Ecosystem Basics

Since the launch of Bitcoin in 2009, the cryptocurrency and decentralized computing ecosystem has rapidly evolved and expanded. The ecosystem now includes hundreds of blockchains, often also referred to as Layer 1s.

Prior to 2015, blockchain transactions were limited in their capacities, typically being used to transfer funds from one user to another. This changed with the intoduction of Ethereum and smart contracts. Smart contracts allowed developers to perform arbitrary on-chain computation as part of a blockchain transaction, opening the door for blockchain technology to become a global computing platform. These innovations laid the groundwork for the creation of Decentralized Applications or Dapps.

Now, a rich ecosystem of Dapps exists across an array of smart-contract-enabled blockchains. These Dapps provide a number of services across categories like:

  • Decentralized Exchanges (DEXs)
  • Decentralized Autonomous Organizations (DAOs)
  • Borrow-Lend Platforms
  • Decentralized Games
  • NFT Protocols
  • Metaverse Platforms
  • and more

However, Dapps are not without limitations, many of which are tied to their underlying blockchains.

Two notable limitations are that blockchains have no access to off-chain data and no mechanism to interact with other blockchains. These limitations have lead to a fractured ecosystem where each blockchain is closed off from the others by default. That means assets native to one chain are not accessible on another, and some services can't be leveraged on particular chains altogether.

Blockchain developers are now aiming to solve these interoperability problems to create a unified ecosystem. In this new cross-chain ecosystem, people can move beyond being users of individual blockchains and take advantage of Web3 on a broader scale.


In the next section, we'll discuss the history and challenges of cross-chain interoperability, as well as introduce the role Wormhole plays in the future of this space.