In everyday life, a holder of dollars who wants to travel to Europe will have to exchange these dollars into euros for a small commission via an exchange office. In the cryptosphere, an exchange between, say, Ether and another cryptocurrency will operate on the same principle. But to do this, it was necessary to create “Crypto Bridges”, which allowed the different blockchains to communicate with each other.
But what is really meant by “Bridge crypto”? How does it work? And what is its importance?
What are crypto Bridges concretely?
By default, each blockchain has its own environment (its governance rules, its own token, etc.). The data is therefore theoretically incompatible with that of other blockchains, because it does not speak the same language.
This lack of interoperability and connectivity therefore seems to be major obstacles to the development of the crypto ecosystem and especially to the innovation capacity of this universe.
Bridges therefore offer a solution as a gateway between different networks. So it is quite possible and transferred from the stablecoin USDT of the Ethereum blockchain to, for example, the Blockchain Cardano. Among the most famous crypto bridges we find in particular Avalanche or Polygon.
How do Crypto Bridges work?
The mechanism remains relatively simple as you have to link your wallet (Metamask or other) to the desired Bridge platform. Then, just choose the initial network (sending blockchain), the destination network (recipient blockchain) and the token to be transferred. A signature is required at the beginning of the operation so that the user grants access to the wallet’s tokens before the transfer. A second signature may be requested when validating the transaction itself.
When the user wants to restore their tokens on the original blockchain, the similar operation must be performed in reverse order.
Depending on the platforms, all of these operations may incur transfer fees.
There are mainly two types of Crypto Bridges:
- Centralized third-party validation. They are mainly found on blockchains like Avalanche Bridge, Harmony Bridge.
- Being decentralized based on a smart contract or the user does not need a trusted entity. There are untrustworthy bridges (networks of trust) that take over. These include the Polkadot snow bridge.
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In addition, it is also necessary to make a technical distinction between the types of connections allowed by these bridges.
- The layer 1 / layer 1 = connects two blockchains of the same level in between such as Solana and Ethereum for example.
- layer 1 / layer 2 = connects a blockchain like Ethereum to a layer 2 solution like Polygon.
- Value layer 2 / layer 2 = connects two level 2 blockchains such as Optimism and Arbitrum for example.
What are the applications of Bridges?
Despite some data security concerns, Bridges bring many benefits to the crypto ecosystem:
- Extremely fast execution. Some blockchains can suffer from slowness, network congestion, excessive costs at some point. So we can overcome these situations by switching to another blockchain.
- Optimizing the use of its cryptocurrencies. Anyone can transfer assets from one blockchain to another with more usage options.
- The interoperability of blockchains between them allows the user to switch very easily. It also enables developers from different ecosystems to collaborate to build new, increasingly efficient platforms.
- Increased user experience efficiency. Always more options, fewer barriers, costs that can be reduced…
Conclusion: a must in the crypto universe
Over time, the Bridges have become indispensable for connecting two different ecosystems. lThey open up a huge field of possibilities within web3.0 and DeFi. This is why crypto developers are integrating these bridges into their applications to make them multi-chain.
However, keep in mind that: these bridges suffer from vulnerabilities that compromise the security of these protocols. It is still common to discover large-scale hacks through the use of these bridges.