Cross-chain Bridges: Crossbeams to the Future

The best-known public blockchains are, without a doubt, Ethereum and Bitcoin. A public blockchain is a blockchain that everyone has access to because it is open-source and completely transparent. In addition, the network makes sure that the work is done correctly. The rules are embedded in a consensus mechanism, which is different for each blockchain. The latter ensures that, in theory, different blockchains cannot work together. After all, they are built with different rules and protocols, making it impossible to move tokens or other assets from one blockchain to another.

However, we now have a tool that makes this possible. Thanks to cross-chain bridges (cross-networks), communication between blockchains is improved, and many new possibilities emerge.

This article will explain what cross-chain bridges are, how they work, and why the deBridge cross-chain interoperability and data transfer protocol is an excellent example of such a solution.

What are cross-chain bridges?

Cross-chain bridges provide interoperability between different networks and can connect different blockchains such as Bitcoin or Ethereum. What is unusual is that this is possible because these blockchains are not in principle compatible to work with, let alone make a transaction on a Bitcoin blockchain that is sent to an Ethereum blockchain.

This interoperability has great practical value, such as transferring tokens, data, and even smart-contract instructions between different platforms. You can also use cryptocurrencies running on one blockchain and move them to other dApps on another blockchain. This opens up an incredible number of new possibilities that we couldn’t have imagined before.

Suppose you have assets running on a blockchain with high fees because that blockchain is not scalable enough. Now you can move them to another scalable blockchain. That way, you end up paying lower transaction costs, and the transaction can be processed much faster.

These conveniences also apply to the so-called mainchain, and subsequent blockchain called sidechain, which can work with different consensus algorithms or take advantage of the security of the mainchain. This mainly applies to Ethereum-based blockchains.

What are the advantages of cross-chain bridges?

Let’s look at the main advantages of cross-chain bridges to clarify why you can’t do without them. Below we have listed the most important benefits:

• Reduced cost and efficiency. In general, users benefit greatly because, with bridges, it is easy to use different blockchains and always have a choice; for example, in terms of the cost of transactions — it becomes cheaper. The possibilities are getting more expansive, and the barriers between blockchains are getting lower, and this only improves the user experience.
• Interoperability and system flexibility. Blockchains are becoming compatible with each other, and for users, it is easy to move from one blockchain to another. Recall that, traditionally, networks cannot communicate with each other, let alone move tokens from one blockchain to another that does not support such tokens.
• Increased scalability. This impressive innovation brings more liquidity (especially for WBTC) and more solutions. Developers now don’t have to create new programs — you can implement a bridge to make your blockchain more diverse.
• Leveraging the full potential of cryptocurrencies. Bridges allow you to move assets that have no blockchain application to a blockchain with multiple options and applications for decentralized applications. That way, you can get the most out of almost any digital asset.
• Accelerating mass adoption. As blockchain technology becomes more accessible and easier to use, we are seeing crypto-assets being adopted by the community at an increasing rate. In the best-case scenario, this could lead to higher prices for cryptocurrencies as they are used more frequently, causing an increase in demand.
• More DeFi-applications. If we “make” DeFi-applications work together between different blockchains, we will see that developers will be able to create more and more user-friendly applications. After all, it will be possible to use additional functionality. Financial products that currently work centrally can be translated into a decentralized version of the same product much more easily and quickly. Over time, this will increase the DeFi marketplace’s value even more.

How do cross-chain bridges work?

We have already figured out that when a user wants to transfer assets from one blockchain to another, they must use a bridge. Note that this is not a simple task from a technical point of view.

The following are the steps that are taken when someone wants to transfer assets from one blockchain to another:

1. Assets are locked or “frozen” on the blockchain on which they reside using a smart contract (or another mechanism). A prerequisite is that the blockchain supports smart contracts.

2. Once these assets are locked on the new blockchain, new corresponding tokens are created. When the user wants their original assets back, they ask to burn the assets they own to release the original assets.

This process is widely used in this type of procedure (e.g., wrapped bitcoin (wBTC)). This prevents assets on both blockchains from being used simultaneously. As such, Double Spending attacks are eliminated. In addition, it is possible to move all assets from one blockchain to another without intermediaries.

Wrapped Bitcoin and related projects such as imBTC and HBTC are based on the same principle and allow using BTC in the Ethereum network and leveraging it for decentralized applications. Examples include Aave, Compound or MakerDAO.

Cryptocurrency wallets now offer cross-chain solutions as well. MarsDAO Wallet (Telegram-based cryptocurrency wallet by MarsDAO) is a multifunctional cryptocurrency wallet, the main priorities of which are convenience, speed, privacy, anonymity and data security. MarsDAO Wallet offers users a convenient USDT Bridge service, allowing them to exchange their USDT from one network to another.

Now, what does this have to do with deBridge?

deBridge is a protocol for cross-chain interoperability and liquidity transfer that enables the decentralized transfer of data and assets between different blockchains. This protocol can transmit any information or transaction data to be executed on the final blockchain, making cross-network calls between smart contracts and creating a new generation of cross-chain protocols and applications that were not possible in the past.

The deBridge infrastructure is currently available in Ethereum, BNB Chain, Huobi Eco Chain, Arbitrum, Avalanche, Fantom and Polygon.

The deBridge protocol was created to solve the problem of liquidity and technology fragmentation. It is a unified standard in which inter-network transfers and swaps between any blockchain can be performed from a single interface.

The market will soon see the product of the deBridge Protocol and MarsDAO collaboration — a cryptocurrency index for investments. The new product, as part of the MarsDAO ecosystem, will cover major cryptocurrency market assets and offer traders multiple trading options. MarsDAO’s crypto index is being developed as a cross-chain bridge based on the deBridge protocol.