Interoperability, also known as cross-chain interoperability, facilitates sharing of information across various blockchains. One of the biggest advantages of blockchain interoperability is the ease of trading assets within various blockchains without any centralized custodial exchange.
Interoperability is crucial, especially for the further development of blockchain. Separate blockchains such as Ethereum and Bitcoin can be connected together. The most popular alternative to interoperability is the use of wrapped or proxy tokens.
Although, it has its own set of limitations. With wrapped tokens, a trusted custodian is required that would hold the user’s fund, in order to create a consistent supply of crypto assets.