Ethereum co-founder Vitalik Buterin believes that the stablecoin industry is missing a valuable opportunity to improve interoperability between different blockchains.
In a long Twitter thread on May 20, Buterin suggested that stablecoins could allow users to move value across different blockchains:
„In the specific case of issuer-backed stablecoins, there are many things that could be done but are not; for example, each stablecoin could be an instant bridge between strings“
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Bitcoin (BTC) activist and independent developer Udi Wertheimer said something similar to what Buterin suggested is already possible with crypto currency exchanges. He explained that a user can deposit the Ethereum version of the Tether USDT in the Binance crypto exchange and immediately remove its Omni protocol or the Tron (TRX) version.
Buterin, on the other hand, explained that he would like to see a bridge that does not require the user to move funds on an exchange:
„Of course I’d love for them and the USDC and others to agree on a standardized API (maybe an ERC „bridge contract“); that way I wouldn’t have to bother dealing with blockchain keystore feature – exchange announced upcoming support – doesn’t quite condone – global protests reveal bitcoin’s limitations – called for a hearing – a bitcoin etf – given the mandate – would withdraw from the project – first official marketplace – being sold to institutions to move currencies!“
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Users don’t care about decentralization
Wertheimer admitted that while industry insiders like him and Buterin like decentralized solutions, users don’t really care how the systems work as long as they are interconnected.
Tether’s technical director, Paolo Ardoino, on the other hand, is convinced that the lack of interoperability is a problem that affects all digital tokens. He also argues that third parties should implement a system that solves this problem, not stablecoins issuers:
„Tether is the stablecoin emitter. There are many projects already working on solving this problem. This is a general problem that applies to all tokens in all blockchains. […] Now Tether is advising projects that are trying to solve this problem. […] So we have an active role in the process. We are simply not developing the solution ourselves.“
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A difficult solution
Ardoino said the biggest challenge in developing an interoperability protocol is to develop a complete understanding of the security implications of each blockchain involved.
Testimony to the difficulty of implementing bridges between blockchains is the incident earlier this month, in which an unguarded bridge between Bitcoin and Ethereum was closed just two days after its launch due to a failure.
Jagdeep Sidhu, co-founder and main developer of the Syscoin core, which launched a Syscoin-Ethereum bridge in late January, commented on the challenges in developing interblockchain bridges:
„It is easier for projects to make sacrifices to accelerate solutions to market, or to base basic interoperability on market-driven business mechanisms or liquidity providers, only to experience multiple discoveries, or to find that business adoption may be hindered by regulatory and legal requirements.