What is a Blockchain Bridge? Examples + Purpose for Blockchains

A sidechain, or child chain, is a secondary blockchain that is linked to the main chain, or parent chain, allowing assets to be exchanged at a fixed rate between the parent and sidechain. Blockchain bridges work just like the bridges we know in the physical world. Just as a physical bridge connects two physical locations, a blockchain bridge connects two blockchain ecosystems.

With a liquidity pool, a cross-chain bridge provider holds inventory — or pools — of various coins where one can be exchanged for another. As the demand for different blockchain-based Web 3.0 technologies continues to grow, so too does the need to enable interoperability. Blockchain technology has come a long way since 2008 when the Bitcoin white paper was published. Since then, an explosion of blockchain networks have been created, with a huge variety of designs and intended functionality. Since the light client on the target blockchain can reference previous block headers, it can verify that the proof-of-work confirming the transaction was executed correctly.

How Does a Blockchain Bridge Work?

Formerly known as Fantom Anyswap, Multichain positions itself as a cross-chain router protocol, enabling the flow of data and assets across different blockchain networks. No other cross-chain bridge service supports as many token types as Multichain. For Bitcoin, which is perhaps the most well-known cryptocurrency, the most common bridge is with the use of Wrapped Bitcoin (WBTC). Wrapped Bitcoin is sometimes referred to as a blockchain bridge, as it enables Bitcoin as an ERC-20 token — a token specification that is supported on many other blockchains. The internet is a revolutionary system partly because of its high interoperability.

Blockchain bridges by mechanism are divided into (unidirectional) and two-way (bidirectional). A one-way bridge means users can only connect assets to one target blockchain but not back to its blockchain. One of the Portal Token Bridge’s strongest features is its selection of supported blockchain, which is among the largest among all cross-chain bridges.

Custodial Blockchain Bridges

Burn & Mint bridges bear many resemblances to lock and mint bridges but are non-reversible. Upon bridging tokens, the original tokens on chain A are sent to a burn address, and new tokens are issued on chain B. Should a user want to bridge the tokens back to chain A, the tokens once again go through a burn and mint process. Custodial bridges have higher security qualifications and are less likely to be hacked or exploited. As with every custodial solution in cryptocurrency, the bridge must be highly reputable and trusted. The downside of trustless blockchain bridges is that the increased complexity increases the attack vectors, as illustrated by two massive hacks in early 2022.

Just like a physical bridge connects two physical locations, they connect two different worlds of blockchains running on similar or other protocols. Bridges help extend «distributed ledgers» beyond the local boundaries of the mesh network, building invisible interconnections. Unfortunately, blockchain bridges have been the target of several hacks in recent years. In some cases, there hundreds of millions worth of crypto assets were stolen. We recommend that you exercise caution when transferring tokens with bridges, and you shouldn’t bridge more tokens than you can afford to lose in case the worst-case scenario does happen. It’s important to mention that blockchain bridges have unfortunately been a very popular target for exploits.

Lower transaction fees

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. A blockchain bridge overcomes this obstacle to allow blockchain networks to transfer data and tokens with other outside networks. Blockchain bridges do this by using wrapped tokens to mimic the characteristics of the target token in a different network. A blockchain bridge will wrap that Bitcoin and lock it in a smart contract. At the same time, the blockchain bridge generates the same amount of wrapped BTC in the Ethereum network.

Overall, the Portal Token Bridge is a great choice if you’re active on many different blockchains and would like to keep all your bridging under one roof. Porting tokens cross-chain can help solve scalability issues related to high demand. In 2017, the first blockchain game of sorts, CryptoKitties, was released to the public. Due to extremely high demand and Ethereum’s network limitations at the time, the network ended up congested. The ability to port tokens from a congested or high-fee blockchain to a high-performance blockchain can be revolutionary.

What is the fastest blockchain bridge?

It provides a sleek user interface, and also provides estimates for slippage, gas costs so you’ll be able to tell how many tokens you’ll keep once the bridging is completed. You can also set your slippage tolerance before making a transaction in order to avoid losing too much value. The Portal Token Bridge is a cross-chain bridge for crypto that’s based on the Wormhole protocol. When using this bridge, the tokens you are sending are locked using a smart contract, and an equivalent amount of wrapped tokens is created on the destination chain. The Synapse Protocol is the backbone of the Synapse Bridge, which is one of the most popular blockchain bridges on the market today. One of the reasons for its popularity is that Synapse Bridge supports a wide variety of blockchains, including EVM and non-EVM chains.

Attackers took advantage of smart contract vulnerabilities in some bridges. Attackers from the bridges have misappropriated vast amounts of cryptography. According to decentralized finance tracker DeFi Llama, Synapse Protocol has a TVL (total value locked) of about $107 million at the time of writing. Users can partly avoid custodial risk by verifying the custodial bridge’s reserves via proof-of-reserves.

Advantages Of Blockchain Bridges

The bridge would employ a mint-and-burn mechanism to limit the number of tokens available, the bridge would employ a mint-and-burn mechanism. The amount will be deducted according to the minting fees of the bridging solution. User X is in a quandary if they wish to pay user Y for something, but Ethereum only takes ETH. Due to the interoperability provided by bridging solutions, they can still buy ETH or convert part of their BTC into ETH.