What Are Cross-Chain Bridges?
With the explosion of various blockchain ecosystems in recent years, the issue that has risen to the surface is that most Blockchains aren’t interoperable, meaning they don’t work seamlessly together. In the current crypto world, there are many blockchains with different structures and features but previously there was no way to move between these ecosystems quickly and efficiently.
Before the iteration of bridges, if you wanted to move from let’s say the Ethereum blockchain to the Binance chain the only way would be to more your Ethereum to a centralized exchange, sell it, buy BNB and then send it to your wallet on the Binance chain. This is a time consuming and potentially expensive process.
Cross-chain bridges solve this issue by connecting blockchains and allowing users to transfer assets and information across chains so they can access the different features and protocols in various ecosystems.
How Do Cross-Chain Bridges Work?
The majority of bridges use a model to transfer assets between chains that involves locking or burning assets on the source chain and then unlocking or minting assets on the destination chain.
The process of bridging is facilitated by communicating smart contracts on each blockchain, when you put tokens into the smart contract on one chain it triggers the smart contract on the other chain to send you the tokens on that chain.
Here’s how the process works:
1. I have 20 of token 1 on blockchain A and I want to bridge to blockchain B, I will submit my tokens to the bridge on blockchain A.
2. Those tokens on blockchain A will be either locked or burned (depending on the mechanism used by that bridge).
3. The wrapped version (the tokenized version on the other blockchain) of those tokens will then be minted or unlocked on blockchain B.
4. Those tokens will then be sent to my wallet on blockchain B, allowing me to now start using protocols and Dapps in that ecosystem.
5. If and when I’m ready to bridge back to chain A I can then lock or burn my tokens in the bridge on blockchain B, and my tokens on blockchain A will then be unlocked or minted on blockchain A and sent back to my wallet.
The 3 Kinds of Bridges
There are 3 different methods used by bridges to achieve essentially the same result, here’s how they work:
Lock and Mint: The user locks their tokens on the source chain, the wrapped version of the token is then minted on the destination chain as an IOU. When the user wants to bridge back, they then burn their wrapped tokens on the destination chain which then unlocks the origin tokens on the source chain.
Burn and Mint: The user burns their tokens on the source chain which then mints the same tokens on the destination chain and vice versa when they want to bridge back.
Lock and Unlock: The user locks their tokens on the source chain which then unlocks the tokens from a liquidity pool on the destination chain. When the user wants to return to the source chain, they submit their tokens back to the liquidity pool which then unlocks their tokens on the origin chain.