WTF is a bridge?
If you’ve been following Bebop, you’ll know that trading on Ethereum has been available for a select group of whitelisted users since June 2022. But Bebop recently expanded to Polygon for our public launch in November 2022 and to Arbitrum in January 2023. It seems only natural that with our expansion to L2 blockchains, we write a little bit more about decentralized finance as a whole. Beyond just Ethereum.
Approaching DeFi without any background is tough. The landscape is fragmented. It lacks user-friendly interfaces and, as you dive deeper into the weeds, there aren’t many easy-to-find sources of truth for the answers to your questions. We get it.
Most DeFi users begin their journeys on Ethereum but, as they gain more exposure, they realize the chain’s issues with scalability. Ethereum can be expensive. As demand has increased, so have the network fees associated with each transaction. The next step for most users would be to explore other, faster and cheaper blockchains like Polygon or Arbitrum. But how do you even start? Cross-chain interoperability is a phrase commonly thrown around in crypto. But what does it mean? And, finally, wtf is a bridge?
What is a bridge?
If you’ve read our post “what are all these blockchains?” you hopefully understand, at least at a high level, how vast the range of cryptocurrency networks is — but wtf is a bridge and why do we need them? You’ll hear again and again that one of the biggest issues facing DeFi is cross-chain interoperability. In this, we mean that each of the blockchains we covered live in isolated environments and tokens cannot be freely moved between chains. Even between an L1 and L2 built on that parent chain, you will need to use a bridge to move tokens between the ecosystems. Because of this, bridges have been developed to enable this interoperability and to allow users to transfer information/assets between networks.
Just like a physical bridge provides infrastructure for passing over obstacles, a blockchain bridge connects the gap and provides passage between chains. To do this, the bridge creates a synthetic asset that is on the chain that you are trying to move your assets to. Have you ever had to use wrapped ether (WETH) instead of ETH? Well, similarly, the bridge is wrapping that asset for you to make it compatible with another chain.
In DeFi, we’re primarily talking about non-custodial bridges. This means that you do not need to trust a centralized intermediary with your funds. Non-custodial bridges are smart contracts that are written for the purpose of moving your assets. The assets are typically frozen in the smart contract (or burned) and your wallet is transferred a copy of that asset on the network that you are bridging to.
Try out trading on Polygon or Arbitrum with Bebop! We would recommend starting by bridging funds from Ethereum to the respective blockchain either via the Polygon Bridge or Arbitrum Bridge. To do this, you’ll need to connect a compatible wallet, select the currency you would like to move, and to continue the steps through the transfer. You can watch some videos on how the Polygon bridge works here.
Note: Don’t be alarmed if bridging is taking you longer to process than you’re used to with a normal transaction. While deposits are typically quicker, withdrawals can commonly take anywhere from 45 minutes to 3 hours.
Exercise caution with bridges
While bridges have opened the doors for users to trade and interact across a number of different chains, they do not come without their own risks. Bridges can be vulnerable to exploitation.
In one of the most recent scandals this August 2022, the Nomad Bridge was hacked and over $190M was stolen. While some of the funds were returned, the majority is still missing. Similarly, the Solana Wormhole Bridge (now Portal Bridge) was hacked in February 2022, resulting in a $326M loss and leaving a number of wallet addresses exposed.
Why are bridges so susceptible to hacks? Well, this is a question for any smart contract that you interact with. In DeFi, your funds are your responsibility. It’s important to follow any directions carefully to avoid any user errors. Smart contracts themselves are prone to bugs like any other code and, if someone finds a way to exploit these vulnerabilities, chances are there are some bad actors will.
Bridge operators themselves can have malicious intent. For this reason, we urge you to use caution on bridges and with any protocol in DeFi. If your funds are being held or locked in a smart contract, the risk increases. While these inherent risks exist, thoughtful codes and audits can help mitigate them.
Bebop takes your security seriously — our smart contracts have been audited by both Certik and Quantstamp, leaders in blockchain security. We also do not lock any funds in contracts beyond the settlement window. Use your best judgment and do your research to make sure that the bridge is trustworthy. Read about the bridge on Twitter, Medium, or even Reddit posts. If there is one thing that we’ve learned about crypto, it’s that the community aspect is strong — reach out and ask questions if you’re uncertain about anything.
Bridges are a vital part of the DeFi ecosystem and there are many smart teams working on making the bridges better, faster, and more resilient. Don’t let the newness or unfamiliarity of DeFi scare you away.
Try it out on Bebop
Right now Bebop is open for trading on both Polygon, Arbitrum, and Ethereum. To get started, why not bridge some assets via the Polygon or Arbitrum Bridge and try trading with Bebop! Head over to bebop.xyz to get started!
Stay tuned for announcements and surprises on Twitter and join our Discord to stay connected with the community.
