Polkadot XCM: Enabling True Interoperability

Addressing Existing Challenges

XCM empowers Polkadot L2 rollup chains - once exclusively termed "parachains" - to interact seamlessly. It enables asset transfers, governance actions, smart contract calls, in fact all types of on-chain function calls across chains. In a blockchain landscape that treasures interoperability, XCM is the medium that makes the Polkadot ecosystem a cohesive whole in itself, and connects it to other ecosystems like Ethereum over fully trustless bridges.

But XCM has not behaved perfectly up to now. Indeed, as a developer or user, you've likely encountered some of its challenges.

Estimating fees for cross-chain actions has been a pain point. A single XCM transaction can involve multiple components, including execution costs on both local and remote chains, plus transport fees across each hop. This complexity makes it difficult to calculate the total cost upfront, impacting the user experience.

Developers have faced hurdles when creating multi-asset or multi-hop transfers. Some tools, while functional, impose constraints and require significant technical expertise to execute more advanced scenarios. These challenges highlighted the need for standardization, improved tooling, and a more user-friendly approach.

Fortunately, XCM is improving all the time. Recent updates are providing real benefits for both developers striving to build on Polkadot and users trying to navigate multi-chain interactions.

Positive Developments

Fee Transparency & Execution Flexibility

Polkadot has introduced the DryRun and XcmPayment runtime APIs to address the issues around XCM fee calculation, a major challenge up to now. These tools allow you to simulate transactions and estimate the total fees - including local execution, transport costs, and remote chain execution - before initiating a transfer. This feature ensures you're never caught off-guard by unexpected costs.

System chains now support arbitrary XCM execution via pallet_xcm::execute(). This means you can build custom XCM programs off-chain and deploy them directly, unlocking new possibilities for tailored cross-chain interactions.

With these recent developments, XCM is already becoming more accessible, reliable, and versatile, but there's more.

Improved Multi-Asset & Multi-Hop Transfers

A new InitiateTransfer XCM instruction dramatically improves complex cross-chain asset transfers by enabling multi-asset transfers with different transfer types (teleport, local-reserve, destination-reserve) in a single transaction. It simplifies cross-chain operations, allowing developers to execute multiple asset transfers within one unified program, eliminating the need for multiple independent messages.

This reduces complexity and enhances UX for multi-hop transfers, such as bridging assets across chains. The instruction streamlines fee payment by integrating remote fee logic and also allows the preservation of the origin across multiple chains, enabling more complex programs, while boosting efficiency and reliability. 

Developers building wallets and apps, including those extending beyond the Polkadot ecosystem, gain powerful new capabilities for building complex cross-chain asset transfer solutions, using trustless bridges where necessary.

Seamless Fee Payments

The required functionality for seamless fee payments is ready and will be part of the upcoming Polkadot runtimes v1.4.0 release. Once it is deployed on-chain, it will enable fee payments using any asset on Polkadot Asset Hub. By leveraging autoswap mechanisms, you'll be able to cover both execution and transport fees using your preferred token - like USDT or parachain-native assets - as long as conversion pools exist. This will drastically improve flexibility and user experience.

The same can be done by any chain deploying pallet-asset-conversion, ultimately allowing its users great flexibility and great UX for all local or cross-chain actions.

Parity's Cisco Aguirre giving a high-level talk on XCM at Polkadot Decoded, July 2024

Future Plans for XCM

Parity's roadmap for Polkadot XCM is focused on improving UX and capabilities even further. Here's what's on the horizon:

Empowering Cross-Chain Origins & Debugging

Future updates aim to standardize how accounts are derived across chains, ensuring consistent user experiences. Unified location-to-account mapping will make it easier for you to interact seamlessly across chains. Additionally, support for permissionless Origin Aliases will allow local accounts to be linked with external identities, enabling you to maintain consistent permissions and origins across chains.

Polkadot is making XCM easier to monitor and debug. Improvements like message tracking via global topics and detailed error events will help you trace transactions across chains more effectively. Additionally, tools like runtime APIs for replaying XCM messages with full logs will give you deeper insight into execution flows.

Ecosystem-Wide Regression Testing

To ensure compatibility and reliability across multiple chains, Polkadot plans to introduce an ecosystem-wide regression tests suite. This will cover business-critical XCM programs from the entire ecosystem, ensuring that new runtime upgrades don't break existing functionality. This will allow chains, smart contracts, dapps, and others to contribute regression tests for their business-critical use cases and thus make sure they are compatible with all future ecosystem enhancements and deployments.

XCM Cookbook Expansion

The XCM Cookbook will be updated with more practical guides, such as how to:

• Configure foreign asset transfers.
• Set up Asset Hub as a reserve for DOT and other tokens.
• Use autoswaps for paying fees in non-native currencies.
• Configure trustless bridging to other ecosystems.
• General transactions (arbitrary calls) between any two smart contracts across different chains or even different ecosystems (over trustless bridges).

These recipes will provide actionable steps for developers to implement advanced XCM use cases.

Off-Chain Tooling and Libraries

Polkadot is shifting toward leaner on-chain implementations complemented by robust off-chain tools. By creating richer libraries for TS/JS and Rust, developers will have access to libraries and tools for automatic XCM program builds, such as asset transfers, swaps, and governance actions. These tools will accelerate development and reduce the barrier to entry for new contributors.

Try Polkadot's Better XCM for Yourself!

Polkadot's vision for XCM is one of continuous improvement, allowing cross-chain interactions to become as easy and intuitive as possible. It all means interoperability is at the fingertips of everyone building in the ecosystem.

So now it's over to you. It's time for you to explore what these changes mean and how they can help you unlock the full potential of Polkadot. So take the next step - whether it's experimenting with the latest XCM tools, reviewing XCM proposals and developments, or simply staying informed. The future of cross-chain communication is here, and Polkadot is leading the way.