Aka Cross-chain Bridging
Why use Blockchain Bridging? Why is it needed?
- Major crypto brokers don’t sell native tokens like Ethereum
- They sell tokens on the Ethereum network
- Ex: Ethereum and Wrapped Ethereum on Polygon
- Transaction on the Ethereum network is more expensive
- Other bridges can scale more
- People can access new networks
- These networks are faster, cheaper, and maybe safer
- Currently, the blockchains need to be able to scale and innovate
- Ex: Bitcoin is some benefits over Ethereum, Ethereum has some benefits over Bitcoin
- It becomes more likely that these chains would need bridging to make crypto an all-around solution
Issue with Bridges
- You must trust a central authority that it doesn’t steal you money in the process
- It can be slow
- Some can be minutes, hours, and days
What makes it work?
- It works using pools
- You deposit money
- Centralized authority will send an equivalent amount of what you deposited
- This involves a small fee you give to the liquidity providers
- You must trust the central authority doesn’t steal you money in the process
- Only work if people can keep trading back and forth, if the pools have funds
- Smart Contracts
- When you bridge, your assets your sending is in a smart contract
- When your assets are frozen, you are given a copy of that token on a new network
- Smart contract mints you more of that token because it burned or froze the token on the other network
- This method is usually used for coins that don’t have smart contract capability
- Ex: Dogecoin can’t lend or borrow on AAVE
- Ex: renNTC is pegged to BTC price, but it is on the ETH network
- This mean you can lend it and interact with other decentralized apps
Choosing the Right Bridge
- Bridge providers allow users the flexibility to choose between them based on requirements across costs and duration.
- Some popular bridge providers include Multichain, Hop Protocol, Connext, Synapse, and Across. Most chains, like Polygon and Arbitrum, also have their own native bridges.
- The presence of multiple bridge providers with different fees and transaction duration that are updated in real-time means users have to do their own comparisons to find the cheapest or fastest routes.
- Similar to DEX aggregators like Paraswap, which automatically finds the cheapest swaps across DEXes so users don’t have to, bridge aggregators like FundMovr by Socket, LiFinance, and Rango aggregate all bridging options.
- This simplifies the process of finding the best bridge for users. Bridge aggregators thus act like Google Maps for the multi-chain world.
- https://blog.liquid.com/blockchain-cross-chain-bridge#:~:text=A blockchain bridge%2C otherwise known,one chain to the other.&text=Having access to multiple blockchains,experience for most of us.
- MATIC Bridge
- Binance Network