Crypto bridges are essential for facilitating interoperability among various blockchains. They connect previously isolated crypto ecosystems so that users can share data and transfer assets across separate blockchains which have their own individual technological and economic rules.
Crypto bridges can be categorized as trusted, trustless, uni-directional, and bi-directional. Solana Wormhole Bridge, Avalanche Bridge, and Polygon Bridge are some of the popular crypto bridges used to move assets around, and each bridge presents unique advantages.
Generally, blockchains are not inherently interoperable, meaning that data and assets on one blockchain can’t be transferred to another blockchain. Many projects tackle this problem by building crypto bridges between them to facilitate data and asset transfers. However, each crypto bridge connects only specific blockchains and is therefore not a one-size-fits-all solution.
If a team builds a bridge between ETH and BTC, for instance, that bridge cannot be used to move assets from XRP to ETH. Also, only users who have crypto wallets compatible with a particular bridge can use that bridge.
What Is a Crypto Bridge?
A crypto bridge is a protocol that enables two or more blockchains to work and share data with each other. It connects blockchains so users on one network can participate in the activities of another. This allows crypto users to utilize their holdings outside native chains.
Blockchains differ in their tokens, consensus mechanisms, communities, and governance models. A crypto bridge facilitates blockchain interoperability, allowing data and crypto asset transfers across different chains.
Crypto bridges also allow blockchains to build off one another’s strengths. For example, Bitcoin doesn't have to reconstruct its blockchain to incorporate smart contracts because other networks can fill that gap.
Additionally, crypto bridges allow developers to communicate and collaborate regardless of which network they're working on. As such, protocols can more easily connect and build upon one another's features and use cases.
Usually, crypto bridges port tokens from one network to another by wrapping them, a process whereby the bridge locks the original token in a smart contract and creates an equivalent amount of wrapped tokens, such as WETH for ETH or WBNB for BNB.
There're also other technologies focusing on interoperability in the crypto ecosystem. One such example is Layer 0 protocols. Layer 0s allow other blockchains to build on top of them by offering the blockchains a common underlying layer. Therefore, a blockchain doesn't require bridges because each blockchain building on top of Layer 0 connects to other blockchains right from the start.
Types of Bridges
Trusted bridges depend on a central entity or a system. They include external verifiers to safely facilitate the transfer of data and value. However, this also means they require users to give up control of their crypto assets, which contradicts the crypto ethos of self-custody.
Unlike trusted bridges, trustless bridges don’t rely on third-party entities. Instead, they operate in a decentralized manner by utilizing smart contracts that manage the interoperability process. As such, users can maintain ownership of their crypto. While trusted bridge users must rely on the bridge operators’ reputation, trustless bridge users look to the underlying code instead.
Uni-directional (or one-way) bridges enable users to move their crypto to another network without the possibility of sending them back via the same route. This means they should be used only for one-way transactions.
Bi-directional bridges, on the other hand, allow the transfer of assets both ways. They provide a more seamless way to transfer data and crypto between two networks. And as such, might be more convenient for a user who frequently uses two networks to send and receive crypto.
Solana Wormhole Bridge
A bi-directional bridge, Wormhole seeks to facilitate the movement of tokenized assets quickly and cheaply across blockchains by tapping into Solana's high-speed and low-cost structural advantages.
Solana's goal for Wormhole was to solve common issues with decentralized finance (DeFi), such as high gas fees, price slippage, and network congestion. When it launched in 2020, it offered a decentralized way to bridge ERC-20 and SPL between Ethereum and Solana. Nowadays, Solana Wormhole allows crypto transfer among 17 chains.
Wormhole was developed together with Certus One, a company running nodes for blockchains and providing infrastructure security services for proof-of-stake (PoS) blockchains. As developers can employ Wormhole to access the Solana network, there is no need for a crypto project to rewrite their own codebases for Solana.
The bridge is based on decentralized cross-chain oracles. These so-called "guardians" bring tokens from one chain to another by locking up or burning tokens on one chain and minting or releasing them on another.
The “guardians” are run by node operators such as Solana validators and ecosystem stakeholders. Their aligned incentive structure with Solana may help to keep the bridge reliable.
Another bi-directional bridge, Avalanche Bridge (AB) was built especially for retail users and launched in July 2021 by Ava Labs. The bridge is a replacement of the previous bridge design, called Avalanche-Ethereum Bridge (AEB), and boasts fees that are approximately five times lower than those of its predecessor.
In addition, AB strives to further improve the asset-bridging experience for users by focusing on security, faster finality, and lower fees. AB also connects Ethereum and Avalanche by enabling users to transfer Ethereum ERC-20 tokens to the Avalanche Mainnet.
The AB design consists of a private codebase (or "Intel SGX") and relayers (called wardens.) The Intel SGX application is a private enclave that creates a more secure computing environment by facilitating operations in a closed space and ensuring the bridge is tamper-proof.
The warden's main job is to monitor the Avalanche and Ethereum blockchains. Whenever a warden sees an ERC-20 token coming to Avalanche Bridge's Ethereum, they register the transaction in the Intel SGX enclave.
However, when tokens are sent from Avalanche to Ethereum, the enclave confirms that the wrapped ERC-20 coins are first burned to signal the transfer of the equivalent amount to Ethereum. Finally, when the transaction is confirmed, the token is either locked and minted or burned and released.
The trustless Polygon Bridge was first proposed in early 2020 by the Polygon team to increase interoperability between the Polygon and Ethereum networks. The bridge went live later that same year.
Nowadays, it allows users to transfer tokens and non-fungible tokens (NFTs) between Ethereum and Polygon. Now users can take advantage of Ethereum's popularity while utilizing Polygon’s lower fees and faster transaction times.
Polygon has two bridges through which users can transfer assets: the Proof-of-Stake (PoS) bridge and Plasma bridge. The former secures its network by adopting the PoS consensus algorithm. While deposits are completed almost instantly on the PoS bridge, withdrawals may sometimes take longer. This bridge supports the transfer of ether and other common ERC tokens.
The Plasma bridge uses the Ethereum Plasma scaling solution to offer increased security. Users can use the bridge to transfer Polygon's native token, MATIC, and certain Ethereum tokens (ETH, ERC-20, and ERC-721).
Bridging tokens using Polygon follows typical bridging logic. Tokens that leave the Ethereum network are locked, and the same number of tokens are automatically minted on Polygon at a one-to-one peg. Similarly, when bridging tokens to Ethereum, the pegged tokens on Polygon are burned and the Ethereum tokens are unlocked.
While crypto bridges make the crypto ecosystem more interoperable, you should always do your research so you can pick the most suitable bridge to use.
Remember that bridging doesn't change the circulating supply of the cryptocurrency you want to transfer. Bridges simply lock tokens on the sending network and mint new tokens on the receiving side, creating wrapped tokens.
If the wrapped tokens are sent back to the native chain, they are burned before the original tokens are released on the other side.