We all know that bridges connect to physical locations and facilitate movements between them. Now replace that bridge with a blockchain bridge connecting two different blockchains and you will have the basics of blockchain bridges down.
And now that the blockchains are connected, the transfer of tokens and data between them is now possible.
In this article, let us find out why we need blockchain bridges, how they work and the different types of bridges that are available.
What Are Blockchain Bridges?
Ever since new blockchains started popping up after the creation of Bitcoin’s blockchain in 2008, there has been a prevailing problem and that is a lack of interoperability.
So there has always been a need to solve this problem to ideally make the whole crypto ecosystem work as a team instead of existing like islands, and having the ability to move your assets to different blockchains means that you get to enjoy the benefits that may be native to certain ecosystems.
Benefits of Blockchain Bridges
1. Cheaper and Faster Transaction Fees
Let’s say you have ETH on the Ethereum network which has its own flaws like high transaction fees and slow throughputs.
You could choose to move your assets through a bridge to Polygon which is much faster and also cheaper. By moving your eth to polygon you get to save money by trading tokens for a fraction of the cost you would incur on the Ethereum network.
2. Ability to Explore the Blockchain Ecosystem
This allows you to enjoy products like decentralized applications or DApps that only exist on other blockchains.
For example, there may be DeFi protocols that are only available on a specific blockchain and support a wrapped version of ETH. If you find interest rates or products offered in the protocol appealing, you may decide to port your ETH through a bridge to enjoy the benefits offered by that protocol.
This could also be the case for protocols that exist on multiple blockchains like the popular lending protocol Aave. For example you have been using Aave on Ethereum to lend USDC but the interest for the same coin on Polygon is higher, you may choose to move your assets to Polygon and take advantage of the higher interest there.
Just like users, developers that create products on the Ethereum network have had negative experiences due to the fees and speed.
You might be wondering, “why do they choose to build there in the first place?”
Since Ethereum has been there for a longer time than its competitors, there is a factor of network effects—this is when a product, in this case Ethereum, becomes more valuable when more people use it; and if many people are using it, there comes liquidity, which is a measure of how easy it is to convert one asset to another.
But now with blockchain bridges, developers don’t have to trade off these important benefits for speed and lower transaction costs by building on a different chain as users can easily move their assets from the original chain to other block chains, where the same tokens can be processed faster and at a lower cost.
How Do Blockchain Bridges Work?
Let’s consider Eva who has her assets on Ethereum but wants to use a lending and borrowing platform on Solana.
Eva would need to transfer her ETH to Solana through a blockchain bridge.
The bridge then locks her Ethereum on the Ethereum network and mints new tokens that can be used on Solana.
When Eva wants her original ETH back, she can burn her Solana-compatible ETH to release her locked ETH on the Ethereum network.
Now that you have the full picture of the whole process, you may have noticed that the ETH is not actually moving, rather it gets locked and you get access to a similar amount that is compatible with another chain.
Types of Bridges
Generally, bridges can either be centralized commonly known as “trust-based” or decentralized commonly known as “trustless”:
As the name suggests, you are essentially trusting your crypto in the hands of a centralized entity. You have to give up control of your assets as they act as third parties that verify transactions and convert your coins into another cryptocurrency. An example of this is Wrapped Bitcoin (WBTC); it is a product of a centralized entity that takes BTC and wraps it in an ERC-20 contract to make it function like an Ethereum token.
The advantage of using trust-based bridges is that they are cheaper and quicker.
Trustless-based bridges depend on algorithms to operate, thereby removing the need for a third party. They are decentralized just like blockchain, with individual networks contributing to the validation of transactions.
However, being decentralized has its own flaws; one of them is that the service may be freelance-based—the validators are paid to only process your transaction. So incase of a problem, they may not be able to help you.
Are Blockchain Bridges Safe?
It is important to know that when it comes to crypto, your capital may always be at risk and bridges are no exception, especially since successful attacks on blockchain bridges have become unfortunately a common occurrence.
Cross-Chain Bridges Tutorial
Let’s try to bridge ETH into the Base network, an Ethereum Layer 2 blockchain released recently in August by Coinbase.
1. Prepare your ETH holdings on the Ethereum network
Please ensure that your ETH holdings must be on the Ethereum network.
2. Add the Base Mainnet to your MetaMask
To add the Base Mainnet to your list of networks on MetaMask, input the following information below:
Network Name: Base Mainnet
New RPC URL: https://mainnet.base.org
Chain ID: 8453
Currency symbol: ETH
Block explorer URL: https://basescan.org
3. Visit bridge.base.org
Please be cautious of identical websites to prevent falling victim to phishing.
4. Connect to your MetaMask
5. Bridge your ETH to Base and confirm the transaction
When you are ready, click “Deposit ETH” to finish the transaction—network fees must be paid for the transaction to be completed. Finally, check your associated wallet.
And that’s it! You have successfully bridge your Ethereum to Base—you may now try Base’s ecosystem filled with on-chain products and services.
The main idea of these systems is that bridges rely on several different validator nodes to reach a consensus on the accuracy of the distributed information. Allowing different terms and blockchain protocols in the space to work together will fuel innovation which will in turn accelerate user adoption.