Blockchain bridges: Guide to cross-chain data sharing LogRocket Blog

With both, the pros and cons of blockchain bridges, by now you must have a got clear picture of its ecosystem. Now let’s move ahead and comprehend the mechanism of a blockchain bridge with the help of an example like bridging between BSC to ETH in the following section. When you use a blockchain bridge for instance a BSC to ETH bridge, it will link Binance Smart Chain and Ethereum blockchain for you via a sidechain. Since both, the main and the subordinate chain exist on different networks, they need a sidechain bridge to connect and transfer data. With the inception blockchain in 2008 via Bitcoin’s whitepaper release, people got to know about the innovation of a decentralised ecosystem.

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. Despite what individual communities believe, the reality is that the universe tends towards entropy, and the number of these networks will likely continue to increase into the future. Blockchain bridges can streamline this process, allowing assets to be transferred seamlessly across different blockchains. These bridges allow assets to move between a main chain and a sidechain – an auxiliary blockchain that runs parallel to the main blockchain. Although not foolproof, a valuable first step towards addressing the security issues on blockchain bridges can be an extremely rigorous source code audit before deploying the bridge on the blockchain.

Many DeFi protocols have integrated bridges to let their users swap tokens from different protocols without having to leave the platform. This makes the process of converting tokens through bridges less cumbersome. They remove the official’s role with technology and enable users to remain in control of their assets. But, in general, we see different types of bridges because of what they connect and their main usability. This potential technical issue can hinder large-scale blockchain interoperability by blocking a single chain’s throughput capacity when it receives transactions from many chains.

For instance, wrapped bitcoin tokens enable users to send Bitcoin to Ethereum as an ERC-20 token, but it doesn’t let you transfer the ETH token (Ethereum) back to the bitcoin. You can transfer bitcoin to a polygon blockchain, but the other way around is impossible. Trusted bridges rely on a governing entity or authority for controlling operations. Under this type of bridge, members are obliged to cede control of their assets to a governing body. However, there are not as many reliable services available today, which could force users to trust smaller and less-known companies. One of the most popular trusted bridge initiatives is Wrapped Bitcoin (wBTC), which allows sBitcoin users to pursue the opportunities of Ethereum.

These bridges will help you facilitate cross-chain transfers and also offers seamless connectivity between the parent and the child network. With the increased adoption of blockchain bridges, the scope of interoperability in the decentralised space also increases. This also encourages the developers to efficiently deploy dApps on various DeFi platforms. Blockchain bridges provide a promising way to move beyond the Balkanization of blockchain networks in an effort to promote greater innovation, user adoption and technological relevance. A blockchain bridge is a platform that allows different blockchain networks to communicate and exchange information. These bridges facilitate cross-chain transactions and enable users to access decentralized applications on different blockchains.

Custodial Blockchain bridge operator enabling users to transfer assets across Ethereum, Solana, and Polygon blockchain can collude to seal the investor’s funds as well. Finally, blockchain bridges could expose the underlying protocols to risks related to the disparity in trust. Because blockchain bridges connect different blockchains, the overall security of the interconnected networks is as strong as the weakest link. A blockchain bridge connects two separate blockchain networks, allowing them to communicate and exchange data and assets. Interoperability has the potential to be the catalyst for Internet innovation.

  • You can find a few blockchain bridge projects making their way towards popularity.
  • Usually, in the case of trusted bridges, the operations heavily depend on centralised entities and systems.
  • In addition, you can find a list of blockchain bridges focused on addressing unique user requirements.

For instance, an Ethereum Mainnet could be connected with a Layer 2 solution such as Arbitrum or Optimism, which addresses Ethereum’s high transaction fees and congestion issues. Usually, in the case of trusted bridges, the operations heavily depend on centralised entities and systems. After setting up the smart contract, you need to deploy the Binance bridge once you are done with developing and deploying the code for the bridge base. Although every blockchain has some cons, for instance, Ethereum has scalability issues for which it needs ZK-rollups and layer1 scaling solutions.

What are the biggest blockchain bridges?

Blockchain technology has the potential to improve a variety of information systems. But, the basis for its widespread adoption lies squarely with the evolution of cross-chain technology. Stateless SPV operates by sending only the transaction’s necessary headers.

The largest blockchain bridge is Wrapped Bitcoin, accounting for almost half of the bridge market, with $10.2 billion in total value locked (TVL). DeFi Llama pegs Multichain as the largest cross-chain bridge, with about $7 billion in TVL. Some bridges, known as unidirectional or one-way bridges, allow you to port assets only to the target blockchain and not the other way around. For instance, Wrapped Bitcoin allows you to send bitcoin to the Ethereum blockchain – to convert BTC to an ERC-20 stablecoin – but it doesn’t let you send ether to the Bitcoin blockchain. If you use a bridge to send one Solana coin to an Ethereum wallet, that wallet will receive a token that has been “wrapped” by the bridge – converted to a token based on the target blockchain.

In the case of trusted bridges, control is in the hands of a single entity or a small group of users. If certain transactions are not in the best interest of bridge operators, they have the power to prevent transfers of assets via the bridge. Blockchain bridges utilize wrapped tokens to facilitate interactions between blockchains. Blockchain bridges come in various forms, each with its characteristics and functionality.

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The Binance Bridge helps users utilize Ethereum-based assets on the BNB Smart Chain by wrapping tokens in the BEP-20 token standard. Web3 has evolved into an ecosystem of L1 blockchains and L2 scaling solutions, each designed with unique capabilities and trade-offs. As the number of blockchains protocols increases, so does the demand to move assets across chains(opens in a new tab). However, the isolated nature of different blockchains can limit the benefits of tokenization. Blockchain bridges can solve this issue, enabling tokens to move seamlessly across different blockchains.

Take your bridging experience to a whole new level!

These bridges connect different blockchains allowing them to share information, transfer assets, and communicate seamlessly. Also, in his article, Arjun Bhuptani classifies bridges based on how they are verified into natively, externally, and locally verified systems. Different bridging solutions focus on different factors out of the three listed above and have their own strengths and trade-offs. As a result, there are varying bridge designs with unique value propositions. Blockchain bridges, also known as network bridges or cross-chain bridges, are a tool designed to solve the challenge of interoperability between blockchains. Bridges have become a necessary component of the blockchain industry because, as it stands, blockchains operate in silos and cannot communicate with one another.

This can greatly enhance the functionality and liquidity of DEXs, making them more efficient and user-friendly. These vulnerabilities can not only compromise the security of transactions but also lead to significant financial losses. Moreover, the decentralized nature of blockchain can make it difficult to enforce privacy laws and regulations, further complicating matters. They pave the way for interoperability, eliminating the traditional silos and promoting a more interconnected, efficient blockchain infrastructure. If you keep your cryptos in a custodial wallet, in that case, your private keys are kept in a cold storage platform, and it’s like investing in a commodity without holding the item yourself.