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The incident of 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 a certain extent through decentralized wallets and applications, this privacy also brings regulatory pressure to the entire cryptocurrency industry. For example, criminals can use decentralized protocols for money laundering and other illegal activities, which is the main reason the U.S. Treasury took action 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. Besides the users' demand for privacy, decentralized protocols also face similar issues. For instance, the clear and transparent lending situations on lending protocols can give large holders opportunities 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 affected due to anonymous "poisoning." Although Aave has lifted the ban and Uniswap has implemented bans on the front-end interface, it undoubtedly serves as a wake-up call, indicating the importance of privacy protection for users' on-chain activities.

Due to the traceable nature of blockchain ledger data and 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 example, the privacy system Espresso Systems completed a $32 million financing round in March 2022, led by Sequoia Capital; the L2 privacy solution Aztec Network completed a $17 million Series A financing round in December 2021, led by Paradigm; and the data privacy platform Aleo completed a $28 million Series A financing round in April 2021, led by a16z.

The core spirit of the internet lies in equality, openness, sharing, interaction, and innovation. This is the technical essence of the internet 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. As time has passed and with the rise of Web 2.0 mobile internet, nearly a billion users have entered the internet. However, leading internet companies are weaving increasingly large and closed information cocoons, while some emerging products merely continue to draw circles around users. Openness and interaction depend more 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 have different code bases, leading to complete technical independence between chains, 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 emergence of new public chains, Ethereum remains the preferred choice for most DeFi projects, primarily due to the network's high liquidity and trading volume. It is also evident 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, an increase of 10.4 times. 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 crucial, and the lack of interoperability between multiple public chains has led to sluggish liquidity. Therefore, cross-chain bridges are essential for the crypto market. In 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 also includes 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 on one blockchain ("source" chain) for 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, the monitoring role transmits 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 serve 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 is compatible with 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: Allows users to upload files to a storage network during batch uploads, 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 Trading: Using hash time locks, technology can directly exchange native tokens across various public chains on-chain to achieve transactions.
   (2) Token Transfer: Public chains are closed, and native assets on one chain cannot be directly transferred to another chain. By leveraging 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 transfer.

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 needed: while locking on Chain A, information about the lock must be transmitted to Chain B, which verifies the authenticity of the message and mints the mapped token, then feeds this state information back to Chain A. This allows for 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, with assets being wrapped assets fully collateralized by underlying assets in a custodial or non-custodial manner. BTC is the most common asset bridged to other chains, such as xBTC, with various 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, operating 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 that access 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 lightweight modular adapters on each blockchain. Blockchains deploying adapters can access all other blockchains connected to the application, but expanding functionality is relatively difficult.

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 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 blockchains 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, and if errors or misconduct occur, they need to provide collateral and be penalized. If user funds are lost, they will be compensated by confiscating part of the collateral.

3. Binding: Similar to the insurance model, but users will not recover funds in the event of errors or misconduct, as the penalized collateral may be destroyed. The type of collateral is crucial for the insurance model; endogenous collateral carries greater risk, and if the cross-chain bridge fails, the token value may collapse, further reducing the security guarantees of the cross-chain bridge.

4. Trust: Validators do not provide collateral, and users will not recover funds in the event of system failures or malicious activities; core users primarily rely on the reputation of the cross-chain bridge operators.

(e) Classification Based on Validation

1. External Validation: Through single-node or multi-node validation, focusing on elements such as sending, locking, validating, consensus, and minting. 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 poorer, 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 collateral thresholds rise.

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, requiring no collateral, enhancing trustlessness. However, this also affects scalability, reduces validation speed, and increases gas fees.

3. Local Validation: Using a liquidity network model, employing local validation without the need for global validation to maintain faster speeds and lower costs, while also being trustless, with security relying on support from the underlying chain. However, there are limitations in information transmission, making universal information transmission unachievable.

4. Subdivisions of Cross-Chain Ecosystems
   Based on the above research on the cross-chain sector, 7 O'Clock Capital believes that the cross-chain sector is still in its early stages, with 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 sector 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 version 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: 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, primarily used to connect assets on the Ethereum chain. When users cross-chain their assets, they need to switch their wallet 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 automatically executes the operation.

Operational Mechanism: Tracks the state of a given blockchain and verifies it in a trustless manner without requiring extensive computation. 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 such as contract balances and transaction histories. Currently 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 via the AB bridge are marked with the suffix ".e," for example, WETH.e represents WETH cross-chained to the Avalanche network.

Core Technology: Its core technology is Intel SGX, which Intel introduced as an instruction set extension to ensure hardware security, not relying on the security state of firmware and software, providing user-space trustworthiness, a new set of instruction set extensions, and access control mechanisms to achieve isolation between different programs, ensuring the confidentiality and integrity of critical user 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 software security vulnerabilities and threats, enhancing system security guarantees. SGX ensures a trusted execution environment at runtime, preventing malicious code from accessing and tampering with the protected content of other programs during execution, 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 guarantees:
   • 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 the entire BTC asset cross-chain space, 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 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 use of trusted execution environments (TEEs) and MPC-supported networks to issue cross-chain composable or pToken assets to protect underlying assets. 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 supports use on Ethereum, BSC, Polygon, xDAI, Arbitrum, Telos, and more. Its V2 version is a cross-chain routing protocol that introduces a universal messaging system, Postman, for cross-chain data transmission, enabling 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, with Kyber and Ren exchanging an initial amount of tokens through custodial Bitcoin to provide initial liquidity and make it immediately interchangeable 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-supported oracle networks for 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 based on different security, scalability, efficiency, and low-cost perspectives.

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 2000 assets across multiple blockchains, including Fantom, Ethereum, BSC, Polygon, Avalanche, Moonriver, Harmony, and Arbitrum.

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

Core Mechanism: Router: Anyswap's latest non-custodial cross-chain solution that enables token exchanges between chains. Bridge: A custodial mapping solution that 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: Hop Protocol is a cross-chain bridge developed by the smart contract wallet development team Authereum, launched in July 2021. The solution designs a universal asset bridge for Rollup-to-Rollup to achieve 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 completely equivalent, but liquidity instability can lead to price discrepancies, so the AMM component and connector are introduced.

The AMM is designed to address 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 part of the yield (7-day withdrawal time). It has been launched on Polygon, xDai, Optimism, Arbitrum, and ETH, Gnosis mainnets.

Core Functions:

• Cross-Chain: Supports asset cross-chain between Ethereum mainnet, Polygon network, Arbitrum, Optimism, and xDai for assets (DAI, USDT, USDC, MATIC, ETH).
• Liquidity Pool: Provides liquidity for the native assets of the above networks and corresponding h-assets.
• Token Conversion: Back-and-forth conversion between tokens and h-tokens.
• Staking Liquidity: Staking provided liquidity tokens (LP) to earn yields, currently supporting assets like Polygon and Gnosis.

3. ClassZZ: Class ZZ is a public chain that supports 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, allowing tokens to switch freely on any mainnet supported by the protocol.

Core Function: The core function is cross-chain trading. By employing techniques of elliptic curve algorithms, it supports cross-chain transactions, enabling trading of external chain assets to CZZ; and through staking, it enables trading from CZZ to external chain assets. Cross-chain trading is achieved in a decentralized manner for BTC/USDT, DOGE/LTC, and other transactions, with original protocols for special consensus addresses and on-chain public asset management.

Fast Payments: The original capsule protocol can achieve second-level payment confirmations in a 5G environment, solving the impossible triangle without sacrificing decentralization, reaching EOS-level TPS.

Post-Quantum Addresses: Expanding elliptic curve encrypted addresses, with new addresses using post-quantum signatures.

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

1. 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 Functions: The main functional modules of O3 Swap consist of two parts:

• O3 Aggregator (Trading Aggregator): Deployed across various mainstream networks, helping users find the best prices and 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 into the Cross-chain Pool through the cross-chain protocol Poly Network, creating a cross-chain asset trading pool to help users achieve 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, aiming to solve liquidity barriers in multi-chain ecosystems, allowing crypto assets to be more conveniently and quickly converted between various ecosystems.

XY Finance is primarily divided into two solutions:

• X: Refers to X Swap, which allows cross-chain trading, integrating 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 achieving 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's 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 bridge/router and optimizing for developers' preferences. Currently supports chains such as Arbitrum, Avalanche, BSC, Ethereum, Fantom, Optimism, Polygon, xDAI, Aurora, and more.

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 implementation path for cross-chain must not only allow for the free flow of assets 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. Therefore, the subjects of cross-chain can derive cross-chain information transmission interoperability between different DApps to achieve more interactions.

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 multi-chain era of consensus systems, 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." The first to compute the "lucky number" 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, thereby 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 barrier to entry 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, constructing a solid barrier that protects the secure operation of the Bitcoin blockchain. Therefore, 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 and starts counting again, and so on. The PoS consensus algorithm does not rely on computational power to gain block production rights, does not require ample time for hash competition, thus allowing for faster block generation and lower hardware requirements, and does not consume massive energy, making it very environmentally friendly. This is its obvious advantage. 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, diminishing the voice of the poor, and being detrimental to decentralization. On September 15, 2022, Ethereum transitioned from PoW to PoS, reducing energy consumption by over 99%, while also optimizing operational speed and transfer 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: lower 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), and these witnesses 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 the right to vote; the more tokens they hold, the more votes they can cast. The candidates receiving the highest number of votes will be elected as witnesses. Witnesses have terms, generally lasting one week. After a week, new witnesses are re-elected. If a block can gain the consent of a certain proportion (greater than 2/3 for EOS) of all witnesses, that block is considered valid. All upgrades and proposals on the blockchain must be approved by the committee (composed of all witnesses) before execution. The DPoS consensus algorithm does not rely on computational power for block production rights and does not consume massive energy. Due to a limited number of witnesses responsible for block production, the block generation speed is faster than PoS. The block generation speed of BitShares can be set, with a maximum of 1 second, generally set at 3 seconds. BitShares has a high TPS, reaching 100,000 transactions per second, while EOS's block generation speed reaches 0.5 seconds. Although the DPoS consensus algorithm has a certain degree of centralization, witnesses are elected and not for life, thus not producing the phenomenon of the rich getting richer and the poor getting poorer. Witnesses receive block rewards, which are generally quite generous, so everyone will strive to compete for election as witnesses. However, this raises another issue: vote-buying. Discussions on vote-buying issues 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 regard 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: lower 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, both obtaining hash values by running hash functions to see 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 into the 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 hard drive IO performance. 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 for verification. If capital forms hard drive mining pools through stacking hard drives, it may lead to mining monopolies. Currently, most PoC projects have incorporated collateral mechanisms to increase the mining costs for large holders, thereby 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, with block intervals generally in the range of several 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 was once ranked in the top 10 by market capitalization and currently ranks 26th, uses the Stellar Consensus Protocol (SCP) 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 does not have a 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 a decentralization perspective, 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 the validity of the transaction, 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, thereby 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 which consensus algorithm is used, each has its advantages and disadvantages; 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 capitalization, apart from Bitcoin, the other five major public chains—ETH, ADA, BSC, DOT, and SOL—have the highest search popularity index. 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. Ethereum 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 suitable for building and running DApps on-chain. For example, 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. Cardano, which had been criticized for its slow progress in smart contract development, finally accelerated its development this year, officially completing the Alonzo hard fork upgrade on September 13, Beijing time, marking Cardano's entry into the "smart contract era." The number of ecosystem projects has grown to over 130 in just four months from May to September 2021, with 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 functions. Established 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 DeFi and NFT traffic, providing the most convenient wallet and contract migration functions while also facilitating interoperability with Ethereum to capture the value overflow of the Ethereum ecosystem, alongside implementing a series of incentive measures to promote the prosperity and development of its 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 in the spotlight, with many communities participating in its governance and deepening engagement with community users. If the Polkadot ecosystem develops, it will generate significant demand for DOT in terms of governance, security, and utility. Moreover, there have not been sufficiently strong competitors in the cross-chain field so far.

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

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

3. Locking Amounts and Capital Flows
   According to data from stakingrewards.com on the locking conditions 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. The highest locking value for ADA indicates that investors are optimistic about its public chain reforms (introduction of smart contracts) and the future market. DOT follows closely, but the trend shows that DOT investors have the highest rewards for locking for one year, reflecting the gradual expansion of the DOT ecosystem. BSC's locking ratio is second only to Solana, with 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 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 foundational framework of Polkadot, Substrate, can be found at https://substrate.dev/.