Such an isolated nature goes against the fundamental principles of decentralization. This limits decentralized interactions and creates economic growth, trade, and innovation hurdles. The biggest draw to cryptocurrency bridges is the interoperability solutions they offer. Anyone using cryptocurrency is familiar with the scalability issues big projects like Bitcoin and Ethereum face. As these projects have grown, their processing speed has dropped while gas fees have soared, especially so for Ethereum.

Via the use of bridges, blockchain has the potential to become more relevant and easily adaptable. However, there are a number of challenges that must be faced erc20 vs kcc in order to prevent security risks, bad practices, and errors in the technology. The development of the blockchain industry is driven by constant innovations.

A bidirectional blockchain bridge helps in ensuring seamless transfer of assets and information between two networks. Therefore, bidirectional bridges serve as a favorable alternative to using two different unidirectional bridges. From ethereum to the solana network — an investor deposits the tokens into a smart contract, a piece of code on the blockchain that enables agreements to execute automatically without human intervention. After years of research & development, we are finally in a multi-chain market structure. There are over 100 active public blockchains, many of which have their own unique applications, users, geographies, security models, and design trade-offs.

What types of blockchain bridges are there?

Several bridges have already been built or are in development in the testnet stage for the Polkadot ecosystem. A single chain’s throughput capacity bottleneck could hinder large-scale blockchain interoperability. Decentralization has always been a defining factor of blockchain, which also makes it a priority over other operative improvements, such as scalability. One of the biggest problems of blockchain was the inability to work together. While fluid and somewhat efficient as single entities, each blockchain is limited by the walls of its own domain.

hat is a Blockchain Bridge

For example, when a Bitcoin is to be used on the Ethereum Mainnet is wrapped into a bridge token for the Ethereum blockchain, we get a bridge token in the form of wrapped BTC. Bridges can help dApps’ capabilities by giving them a mechanism to take advantage of the advantages and strengths of several blockchains. They permit protocol innovation, resulting in new and original solutions. Bridges are either custodial or non-custodial, depending on who controls the tokens used to construct the bridging assets. Transferring assets from one blockchain to another has a wide range of advantages. First, the blockchain onto which you migrate assets may be less expensive and quicker.

Bridges Supported by Web3 Foundation Grants

Bridge services “wrap” cryptocurrency to convert one type of coin into another. So if you go to a bridge to use another currency, like Bitcoin , the bridge will spit out wrapped bitcoins . It’s like a gift card or a check that represents stored value in a flexible alternative format.

  • This concept is a lot similar to Layer 2 solutions even though the two systems have different purposes.
  • Therefore, two blockchains cannot communicate natively, meaning tokens and assets cannot move freely from one blockchain to another.
  • As a Bitcoin sidechain, the network is connected to the Bitcoin Network with a 2-way blockchain bridge .
  • Blockchain bridges cater to the innovative and collaborative requirements of the DeFi ecosystem.
  • Manual checkpoints are similar to a trusted model as it depends upon a third party, i.e., the officials, for its operations.
  • Many blockchains lack interoperability, meaning that they can’t communicate well with each other on their own.
  • But in using them, crypto enthusiasts are bypassing a centralized exchange and using a system that’s largely unprotected.

A trustless or decentralized bridge operates on the blockchain using smart contracts and algorithms, as a result, users remain in control of their assets. A blockchain bridge solves the problem of inter-network communication by offering a way to connect island-like blockchains with each other. Like any physical bridge, a blockchain bridge acts as the missing link between two blockchain ecosystems, making the transfer of information, data and tokens across them fairly easy.

#1 Custodial vs Non-custodial Bridges

We may be inching toward an innovative and normalized crypto economy, but any progress is better than limiting ourselves to what already exists. Bridges are an essential tool in the decentralized finance industry, which is crypto’s alternative to the banking system. Attackers were able to enter any value into the system and then withdraw funds, even if there weren’t enough assets deposited in the bridge. They didn’t need any programming skills, and their exploits led copycats to pile in, leading to the eighth-largest crypto theft of all time, according to Elliptic. At this point in time, it doesn’t seem uncommon for bridges to be hacked.

Badly written or poorly optimized smart contracts could create potential exploits or other vulnerabilities that could be targeted by bad actors. One such example is the Wormhole hack in February, in which a hacker was able to steal 120,000 wETH by exploiting smart contract vulnerabilities. They can be divided into trusted or centralized bridges and trustless or decentralized bridges. Attackers have exploited the vulnerabilities of some blockchain bridges’ smart contracts. Massive amounts of crypto have been misappropriated by malicious actors from cross-chain bridges. To put this in perspective, think of how you can use your Visa to pay for your MasterCard bills; or how PayPal can pay for all your online purchases no matter where you’re buying from.

Imagine different banks worked in silos with no integration between any of them. If you operate with one bank and your friend operates with another, trying to move money across to the other would not only be a headache, but it might be downright impossible. For this reason, interoperability – and the lack thereof – is one of the biggest problems blockchains are facing at the moment. The decentralized promise ensures that blockchain will be owned or operated by numerous stakeholders as opposed to a corporate and centralized model of governance. Such ownership and operational structure have been major contributors to the success of blockchain technology. To encourage users to run the bridge, many projects offer rewards to folks providing crypto used to verify transactions on the bridge.

What Building A Community-Driven Blockchain Is All About

On this article we’ll dig into the blockchain bridges solutions available on the market. For a fluid blockchain future, interoperability is not only important – it’s a necessity. Being able to work and move assets across networks will be a driving force in the digital world, from cryptocurrency networks to Metaverse platforms. — Blockchain bridges are the key to unlocking interoperability between individual networks, allowing users to interact with assets across different networks. It opens the door to new opportunities as users can experience the perks from network to network. Another risk that arises from the use of centralized bridges is the risk of theft.

Network security encompasses all the steps taken to protect the integrity of a computer network and the data within it. A wireless mesh network is a mesh network created through the connection of wireless access point nodes installed at … Many bridging solutions adopt models between these two extremes with varying degrees of trustlessness.

hat is a Blockchain Bridge

That’s why you should always educate yourself on the potential risks of using bridges, as well as the specific bridge you are contemplating using. Collaboration between different blockchains allows more options for its users. In addition to the freedom of which direction bridges allow you to send and receive assets, there is also a variation in the bridge’s custodian, or, who controls the assets used to create the bridged asset.

This provides users with integrated possibilities for ecosystems that otherwise would have been left isolated. All blockchains are developed in isolated environments, with different rules and consensus mechanisms inside each network. Therefore, two blockchains cannot communicate natively, meaning tokens and assets cannot move freely from one blockchain to another. This is where blockchain bridges come into the equation, as they are the middleware between two ecosystems. Blockchain bridges enable users to access the benefits of different blockchain technologies without having to choose between platforms.

They are designed to work with any type of layer one or layer two blockchain. Others work using digital contracts, and wrapped tokens do not require the intermediary governance structure. Instead, the amount gets locked in a smart contract while users gain access to an equal amount of wrapped tokens. When users wish to convert back to the crypto they started from, the excess amount of wrapped tokens gets burned, and an equal amount is deposited back into their wallet.

It also increases the efficiency of the network; users can quickly make and receive micro-transfers without paying high transaction fees. DApps bridges are technically not bridges per se but rather dApps connected to different blockchains. Therefore, they have an ecosystem that can connect to these blockchains.


If a Bitcoin holder wants to transfer some of their BTC to the ETH network, the blockchain bridge will hold the coins and make ETH equivalents of the same. In actuality, the coins move nowhere, the BTC you want to want to transfer gets locked in a smart contract and you get access to ETH tokens of equivalent value. When you want the ETH tokens converted back to BTC, the ETH tokens will be burned and the BTC locked in the smart contract will be released into your wallet.

What Are Blockchain Bridges

Users to access new platforms and leverage the benefits of different chains. However, all blockchains develop in isolated environments and have different rules and consensus mechanisms. This means they cannot natively communicate, and tokens cannot move freely between blockchains. Alternatively, L1s like Solana and Avalanche are designed differently to enable higher throughput but at the cost of decentralization.

Binance Bridge, for example, you will first select the chain you’d like to bridge from and specify the amount. You will then deposit the crypto to an address generated by Binance Bridge. After the crypto is sent to the address during the time window, Binance Bridge will send you an equivalent amount of wrapped tokens on the other blockchain.

No other cross-chain bridge service supports as many token types as Multichain. For Bitcoin, which is perhaps the most well-known cryptocurrency, the most common bridge is with the use of Wrapped Bitcoin . Wrapped Bitcoin is sometimes referred to as a blockchain bridge, as it enables Bitcoin as an ERC-20 token — a token specification that is supported on many other blockchains. Porting assets from one blockchain to another blockchain comes with a myriad of benefits. First, the blockchain onto which you port assets might be cheaper and faster than its native blockchain. This is certainly true for Ethereum, where high transaction fees and slow throughput make it difficult for newcomers to get involved in decentralized finance .

Users to access new platforms and enjoy the benefits of different blockchains. Dapps to access the benefits of various blockchains which enhances their capabilities. All blockchains have their limitations, that’s exactly why bridges have been created.