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Connecting Distributed Ledgers: Surveying Novel Interoperability Solutions in On-chain Finance

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  • Hasret Ozan Sevim

Abstract

This paper emphasizes the critical role of interoperability in enabling efficient and secure communication for the fragmented distributed ledger ecosystem, particularly within on-chain finance. The purpose of this study is to streamline and accelerate empirical research on the intersection of cross-chain interoperability solutions and their impact within on-chain finance. The analysis examines the relationship between financial use and interoperability while comparing the properties of novel cross-chain interoperability protocols (LayerZero, Wormhole, Connext, Chainlink Cross-Chain Interoperability Protocol, Circle Cross-chain Transfer Protocol, Hop Protocol, Across, Polkadot, and Cosmos), focusing on their design, mechanisms, consensus, and limitations. To encourage further empirical study, the paper proposes a set of network metrics and sample statistical models and provides a framework for evaluating the performance and financial implications of interoperability solutions.

Suggested Citation

  • Hasret Ozan Sevim, 2026. "Connecting Distributed Ledgers: Surveying Novel Interoperability Solutions in On-chain Finance," Papers 2603.21797, arXiv.org.
    • Handle: RePEc:arx:papers:2603.21797
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    References listed on IDEAS

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    1. Anthony Jnr. Bokolo, 2022. "Exploring interoperability of distributed Ledger and Decentralized Technology adoption in virtual enterprises," Information Systems and e-Business Management, Springer, vol. 20(4), pages 685-718, December.
    2. Fabian Schär, 2021. "Decentralized Finance: On Blockchain- and Smart Contract-Based Financial Markets," Review, Federal Reserve Bank of St. Louis, vol. 103(2), pages 153-174, April.
    3. Ravallion, Martin, 2017. "A concave log-like transformation allowing non-positive values," Economics Letters, Elsevier, vol. 161(C), pages 130-132.
    4. Swathi Punathumkandi & Venkatesan Meenakshi Sundaram & Prabhavathy Panneer, 2021. "Interoperable Permissioned-Blockchain with Sustainable Performance," Sustainability, MDPI, vol. 13(20), pages 1-12, October.
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