Blockchain bridges

Blockchain networks are like islands with their own communities and economies

They can’t exchange information or value with the outside world. The siloed nature of today’s blockchain networks goes against the principle of decentralization.

Generally, applications designed for one network only work within that network, limiting their potential for broader adoption.

As blockchain technology matures, several projects are addressing this problem by building “bridges” between networks. Applications such as (

DeFi⁠

) will benefit from increased liquidity and the ability to build a network of services that interact with each other across communities, increasing their user base and expanding the resources available.

What Is a Blockchain Bridge?

A blockchain bridge is a connection that allows the transfer of tokens and/or arbitrary data from one chain to another. Both chains can have different protocols, rules and governance models, but the bridge provides a compatible way to interoperate securely on both sides.

There are many different designs for bridges, but they can generally be divided into two camps: more centralized bridges that rely on trust or federation, and so-called “trustless” bridges that are more decentralized. Centralized bridges rely on some type of central authority or system to operate, meaning that users are required to place trust in a mediator to use a given app or service.

By contrast, trustless bridges are those in which users don’t have to place trust in a single entity or authority. Rather, the trust is placed in the mathematical truth built into the code. In a decentralized blockchain system, this truth is achieved by many computer nodes reaching a common agreement according to the rules written into the software. This removes many of the problems of centralized systems, which are open to corruption or abuse of power, by using transparency and incentivization of widespread participation.

Bridges can be created to suit various purposes. They are not only capable of enabling a token on one network to be used on another network, they can also be built to exchange any type of data, including smart contract calls, decentralized identifiers, off-chain information from oracles such as stock market price feeds and much more. For example, a chain anchoring verifiable credentials on Polkadot could be used for KYC (Know Your Customer) requirements by a gaming company built on Ethereum. Bridges allow applications to be even more decentralized, as they are no longer limited by their network of origin.

What is a cross-chain bridge?

Bridges allow for the sharing of valuable data and traffic between the many blockchains and layers. More clearly put, with a bridge, someone in Chain A can receive data from Chain B and back, achieving what is known as interoperability. Users don’t need to hesitate to start on one chain if it’s just as easy to access protocols, information, and value from any other chain.

How do bridges work?

The total amount of circulating tokens remains the same but is split between the two chains, in this case, Chain A and Chain B. If Chain A had ten tokens and then sent five over to Chain B, Chain A would still have ten tokens (five locked), but an additional five of them would be minted on Chain B. If at any point the holder of the minted tokens wants to redeem them, they can burn them from Chain B and unlock them on Chain A. Since Chain A always had a locked copy of the token, the token’s value stays consistent with the chain A market price. This lock-and-mint/burn-and-release process is how the amount and cost of the tokens sent between the two chains remain the same.

Bibliography:

https://medium.com/chainsafe-systems/bridges-in-crypto-space-12e158f5fd1e⁠

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