Popular Crypto Bridges and How They Work
Web3 has evolved into an ecosystem of L1 blockchains and L2 scaling solutions, each designed with unique capabilities and trade-offs. As the number of blockchains protocols increases, so does the demand to move assets across chains. To fulfill this demand, we need bridges.
Like the bridges we are familiar with in the real world, blockchain bridges function exactly the same. A blockchain bridge links two blockchain ecosystems, much as a physical bridge does the same for two real locations. Through the transmission of assets and information, bridges enable connection across blockchains.
Introduction
In general, blockchains are not naturally interoperable, which means that assets and data on one blockchain cannot be moved to another. Building crypto bridges between them to enable data and asset transfers is one way that several projects address this issue. Each crypto bridge, however, only links particular blockchains, therefore it is not a generalized solution.
For instance, a team cannot transfer assets from XRP to ETH via a bridge they establish between ETH and BTC. Additionally, only users with crypto wallets capable of using a specific bridge are permitted to utilize that bridge.
What is a Crypto Bridge?
Technology known as “crypto bridges” enables the transfer of digital assets between various blockchain networks. This can help with a number of things, including facilitating cross-chain transactions, using assets across blockchains, and using decentralized apps (dApps) across blockchains.
The tokens, consensus techniques, communities, and governance models of different blockchains vary. Blockchain interoperability is facilitated through a crypto bridge, which enables the transfer of data and digital assets between chains.
Blockchains can also benefit from one another’s strengths thanks to crypto bridges. For instance, since other networks may fill that gap, Bitcoin doesn’t need to restructure its blockchain in order to include smart contracts.
Crypto bridges also make it possible for developers to interact and work together regardless of the network they are using. As a result, protocols can link more readily and expand on the capabilities and use cases of other protocols.
Listed below are three well-known crypto bridges and how they operate:
Cosmos: Powered by the Cosmos Hub, Cosmos is a decentralized network of independent, alternative blockchains. The movement of digital assets between the several blockchains in the Cosmos network is made easier via the Cosmos Hub, a single hub. Pegs, which are unique accounts that hold the transferring assets and enable their transfer between other blockchains, are used to do this.
Polkadot: Polkadot is a blockchain platform that permits the development of decentralized apps (dApps) as well as the exchange of virtual currency between various blockchains. This is accomplished through the use of “parachains,” or separate blockchains linked to the Polkadot network and capable of cooperating with one another. This makes it possible to move digital assets among the Polkadot network’s several blockchains.
The Interledger Protocol (ILP) is a method for transferring money between various ledgers or payment systems. It accomplishes this by creating a “conduit” between the two ledgers that enables value to be transferred between them. The ILP can be used to transfer value between any two systems that support it because it is independent of the underlying ledger or payment system.
Closing Remarks
Crypto bridges increase the interoperability of the cryptocurrency ecosystem, but you should always conduct research to determine which bridge is best for your needs.
It’s important to keep in mind that bridging has no effect on the amount of the desired cryptocurrency that is in circulation. Simply by locking coins on the sending network and creating new tokens on the receiving side, bridges produce wrapped tokens.
Before the original tokens are released on the other side if the wrapped tokens are returned to the native chain, they are burned.
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