Moreover, developers from different blockchain ecosystems collaborate and build new platforms for users. For example, trusted blockchain bridge presents the concerns of censorship due to centralized control. On top of it, the custodial risks of exposing assets to malicious bridge operators could also affect users. At the same time, a trustless bridge would also present risks in the form of malware or bug risks in the smart contract code.
Furthermore, a trustless bridge offers complete transparency by leveraging the advantages of mathematics, computer science and cryptography for security of transactions. On top of it, users have complete control over their assets at different times. One of the first things you need to do before you start looking for best blockchain bridges would be to find the definition of one. Therefore, the uses of a blockchain bridge are gradually gaining momentum in the decentralized applications ecosystem. The maturity and evolution of blockchain technology have led to the demand for blockchain bridge projects to improve interoperability among different blockchain networks.
Today, interoperability between blockchains is facilitated by many of the best blockchain bridges in the crypto space. DeFi bridges are protocols that enable the bridging of DeFi assets among different smart contract-enabled blockchains. Some also refer to DeFi bridges to explain protocols that allow for the creation of synthetic derivatives that represent an asset from another blockchain.
Ethereum bridges provide a way to transfer assets to EVM-compatible networks like BNB Smart Chain, Fantom, and Avalanche. While blockchain bridges may have several types of designs, they https://www.xcritical.in/blog/what-is-a-blockchain-bridge-and-how-it-works/ generally fall into two categories; trusted and trust-minimized bridges. For Bitcoin, the most well-known cryptocurrency, the most common option is to use Wrapped Bitcoin (WBTC).
An Introduction to ERC-20 Tokens
TBTC – tBTC is a tokenized version of BTC that serves as a trust-minimized bridge between Bitcoin and the Ethereum blockchain. By minting tBTC, users can use a Bitcoin-equivalent asset to interact with Ethereum dApps. This includes using Bitcoin’s value to borrow and lend, mint stablecoins, provide liquidity, and much more. As one of the most popular solutions to bridging blockchains is to require some level of trust this naturally brings the disadvantages of a single central point of control. The locally verified blockchain bridge solution assumes that each party to a cross-chain exchange assumes responsibility for verifying their counterparty.
- Trusted bridges are centralized, giving them a clear downside for privacy-conscious blockchain users.
- This, in turn, represents the transferred amount of BTC “wrapped” in an ERC-20 contract, allowing this token the uses and functionalities of an Ethereum token.
- However, certain bridges have been exploited in the past, leading to hacks and lost assets.
- The blockchain bridge by Binance serves as a bidirectional bridge between Ethereum and the main Binance chain.
- Blockchain technology has come a long way since 2008 when the Bitcoin white paper was published.
An atomic swap is specifically designed to enable the secure exchange of assets between two different blockchains. Instead of active human error, there could be unknown bugs within the smart contracts’ code that malicious attackers could uncover and exploit. While bridges have a great amount of utility, it’s important to consider the potential risks that can arise from sending crypto assets between blockchains. Rather than holding wrapped tokens, users can simply bridge with another chain to acquire the native token version.
Upgrade Your Blockchain Skills with 101 Blockchains
In this example, you want to transfer your bitcoin (BTC) to the Ethereum network. A blockchain bridge is a special type of smart contract used to transfer tokens on one chain to another. If you want to sell your BTC and then purchase ether (ETH), you may incur transaction fees and expose yourself to price volatility. A blockchain bridge is a protocol that connects two economically and technologically separate blockchains enabling interactions between them.
For example, some Ethereum dapps are not available on the Polygon Bridge, which limits its scaling efficacy. Wormhole, the popular bridge between Solana and Ethereum, also come under fire in February 2022. A hacker fiddled around enough with the bridge’s smart contract code to find an exploit that allowed them to bypass signature verification.
However, the transition to faster and cheaper networks, such as Polkadot, Solana, or Tezos, threatens with the loss of a large, established community and infrastructure. From the very beginning, one of the most significant problems of blockchain ecosystems was their mutual incompatibility. Choosing a particular blockchain as a platform for their application limited developers from the benefits https://www.xcritical.in/ of other, alternative protocols. However, it also means there is no real authority on who controls Bitcoin’s code or how it is edited. If a majority of the network users agree that the new version of the code with the upgrade is sound and worthwhile, then Bitcoin can be updated. For all of its complexity, blockchain’s potential as a decentralized form of record-keeping is almost without limit.
A blockchain bridge is a tool that lets you port assets from one blockchain to another, solving one of the main pain points within blockchains – a lack of interoperability. Depending on the implementation and purpose, there are several main types of blockchain bridges. For instance, the Ethereum network randomly chooses one validator from all users with ether staked to validate blocks, which are then confirmed by the network.
The Portal platform uses Wormhole, which is a “communication bridge” that allows the prominent blockchain Solana to interact with other DeFi networks. Portal also supports converting digital collectibles across a variety of blockchains, making it an excellent choice for NFT enthusiasts. Like some competitors, Portal’s platform has a dedicated swapping hub for stablecoins, on top of a bridge to the Layer 1 blockchain Sui. When a developer builds a decentralized application (or a dApp), they generally choose a single blockchain to release it on. That means the app is stuck using the features of that single blockchain.
Popular Blockchain Bridge Examples
Blockchain bridges are fundamental for achieving interoperability within the blockchain space. Bridges have different designs with unique strengths and trade-offs, and thus, there are a plethora of options when it comes to which bridge can be used to communicate between two blockchain networks. Wormhole is a bridge that allows cross-bridge transactions between Solana and Ethereum. Binance Bridge is a cross-chain bridging service that enables you to convert select cryptoassets into wrapped tokens to be used on BNB Smart Chain. The trusted bridge aims to improve the interoperability of different blockchains and bring assets like BTC, LTC, ETH, LINK, ATOM, DOT, and more to the BNB Chain ecosystem.
WBTC complies with the ERC-20 token standard used by Ethereum, so it can be used across its ecosystem. One of the primary reasons for these hacks, as stated by CoinTelegraph, is open-source code and copy-pasting code. With open-source code, blackhat hackers can review a bridge’s code for vulnerabilities. If a bridge’s developer copy pastes code from another bridge, they may copy the same vulnerabilities. Ben Knight is a freelance writer with a passion for music and finance from Melbourne, Australia. He completed his Master’s in Writing, Editing, and Publishing in 2019, following a Bachelor’s degree in Creative Writing.