Users have to “trust” the integrity and efficiency of the centralized entity to perform the transaction. Some blockchain bridges, such as “Cross-Chain Bridge” and Synapse Protocol, adopt different approaches. For instance, there are liquidity pools for WETH on BNB Chain, Polygon, and so on. Let’s say you want to own native Bitcoin (BTC), but you only have funds on Ethereum Mainnet. However, WBTC is an ERC-20 token native to the Ethereum network, which means it’s an Ethereum version of Bitcoin and not the original asset on the Bitcoin blockchain.

Several bridges have already been built or are in development in the testnet stage for the Polkadot ecosystem. A single chain’s throughput capacity bottleneck could hinder large-scale blockchain interoperability. All bridges have different designs and trust assumptions, so make sure to do your due diligence on each bridge before interacting with https://www.xcritical.com/blog/what-is-a-blockchain-bridge-and-how-it-works/ it. You can do this by checking the documentation and code and observing how mature it is. Build your identity as a certified blockchain expert with 101 Blockchains’ Blockchain Certifications designed to provide enhanced career prospects. Blockchain bridges can be categorized into the following types as explained in the pointers further.

Blockchain bridges by mechanisms

The Binance Bridge helps users utilize Ethereum-based assets on the BNB Smart Chain by wrapping tokens in the BEP-20 token standard. A blockchain bridge might seem like the most practical choice for extracting the actual value benefits of the blockchain ecosystem. However, bridges also present certain setbacks, which should be the priority of everyone in the blockchain landscape. Just like the web3 industry, blockchain bridges are still in the early stages of development. On top of it, the community of blockchain developers believes that the best design for a blockchain bridge has not been created yet.

These protocols function like a physical bridge linking one island to another, with the islands being separate blockchain ecosystems. The next entry among types of blockchain bridges would point at unidirectional bridges. https://www.xcritical.com/ As the name implies, unidirectional bridges can only ensure irreversible asset transfers from one network to another. The first entry among the types of a blockchain bridge would refer to a trusted blockchain bridge.

Portal Bridge

The world of Web3 technology has been advancing at a very rapid pace in recent years. Many new and promising blockchains have launched in recent months, as a few others fell in popularity. Nearly all new blockchains incorporate tokenization and smart contracts, which result in an ecosystem of applications such as DEXs. As a popular and widely used digital currency, some crypto investors and users may want the option to hold BTC outside the Bitcoin blockchain. But, as discussed, users can’t transfer cryptocurrency between blockchains. If you want to buy an NFT on the Ethereum blockchain but only have bitcoin, you can use a cross-chain bridge to conduct the transaction.

• This removes many of the problems of centralized systems, which are open to corruption or abuse of power, by using transparency and incentivization of widespread participation.
• Once the bridge is established, users can transfer assets between blockchains.
• Bridges represent points of concentrated liquidity, often secured by a small group of participants, and are prone to bugs and loopholes.
• The conventional consensus mechanism or Proof of Work serves better security, although with additional expenses on energy consumption.
• Some blockchain bridges can handle a large number of transactions, improving efficiency.
• These are the properties that need to be maximized if we want to realize the vision of an “internet of blockchains”.

To send your bitcoin to your Ethereum wallet, you can use Wrapped Bitcoin (WBTC). Wrapped Bitcoin is a cross-chain bridge that creates a new WBTC token on the Ethereum network and holds a bitcoin in a smart contract on the Bitcoin network. The number of WBTC is always equal to the number of bitcoin in the WBTC cross-chain bridge smart contract. After using the cross-chain bridge, you have a Bitcoin-backed ERC-20 token that you can use on the Ethereum network.

Liquidity networks

Both chains can have different protocols, rules and governance models, but the bridge provides a compatible way to interoperate securely on both sides. Non-custodial bridges operate in a decentralized manner, relying on smart contracts to manage the crypto locking and minting processes, removing the need to trust a bridge operator. In the same way that tangible bridges connect two physical locations, blockchain bridges connect different networks or token ecosystems. The definition of a blockchain bridge and the underlying rationale showcases a detailed impression of their importance. At the same time, you must have some doubts about the types of blockchain bridges and their work.

Kaleido is your easy button for developing next era blockchain based business applications. Web3 games and other projects can now port their token across multiple chains and reduce network stress. While cross-chain bridges are mostly used for good purposes, cybercriminals and hackers target cross-chain bridges for vulnerabilities. Users should be cautious of the risks inherent in cross-chain bridge software.