What Are Crypto Bridges? A Complete Guide to Blockchain Interoperability

Interoperability between completely different siloed blockchains has been a significant problem within the crypto house. Nonetheless, cross-chain crypto bridges are rising as a robust answer, enabling customers to switch digital belongings and data seamlessly from one blockchain to a different. On this information, we'll discover what crypto bridges are, how they work, the several types of crypto bridges, and the dangers related to them.

What are Cross-Chain Crypto Bridges?

Cross-chain crypto bridges, also called blockchain bridges, are protocols that join two or extra blockchains, permitting for the switch of belongings and knowledge between them. Consider a crypto bridge as a intermediary that facilitates token transfers between two completely different and beforehand remoted blockchain ecosystems. This was not beforehand possible for the common consumer.

One other relatable instance of that is utilizing SOL tokens on the BNB Chain. With a crypto bridge, you'll be able to bridge the native SOL token from the Solana blockchain to the BNB chain. One other well-liked utility is shifting BTC from the Bitcoin blockchain to the Ethereum blockchain, the place it may be used within the type of Wrapped BTC (wBTC) or (cbBTC) for varied DeFi functions and to earn additional yield.

Whereas we at CoinSutra have mentioned the idea of cross-chain crypto bridges for years, it's solely lately that they've change into prepared for mass adoption. The rise of well-liked blockchains like Solana, Arbitrum, and Avalanche, which have captured important market share, has elevated the demand for functions that allow cross-chain bridging.

How Do Cross-Chain Bridges Work?

A cross-chain crypto bridge sometimes works by locking the native token of a blockchain in a wise contract after which minting a corresponding wrapped token on the goal blockchain. For example, if you wish to transfer BTC from the Bitcoin blockchain to the Ethereum blockchain, the unique BTC is locked in a wise contract on the Bitcoin community. The cross-chain bridge utility then mints an equal quantity of Wrapped BTC (wBTC) on the Ethereum blockchain. You'll be able to then use this wBTC freely inside the Ethereum ecosystem. Anytime a consumer holding wBTC needs to transform it again to BTC, they will use the crypto bridge to take action.

Word: You will need to use the trusted crypto bridges and guarantee in case you are minting a token on one other blockchain, it's broadly accepted. Be particularly cautious with high cryptocurrencies like Bitcoin, Ethereum and so forth.

In case you've been within the crypto house for some time, you might need used a centralized change like Binance, Bybit or Kraken to maneuver your USDT freely between completely different blockchains. On these exchanges, you'll be able to deposit or withdraw USDT on a number of blockchains. Nonetheless, as DeFi turns into extra user-friendly, many customers favor to not work together with centralized exchanges for blockchain bridging.

Due to technological developments, there are actually many high-quality and near-instant cross-chain crypto bridges that lets you bridge tokens from one blockchain to a different with decrease charges than a centralized change. Severely, approach lower fees than using a centralized exchange.

Kinds of Crypto Bridges

There are three major forms of crypto bridges:

Lock and Mint: On this mannequin, a wise contract locks the native token on the supply blockchain, and a corresponding wrapped token is minted on the vacation spot blockchain. If you wish to reverse the method, the wrapped token on the vacation spot chain is burned to launch the unique token on the supply chain.
Burn and Mint: With one of these bridge, a consumer burns tokens on the supply chain, and the bridge then mints new tokens on the vacation spot chain. That is usually used when a protocol decides emigrate its token to a brand new blockchain, permitting customers to burn their present tokens and mint new ones on the brand new chain.
Lock and Unlock: On this mannequin, no tokens are burned or minted. As a substitute, a token is locked on the supply chain, which then unlocks the identical native token on the vacation spot chain. This methodology is often used to extend capital effectivity and entice new liquidity.

Crypto Bridge Hacks: A Main Problem

Whereas utilizing any technology in the blockchain realm, it's essential to pay attention to the dangers. The most important danger to any decentralized utility is the hacking of its smart contracts. Decentralized crypto bridges usually are not resistant to this, and quite a few notable hacks have occurred prior to now. Particularly when this expertise was nascent and protocols didn't have sufficient funding for safety audits, these hacks had a devastating impact on the crypto business.

Chainalysis reported that by 2022, roughly $2 billion in cryptocurrency had been stolen throughout 13 separate cross-chain bridge hacks. The scenario has not improved a lot since then. In response to a 2024 Chainalysis report, a staggering $2.2 billion was stolen in crypto-related hacks in 2024 alone, with a good portion of that coming from bridge exploits.

Listed below are among the most important crypto bridge hacks:

Ronin Community: $625 Million Hack (March 2022)
Wormhole: $326 Million Hack (February 2022)
Nomad: $190 Million Exploit (August 2022)
Binance Bridge: $100 Million Hack (October 2022)
Concord: $100 Million Hack (June 2022)

Bridge vs. Cross-Chain Swap: What's the Distinction?

It's essential to know the excellence between a cross-chain bridge and a cross-chain swap. Whereas a bridge merely transfers the similar asset from one blockchain to a different (e.g., ETH on Ethereum to WETH on Polygon), a cross-chain swap lets you swap completely different belongings throughout two blockchains in a single transaction (e.g., ETH on Ethereum to SOL on Solana).

Cross-chain swaps are usually quicker, extra handy, and less expensive than utilizing a bridge after which a decentralized exchange (DEX) to carry out a swap.

EVM vs. Non-EVM Bridges

Crypto bridges can be categorized based mostly on the forms of blockchains they join: EVM (Ethereum Digital Machine) and non-EVM.

EVM-compatible chains embody Ethereum, BNB Chain, Polygon, Avalanche, and Arbitrum. Bridges connecting these chains are usually simpler to construct as a consequence of their shared technical requirements.
Non-EVM chains embody Bitcoin, Solana, Cosmos, and Polkadot. Bridges connecting EVM and non-EVM chains are extra complicated to develop as they should reconcile completely different technical architectures.

The Rise of Bridge Aggregators

With the proliferation of crypto bridges, a brand new sort of service has emerged: the bridge aggregator. Just like how DEX aggregators discover the perfect costs for token swaps, bridge aggregators search throughout a number of bridges to search out essentially the most environment friendly and cost-effective route on your cross-chain transfers. This protects you the effort and time of manually evaluating completely different bridges and their charges.

High Crypto bridges

We are going to do a deep dive into the highest bridges for crypto in an upcoming article.

For now, here's a fast record of the highest trusted crypto bridges with excessive quantity.

Conclusion – Cross-chain crypto bridges for newbie

Cross-chain crypto bridges are a significant element of the evolving multi-chain panorama, enabling larger interoperability and liquidity throughout the crypto ecosystem. Whereas the expertise has confronted important safety challenges, ongoing enhancements and the emergence of bridge aggregators are making cross-chain transfers safer and user-friendly. Because the crypto house continues to broaden, bridges will play an more and more essential position in connecting disparate blockchains and unlocking new prospects for decentralized finance.