What Is A Cross-Chain Bridge
The blockchain network is evolving at a rapid pace. Every few months a new blockchain is introduced with unique features, making it increasingly important to find a solution for interoperability – the ability for these different blockchains to communicate and interact with one another.
One specific use case of this interaction between blockchain networks is transferring assets. Transferring assets from one blockchain to another can open up a plethora of opportunities and fortunately, the web3 community is working to make it possible via cross-chain bridges – the ability to transfer tokens between blockchains.
In this article, we will go through what cross-chain bridges are, how they work, and their importance to the web3 landscape.
Cross-Chain Bridges – What Are They And How Do They Work?
A cross-chain bridge is a technological solution or protocol that facilitates the transfer of digital assets, tokens, or data between different blockchain networks ensuring interoperability across networks.
It operates by establishing connections between different protocols, allowing for the transfer of assets and data across chains. Through specialized protocols, smart contracts, or intermediary mechanisms, these bridges ensure the secure and efficient movement of tokens or cryptocurrencies between blockchains, thereby fostering a more connected and inclusive decentralized ecosystem.
Consider it like a bridge connecting two cities, each with its own currency. People in City A can’t use their currency in City B, and vice versa. To bridge the gap, a bank sets up a system where people can exchange their currency for a special type of currency that is accepted in both cities.
Different cross-chain bridges have different ways of operating. These are the three most popular structures:
– Lock and Mint: In this case, the token on the base chain is locked and the same amount of tokens are issued on a destination chain.
Think of it as a “safe deposit box.” You put your money (tokens) in a safe deposit box in City A. The bank then gives you a receipt (tokens) that you can use in City B. You can use the receipt to buy things in City B.
– Burn and Mint: This is another type of method where the token on the source chain is burned and the equivalent amount of assets are minted on the other chain. It is like burning your tokens in City A (meaning you can’t use them there anymore). In return, you get new tokens in City B. This is like exchanging currency.
– Lock and Unlock: This is a process to lock or freeze tokens available on one blockchain network, effectively immobilizing them for a certain period or subject to certain conditions. Consider it a parking meter.” You “park” your tokens in City A (meaning you can’t use them). You can “unpark” them later, but only after paying a fee or waiting for a certain time.
The cross-chain bridges work on complex smart contracts. They are self-executing contracts with terms directly written into code playing a crucial role in cross-chain bridges by Securing Transactions, Enforcing Rules, and Facilitating Interoperability enabling seamless communication and asset exchange.
Why Are Cross-Chain Bridges Important in Blockchain?
Without bridges, the blockchain ecosystem is like a set of isolated islands. While each has its own capabilities and utilities, without interoperability, each ecosystem is left to survive and grow on its own. Cross-chain bridges in this way enable greater potential by allowing any and every web3 protocol to interact with one another, regardless of the blockchain ecosystem.
In this way, blockchain networks need cross-chain bridges to communicate with each other and solve the problem of blockchain interoperability. These bridges enable different networks to transfer information and assets seamlessly improving economic activity, scalability, and trust in the entire web3 ecosystem.
What Are The Benefits of Cross-Chain Bridges?
The decentralized landscape is fragmented across various blockchain networks. Each blockchain has its own consensus mechanism and reward system. On top of that, majority of the networks currently available have different base layers making it nearly impossible to communicate with each other. For example, Osmosis blockchain is built on Cosmo, on the contrary Polygon is built on Ethereum. The infrastructural differences at a network level restrict open communication. However, through cross-chain bridges this problem can be cured.
1. Liquidity
We all know how volatile the crypto market is. Cross-chain bridges help us tap into the liquidity available on different blockchain networks. This can provide users with better prices for both the buyer and seller. By connecting multiple blockchains, cross-chain bridges pool liquidity from various sources, creating deeper markets. This can lead to more competitive prices and reduced slippage for traders. Apart from that, it also helps users reduce dependability on a single chain in times of crisis. Users can access a wider range of assets and opportunities, reducing their exposure to the volatility of any single blockchain.
2. Scalability
Cross-chain bridges can help reduce network congestion by offloading it from one chain and distributing it to multiple networks. It can increase the throughput of the entire ecosystem and increase the transaction speed solving the problem of scalability.
3. Interoperability
Cross Chain Bridges have the ability to unlock the movement of assets locked on a native chain. Consider it like different nations opening up their economies to other countries (i.e., Globalization). It is a win-win situation for everyone that boosts innovation, economic growth, and utility.
4 Types of Cross-Chain Bridges
Cross-chain bridges play a crucial role in enabling interoperability between different blockchain networks by facilitating the transfer of assets and data across protocols. There are several types of cross-chain bridges, each with its own unique characteristics and functionalities. Here are the major ones:
- Pegged Sidechains:
Pegged sidechains operate by “pegging” or locking assets on one blockchain while releasing equivalent assets on another network. These sidechains maintain a two-way peg, allowing assets to be transferred back and forth between the main blockchain and the sidechain. This method ensures that assets remain backed and interchangeable across both chains.
- Federated Bridges:
They rely on a group of trusted validators to facilitate the transfer of assets between different blockchains. These validators monitor and verify transactions on both chains, ensuring the secure movement of assets across the bridge. Federated bridges offer a centralized approach to cross-chain interoperability but provide increased security and scalability compared to other methods. One of the popular networks using this bridge is Ripple.
- Wrapped Tokens:
Wrapped tokens are a form of cross-chain bridge that represents assets from one blockchain on another blockchain through tokenization. Users can “wrap” their assets by depositing them into a smart contract on the original blockchain, which then mints equivalent tokens on the destination blockchain. These wrapped tokens can be freely traded and transferred on the destination blockchain, allowing for seamless interoperability between different networks. Wrapped Bitcoin (WBTC) is one such example.
- Relay Chains:
Relay chains serve as intermediary networks that facilitate interoperability between multiple blockchains within a larger blockchain ecosystem, such as a blockchain network composed of multiple parachains. Relay chains relay messages and transactions between different blockchains, enabling cross-chain communication and asset transfers within the ecosystem.
Each type of cross-chain bridge offers distinct advantages and trade-offs, catering to different use cases, security requirements, and levels of decentralization. By leveraging these bridges, blockchain networks can overcome interoperability challenges and unlock new opportunities for collaboration and innovation across the decentralized landscape.
Across Protocol, Avalanche Bridge, Polygon Bridge, and Synapse are some examples of Crypto Bridges – but the easiest way to access all these bridges simultaneously is to use Rubic Exchange.
7 Cross-Chain Bridge Examples
- Rubic: It is a decentralized exchange aggregator and cross-chain bridge that offers users a convenient and efficient way to swap tokens across 90+ blockchain networks and 200+ DEXs. It acts as a middleman, connecting users to the best exchange rates and liquidity sources available on different platforms.
- Multichain: Think of it as a bridge that connects many different cities. It can connect to many different blockchains, like Ethereum, Binance Smart Chain, Avalanche, and Polygon.
- Wormhole: This bridge is known for being fast and cheap. It connects Solana, Ethereum, Terra, and Avalanche.
- ChainBridge: This bridge is like a bridge that can be customized. It connects Ethereum, Binance Smart Chain, Polkadot, and Cosmos.
- Synapse: This bridge is great for connecting Ethereum with other similar blockchains.
- Conflux Bridge: This bridge connects the Conflux network with Ethereum and Binance Smart Chain. It’s known for being fast and efficient.
- Polkadot XCMP is a bridge that connects different parachains within the Polkadot ecosystem. It allows for seamless asset transfers and messaging between these parachains, even if they have different rules or technologies. XCMP is designed for high performance and security
Bridge Between Blockchains Safely With Rubic Exchange
For users seeking a reliable and user-friendly solution for cross-chain asset transfers, Rubic is a leading platform. By aggregating the best crypto bridges for cross-chain all in one platform, Rubic provides a secure and efficient way to bridge assets between different blockchain networks, ensuring seamless interoperability and access to diverse liquidity pools.
For you, that means the ability to evaluate the swap rates across 220+ DEXs and bridges on 70+ chains all in one convenient location.
FAQs
1. What Are Cross-Chain Swaps?
It is a method used to transfer assets on one blockchain with assets on another blockchain without an intermediary. Cross-chain swaps facilitate the exchange of digital assets across different blockchain protocols, using cross-chain bridges, promoting interoperability, and expanding the utility of cryptocurrencies.
2. What is the purpose of a cross-chain bridge?
Cross-chain bridges enable the transfer of assets and data between different blockchain networks, fostering interoperability and collaboration within the decentralized ecosystem.
3. How do cross-chain bridges ensure security?
Cross-chain bridges employ various security measures, including cryptographic protocols, multi-signature authentication, and auditing mechanisms, to ensure the integrity and safety of asset transfers between blockchains.
4. Are Cross-Chain Bridges Safe?
Cross-chain bridges have their own risk. As per the recent report published by Chainalysis, it has been noticed that cross-chain bridges possess a large share of the entire crypto ecosystem. However, Rubic exchange comes with multiple layers of securities to ensure a safe cross-chain swap.
Experience secure blockchain interoperability – effortlessly bridge between blockchains with Rubic, your trusted cross-chain swap and bridge aggregator!