Blockchains are changing both architecturally and scalably as more blockchain networks emerge. Here, we explore what a bridge is and its purpose; an increasing demand for interoperable blockchains stemming from this trend is also evidenced.
What Is A Blockchain Bridge?
Blockchain bridge protocols aim to unite various blockchain networks by exchanging data and assets between them.
A blockchain bridge serves to solve the issue of blockchains operating independently and being unable to interact with one another, given their differing rules, protocols, tokens and smart contracts that may prevent direct interaction.
On the other hand, it is impossible to use Bitcoin (BTC) and Ethereum (ETH) simultaneously on one network. For instance, if you try and pay with Bitcoin but the recipient only accepts Ethereum as payment methods then payment could become difficult since you won’t be able to send Bitcoin directly; you’ll either need to buy some ETH from somewhere or convert some BTC into it before being able to transact successfully.
Cross-chain bridges may offer the solution to the interoperability issue in blockchains.
Developers from different blockchain communities can collaborate through blockchain bridges, which enable cross-chain transfers.
How Do Blockchain Bridges Work?
Token transfers are one of the primary uses for blockchains. By linking one digital asset to another blockchain network, token transfers can be achieved. Replicated assets then appear on both networks while their price behavior still echoes their previous chain counterpart.
Use a blockchain bridge to link bitcoin with Ethereum network. A blockchain bridge locks your BTC on Bitcoin’s main chain before issuing tokenised versions called WBTC which adheres to ERC20 compliant standards and can be unwrapped at any time to produce equivalent amount of BTC.
When looking to move digital assets from one blockchain to the next, bridges provide a useful means of doing so. A bridge locks (or burns) the asset into an intelligent contract before issuing equivalent tokens on its destination blockchain.
Blockchain bridges serve to connect a parent blockchain to its child sidechain, creating interconnection between both networks when their respective verification procedures differ.
Types Of Cross-Chain Bridges
There are various kinds of blockchain bridges, but they can generally be broken down into two groups: trusted and trust-minimized bridges.
Trusted Bridges
Trusted Bridges A trusted bridge is a custodial platform that relies on third-party counterparties to verify transactions while safeguarding bridged assets. Users must trust a central entity with operating, which may depend on their reputation – for instance in WBTC bitcoin is protected with Ethereum while BTC is kept safe via BitGo.
However, trust bridges carry a risk of becoming single points of failure; should their central entity experience bankruptcy, theft, or any other difficulties it could put digital assets under its custody at risk.
One example of the dangers associated with trusting bridges is demonstrated by a hack on Ronin Bridge Protocol in which hackers stole over $600 million worth of Ethereum and USD tokens.
Trust-Minimized Bridges
Trust-Minmized Bridges Non-custodial bridges that use smart contracts, algorithms and economic incentives to store cryptocurrency are known as trust-minimized bridges. All your locked cryptocurrency is stored on these non-custodial platforms using smart contracts for secure storage – such as Nexus or Gravity as examples of trust-minimized bridges.
There are various blockchain bridges that take middle ground approaches between these two approaches, each having its own set of nuances and drawbacks.
Popular Blockchain Bridges
Let’s examine some of the most sought-after blockchain bridges.
Binance Bridge
Binance Bridge is a cross-chain bridging service that allows users to convert certain cryptoassets into tokens that can be used on the BNB Smart Chain ecosystem. The bridge strives to improve blockchain interoperability by connecting BTC, LTC, ETH, LINK ATOM DOT as well as other assets into its ecosystem.
Avalanche Bridge
This bridge facilitates the movement of ERC20 tokens between Avalanche network and Ethereum networks. Ethereum transactions take 10-15 minutes while Avalanche transactions can occur within seconds; all fees must be paid using AVAX coins.
Horizon Bridge
Horizon Bridge is a cross-chain bridge connecting Ethereum, BNB Smart Chain and Harmony networks. Through it you may exchange Ethereum-based tokens for similar ones on Harmony network at a 1:1 ratio or redeem exchanged tokens back for Ethereum or BNB Smart Chain tokens.
Polygon Bridge
Polygon Bridge connects Polygon to Ethereum by enabling you to transfer ERC20 tokens and NFTs from Ethereum’s sidechain directly onto Polygon using two bridges, the Polygon (PoS) bridge and Plasma bridge. While PoS transfers most ERC20 tokens, plasma bridge transfers MATIC (Polygon native token) along with certain ERC20 and ERC721 tokens.
Wormhole
According to its site, Wormhole provides a cross-bridge transaction wormhole between Solana and Ethereum. Wormhole also serves other blockchain networks including BNB Smart Chain Polygon Avalanche Oasis Fantom Karura Celo Acala Aurora as well as Klaytn. Wormhole operates by validating data/assets through its network of nodes before sending them onward to their destination blockchain networks.
Are Blockchain Bridges Safe?
No one disputes that an interoperable blockchain space is essential for the growth of this industry, yet blockchain bridges pose unique risks. Trusted bridges in particular pose considerable centralizedity risks, as we saw with Ronin Bridge protocol hack.
If there’s a flaw in the code, you could be exposed to risk through trust-minimized bridges – like with Wormhole hacker who stole over $300 Million this year.
Both trusted and trust-minimized bridges possess specific strengths in terms of capacity and design; however, using blockchain bridges could help avoid potential pitfalls that exist in both types.
Before engaging with any bridging protocol, it is crucial that you conduct due diligence. Examine its documentation, study its code, and assess its maturity level so as to protect your assets while blockchain bridge developers seek solutions to current shortcomings.
