Protocols and blockchains

Protocols

Protocols are crucial components of blockchain technology that enable information to be shared automatically across a network securely and reliably.

In the field of computing, protocols are essentially rules that define how data is allowed to be transferred between different computer systems. Protocols define the way that data must be structured to be accepted into a system, and they establish safeguards to prevent malicious users from causing damage.

The same protocol can be utilized for different blockchains. For example Ethereum can be used on the public mainnet as well as in a private chain installation. In both cases the protocol is the same but the chain is different.

When assets are tokenized, a protocol and a particular chain need to be selected. There is a large number of feasible protocols and blockchains to choose from. At Bitbond we recommend and therefore support the blockchains that are listed on this page.

In the past years Stellar has been a frequently used protocol for regulated security token offerings because of its scalability, simplicity and low network fees. Regulators around the world have approved several security token offerings on Stellar.

However, with the advent of Ethereum scaling solutions and EVM (Ethereum Virtual Machine) compatible blockchains, currently it seems like EVM compatible chains will remain a core part of asset tokenization in the coming years. These solutions address some of the shortcomings of Ethereum (mainly network congestion and high network fees), while keeping the advantages of the Ethereum protocol (a Turing complete approach to building decentralized software).

EVM blockchains

These chains are all share the technical foundation and compatibility with the Ethereum Virtual Machine. You can find a comprehensive list of EVM chains here. The ones listed below are the ones that are supported by Bitbond Token Tool.

Ethereum

Ethereum is a global, open-source platform for decentralized applications (dApps) on which you can write code (usually referred to as a smart contract) that controls digital value and runs exactly as programmed. The Ethereum mainnet is the most popular blockchain for asset tokenization because of the apps you can write on top of it.

Etherum is also the most popular blockchain that uses smart contracts. Etherum is the best choice whenever we need to set parameters for the smart contracts. The most popular applications for the Ethereum blockchain are decentralized finance (DeFi) and asset tokenization.

Avalanche

Avalanche has four basic interrelated mechanisms that compose structural support of the consensus tool. These four mechanisms are Slush, Snowflake, Snowball, and Avalanche.

By using randomized sampling and metastability to ascertain and persist transactions, It represents a new protocol family. Although the original paper focused on a single protocol, namely Avalanche, it implicitly introduced a broad spectrum of voting-based, or quorum-based consensus protocols, called the Snow family.

While Avalanche is a single instantiation, the Snow family seems to be able to generalize all quorum-based voting protocols for replica control. Unlike prior quorum-based work, the Snow family enables arbitrarily parametrizable failure probability at the quorum intersection level.

Standard quorum-based protocols define this failure probability to be precisely zero, but by introducing errors in the quorum intersection, a larger set of consensus protocol design is available.

Polygon

The Polygon network is Ethereum-native, aligned to be interoperable with all of Ethereum’s existing and even future infrastructures while offering a framework for its interoperability with other layer-2 solutions, sidechains and sovereign blockchains.

The Polygon network is thus also categorized as a layer-2 aggregator, aiming to create a multichain ecosystem of Ethereum-compatible blockchains with superior interoperability.

Binance Smart Chain

The Binance Smart Chain is an innovative solution to bring programmability and interoperability to the Binance Chain. The Binance Smart Chain relies on a system of 21 validators with Proof of Stake Authority (PoSA) consensus that can support short block time and lower fees.

The most bonded validator candidates of staking will become validators and produce blocks. The double-sign detection and other slashing logic guarantee security, stability, and chain finality.

The Binance Smart Chain also supports EVM-compatible smart contracts and protocols. Cross-chain transfer and other communication are possible due to native support of interoperability.

Binance DEX remains a liquid venue of the exchange of assets on both chains. This dual-chain architecture will be ideal for users to take advantage of the fast trading on one side and build their decentralized apps on the other side.

Fantom

Fantom is a high-performance blockchain platform designed to support decentralized applications and real-time use cases. It leverages a unique consensus mechanism called the Lachesis Protocol to deliver fast and efficient transactions.

Fantom's Lachesis Protocol delivers fast and efficient transactions, making it ideal for real-time use cases such as micropayments, gaming, and supply chain management. The consensus mechanism also provides a high degree of security, ensuring that transactions are processed and recorded securely on the blockchain.

The platform's modular architecture makes it easy for developers to build and deploy dApps, and it supports smart contracts for self-executing agreements. Additionally, Fantom's ecosystem is highly interoperable, allowing for seamless communication between different blockchains and dApps.

Arbitrum

Arbitrum is a Layer 2 scaling solution for Ethereum that offers increased speed, efficiency, and privacy. It uses off-chain computation and on-chain enforcement to process transactions quickly and securely.

The platform supports a wide range of use cases and is interoperable with Ethereum-based solutions. This allows for seamless communication and opens new opportunities for developers.

Arbitrum's combination of speed, efficiency, and privacy make it a leading platform in the decentralized space.

Optimism

Optimism is a Layer 2 scaling solution for Ethereum, designed to bring increased speed, efficiency, and scalability to the Ethereum network.

It uses an innovative technique called Optimistic Rollups to process transactions off-chain, reducing congestion on the main Ethereum network. Optimism also offers increased security compared to traditional Ethereum-based solutions.

This makes it an ideal platform for decentralized finance and other high-volume use cases. With its commitment to Ethereum compatibility, Optimism is poised to become a leading platform in the decentralized space.

Base Chain

Base is an Ethereum Layer 2 (L2) network designed to be secure, affordable, and developer-friendly. Built on top of the OP Stack developed by Optimism, Base leverages the security of the Ethereum blockchain while offering faster transaction processing and lower fees. This makes it an attractive platform for building and deploying decentralized applications (dApps).

One of Base's key features is its focus on ease of use for developers. It integrates seamlessly with Coinbase products and tools, providing developers with access to a large user base and various resources.

Polygon zkEVM

Polygon zkEVM is also an Ethereum Layer 2 (L2) network, aiming to address scalability issues like high gas fees and slow transaction speeds that plague the Ethereum mainnet. However, unlike Base which utilizes Optimism's OP Stack, Polygon zkEVM employs a different scaling method called zero-knowledge (ZK) rollups.

This ZK-rollup technology allows Polygon zkEVM to inherit the security of the Ethereum blockchain while processing transactions off-chain, significantly enhancing speed and lowering costs.

MELD

The MELD blockchain is a unique entity in the DeFi (Decentralized Finance) space, as it isn't simply an existing blockchain with additional functionalities or an Ethereum Layer 2 (L2) solution. Instead, MELD operates on its own dedicated, Proof-of-Stake (PoS) blockchain specifically designed for DeFi applications.

This custom blockchain prioritizes features crucial for DeFi, such as high transaction speed, low fees, and security. It integrates core DeFi mechanics like lending, borrowing, cross-chain bridging, and staking directly into its core functionalities. The MELD blockchain boasts interoperability with six leading blockchains, allowing seamless transfer of assets across different networks within the MELD ecosystem.

Non-EVM blockchains

These chains are built on protocols that are independently developed and technically different from the Ethereum protocol and the Ethereum Virtual Machine.

Stellar

Stellar was created in 2014, after Bitcoin but before Ethereum. Stellar uses a more environmentally-friendly consensus mechanism than many other chains and was designed specifically for remittances and payments. Therefore it has “cash-like” delays between transactions (i.e. very short) and it’s more or less free to use (transactions cost way less than a penny).

Like Ethereum, Stellar allows you to issue other custom assets or tokens (say, a digital representation of a dollar or a peso) and to trade them very easily within the network.

Stellar has the Stellar Decentralized Exchange (SDEX) built directly into the protocol which provides a convenient way for secondary trades.