What are Blockchain Bridges or How to Connect Different Blockchains

How to connect blockchains and retain decentralization

6 min readMay 15, 2022

Blockchain has come a long way as we witness its implementation in most sectors. It promises decentralization and a better governance model. However, as the number of blockchain networks grew, it became difficult to work together. It not just limits the concept of decentralization but also hinders economic growth. Each blockchain is defined by its domain walls, leading to high transaction costs and congestion.

Bridges are built between networks to allow applications to build on each other’s services and strengths.

Key Takeaways

A blockchain bridge enables smart contracts and data exchange between independent platforms.
A bridge allows for cheaper, faster, and easy access to the decentralized finance (DeFi) space.
Bridges fall under two categories: trusted and trustless bridges.
Bridges pose software failure, smart contracts, censorship, and custodial risks.

Blockchain Bridges

A blockchain bridge solves the existing problem by enabling exchange of tokens and data between different blockchains and other independent platforms. A bridge provides a compatible way to interoperate securely when both chains have different protocols, rules, and governance models. Although bridges open up new market possibilities, they also come up with several security challenges.

Example: Suppose you want to send one Solana coin to an Ethereum wallet. Since Solana and Ethereum are two different blockchains, there is no easy way to make such transfer. However, you can use a bridge such that your Solana coin will be transferred from Solana blockchain to your wallet on an Ethereum blockchain, where the Solana coin will be “wrapped” by the bridge in an Ethereum supported ERC-20 standard.

Why use a blockchain bridge?

When one tries to port assets from one blockchain to another, one can see its benefits. It could be cheaper, faster, and easy access to the decentralized finance (DeFi) space. The bridges enable DApps to access the strengths of various blockchains and space for developers of different ecosystems to interact and build new platforms. Hence, bridges connect blockchains to allow the transfer of information and tokens.

Investors also use bridges to make the most of markets — Orca is available on the Solana blockchain but supports a wrapped version of ETH. Technological advancements are making it easier to use bridges. Some protocols enable people to swap their tokens from different protocols by integrating bridge functionality.

How do Blockchain Bridges work?

Although bridges can convert smart contracts or send data, the token transfer is essential. Let’s understand this with an example.

Example: Suppose you want to transfer Bitcoin to Ethereum. A blockchain bridge will hold your coin and create equivalents in ETH. In short, BTC gets locked in a smart contract while you gain ETH. When you want to convert back to BTC, the ETH will burn, and your wallet will receive BTC.

However, the process will incur more fees when you convert BTC to ETH. It is similar to using your Visa to pay for your MasterCard bills. It helps to make transactions fast, seamless, and interoperable.

What are the use cases of Bridges?

Promote Scalability

Processing many transactions is often a bottleneck for more extensive blockchain networks like Ethereum, resulting in delays and hindering operations. A bridge takes off the pressure to move tokens to another blockchain using a sidechain. It contributes to the growth of DEXs and DeFi applications. Also, bridges help to use DApps on their blockchains by choosing the platform of your choice for optimizing returns and lowering your overall costs.

Read about how the growth of DeFi has made the need for Blockchain Bridges paramount.

Lower transaction fees

Blockchain bridges help lower transaction costs significantly and enable developers to opt for a blockchain that charges less than the original one. Users can easily bridge ETH from the mainnet to layer 2 (L2) rollup to explore different DApps. Bridges also help build connectivity between two or more blockchains for frictionless data and tokens.

Unraveling of smaller blockchains

As information and tokens can move to less known networks at a lesser cost, bridges help to bring such smaller blockchains to the limelight. It makes people aware of the emerging blockchains and helps expand the crypto ecosystem. Bridges also help to explore blockchain ecosystems as one can explore an alternative layer 1 (L1) by transferring your ETH from Ethereum Mainnet to the alternative L1 via a bridge.

Own native crypto assets

You might not have $xyz crypto at times but shall have $abc crypto. Although you can also use a centralized exchange to swap your funds, it would require more time if your $abc isn’t available on your centralized wallet.

Example: Polkadot allows BTC transfer to Ethereum through a bridge running as a parachain on Polkadot that may have collators monitoring and translating the information between the Polkadot Relay Chain and an external chain. Another parachain bridge working makes it possible to build a custom user interface to interact with these bridges. Users can swap their BTC to participate in a DeFi smart contract on Ethereum via Polkadot.

What are the different types of Blockchain Bridges?

Broadly, bridges fall under two categories: trusted and trustless bridges. As the name suggests, trusted bridges depend upon a central system for operations, while trustless bridges operate without human intervention using smart contracts and zero knowledge algorithms.

While people mostly rely on the bridge operator’s reputation in trusted bridges, the bridge’s security is identical to that of the underlying blockchain in a trustless bridge. In short, trustless bridges are trust-minimized, while trusted bridges have trust assumptions. It also makes trust-based bridges fast and economical when you plan to transfer a large amount of crypto.

Also, users have full access to their funds in trustless bridges, while the control of assets is in the hands of operators in trusted bridges. A trustless bridge will provide complete peace of mind if you are worried about your crypto falling into the wrong hands. Many bridging solutions adopt models between these two extremes with varying trustlessness.

Example: Binance Bridge is a famous decentralized bridge that offers one of the largest tradable cryptocurrencies. AnySwap enables you to view all of your balances across different coins and transfer balances from one place to another.

What are the potential risks of using Bridges?

As bridges are in the early stages of development, they are prone to several risks because of no optimal design. Bridges pose smart contract risk as the users shall lose funds due to a bug in the code, a software failure that can drain the assets, human errors, attack of malicious actors, censorship risk, and custodial risk. All such possibilities can lead to a bridge being hacked and hence loss of funds.

One recent hack was on the Ronin network, where hackers made off with $540 million worth of Ethereum and USDC stablecoin. In another attack, hackers stole about $80 million worth of cryptocurrency from Qubit Bridge at the end of January 2022.

Read about the $326 million exploits on the nascent Wormhole bridge.

Wrapping Up

Decentralization has always been a clarifying factor of blockchain, making it a priority over other operative improvements. The bridges depict a positive sign as they are crucial to onboarding users onto Ethereum L2s and even users who want to explore different ecosystems. We may be inching toward a normalized crypto economy, but progress is better than limiting ourselves to what already exists.