How does bridging work?

Tixl Explained Series is here to make your Crypto journey easier! Get ready for bridging as this is and will be a major part of crypto!

To start: A blockchain bridge is a connection that allows the transfer of tokens from one chain to another; a bridge connects the two worlds.

Technically, a token from a network can never leave that blockchain. However, there are different ways to emulate this.

Option 1: The tokens that are supposed to leave network A are getting locked in a smart contract in network A. And a related smart contract in network B mints/creates the same amount of tokens in network B. If a user wants to go back from network B to network A, the tokens of network B are getting burned and the tokens on network A are unlocked.

Option 2: There are liquidity pools for each token in each network (A, B, C, etc) that is supported by the bridge. The liquidity is provided by projects and/or users who will be rewarded with a portion of the bridging fees for enabling this service. If a user wants to bridge from network A to network B, the user’s tokens are sent to the liquidity pool of network A and in exchange the user gets the same token out of the liquidity pool in network B.

Tixl’s Cross-Chain Bridge v2.0 will work with option 2, liquidity pools, as this is safer, less risky for hacker attacks and can be combined with many interesting DeFi features.

For NFTs, bridging works differently as no one can provide “liquidity” or each token is unique & cannot be replaced by another, respectively. If a user wants to bridge from network A to network B, this works with option 1. The NFT is getting locked in network A and Tixl’s Cross-Chain Bridge v2.0 will mint a duplicate of the NFT in network B. That’s also the reason why Tixl cannot bridge any NFT collection but only the ones that are whitelisted (=for which the bridge either has minting rights in the duplicate contract in network B, C, D… or the bridge completely “owns” the contract).