto market rankings. According to data released by Solana, the Solana ecosystem now has 338 roles.

It has built a diverse ecosystem matrix, including infrastructure, wallets, tools, browsers, oracles, DeFi, DApps, NFTs, GameNFTs, and funds, with DeFi being particularly prominent, boasting 106 projects. The most numerous are DApps, with 82 projects, followed by NFTs and infrastructure, showcasing a rich and diverse ecosystem. This also indicates that Solana has evolved from a purely technical public chain into fertile ground supporting the development of various mainstream crypto industries.

2. Locking Amounts and Capital Flows
   According to data from stakingrewards.com on the locking situation of various public chains, we can see that Solana has the highest locking ratio, reflecting investors' high expectations for it. Although Ethereum has the lowest locking ratio, it still occupies the second position in market capitalization, indicating good liquidity and strong investor confidence in its value.

ADA has the highest locked value, indicating that investors are optimistic about its public chain reforms (including the introduction of smart contracts) and the future market. DOT follows closely, but the trend shows that DOT investors have the highest rewards for locking in for one year, reflecting the gradual expansion of the DOT ecosystem. BSC's locking ratio is second only to Solana, with its one-year locking rewards ranking behind DOT, yielding the second-highest returns.

For blockchain enthusiasts, understanding which programming languages are commonly used is essential. This article provides a summary and comparison.

Currently, the mainstream blockchain development languages include C++, Go, Java, Rust, and C#. Their usage is as follows (mainly focusing on the top 20 blockchains by market capitalization):
(1) C++

• Bitcoin (BTC)
  GitHub: https://github.com/bitcoin/bitcoin
• Litecoin (LTC)
  GitHub: https://github.com/litecoin-project/litecore-litecoin
• Ripple (XRP)
  GitHub: https://github.com/bitcoin/bitcoin
• Stellar (XLM)
  GitHub: https://github.com/stellar/stellar-core
• EOS
  GitHub: https://github.com/EOSIO/eos
  Note: Smart contracts on EOS are developed using C++.
• BitShares (bitshares)
  GitHub: https://github.com/bitshares/bitshares-core
  Note: BitShares is the predecessor of EOS and does not support smart contracts.
• Monero (XMR)
  GitHub: https://github.com/monero-project/monero

(2) Go

• Ethereum (ETH)
  GitHub: https://github.com/ethereum/go-ethereum
  Note: Ethereum is a public chain based on the PoW consensus algorithm but also supports consortium or private chains based on the PoA consensus algorithm. Smart contracts on Ethereum are developed using Solidity, which has a syntax similar to JavaScript, making it easy to learn and use.
• Hyperledger Fabric
  GitHub: https://github.com/hyperledger/fabric
  Note: Fabric is used for consortium or private chains, and smart contracts can be developed using Go, Java, or Node.js, with Go being the most supported.
• IPFS (FIL)
  GitHub: https://github.com/ipfs/go-ipfs/
• LINK
  GitHub: https://github.com/smartcontractkit/chainlink

(3) Java

• TRON (TRX)
  GitHub: https://github.com/tronprotocol/java-tron

(4) Rust

• Polkadot
  GitHub: https://github.com/paritytech/polkadot
  Note: The underlying framework of Polkadot, Substrate, can be found at https://substrate.dev/.