What is Layer Cake?
A Layer cake is basically a bridging system between various smart contract networks. In this blog, we zoom into the concept and tell you more about the different benefits. But to begin with, an explanation of the concept of blockchain bridges will be necessary.
A blockchain bridge is provided to connect two blockchains, just as the bridges we all know are build to connect two physical places with each other. The blockchain bridge allows you to send different cryptocurrency’s from one chain to another. So for example if you have Solana coins and want to spend it like Ethereum you will need a bridge to be able to do so. This can save a lot of time and work, and as you know in the crypto business time can cost you money. The bridge will provide communication between the two blockchains by transferring assets and information. This is necessary, as all blockchains have their own limitations as they are designed differently. It causes problems, as they cannot communicate natively and tokens cannot move freely.
The Layer Cake is one of the most recent innovations and it contains a whole new approach. It is not just from one network to another network, but really between all smart contract networks. This is what makes it so powerful and unique. The reason why this is possible, is because it has been build from the ground up and not based on any existing technology.
What are the benefits of Layer Cake?
The Layer Cake has many benefits in comparison to traditional bridging solutions. This emphasises that there is a difference. Instead of most current bridges that are bilateral, the Layer Cake bridges are multilateral. This makes it much more scalable. For example, Flare needs 101 smart contract to bridge the top 100 chains to each other as via the traditional bilateral way 4950 bridges need to be build. This fragments the liquidity.
There has been a lot of bridge attacks recently as you may know, which means your cryptocurrency might be in danger. Therefore, the blockchain ecosystem needs another type of approach. The approach of the Layer Cake is much more secure and at the same time faster than current solutions. This as a whole means that Layer Cake as a solution is far ahead on the rest as it comes to currency bridging systems.
Let’s sum up a few more advantages, to make sure you are convinced that Layer Cake makes a significant difference.
- Fast, and secure decentralized bridges for smart contract tokens. There is no need to compromise between speed and safety with Layer Cake’s multilateral and insured bridges. Normally most bridges are either slow or unsafe.
- Resistant to chain reorganizations, allowing safe operation across different zones of sovereignty, while definitely not all bridges are.
- 100% insurance, which means that in the unlikely event of an exploid, users will always be fully reimbursed with their funds. This is revolutionary.
This is all very useful in an environment of proliferating chains and subnets.
What is Layer Cake for and how can it be used?
So, now you know what the Layer Cake means and that it is being used to connect all kinds of blockchains. In this new world, many types of networks are being used and Flare is able to connect everything. This will be relevant for you if you have for example bitcoin or Ethereum and you are willing to transfer these coins into other blockchains or even if you want to make low-fee payments with one of the other crypto currencies.
It is important that you understand how it works. If you have Solana and want to transfer some of it to Bitcoin, the blockchain will be holding the coins and creates equivalents in BTC to use for you. The crypto itself will not move, while the Solana that you are ‘selling’ will be put in a contract. At the same time you will have access to the same amount of BTC. If you want to convert it back, the Solana you have left will go back into your wallet. If you do this regularly (this is mostly called trading) to try and earn on it, many actions are required from you like withdrawing, exchanging and depositing. This costs a lot of time, and as there is a continuous change of value this will cost a lot of money as well.
The use of cryptocurrencies getting more normal and for the bigger crowd. This is the right time to make sure we are able to use it in a user-friendly way, without having to pay a lot for each transaction you make. One of the most exciting things is that anyone that uses a Layer Cake bridge will be able to earn from it, because of the monthly reward share. This applies regardless of which blockchain the value will be bridged to.