Cross-chain Bridge is a tool born out of the need for a more extensive movement within the cryptocurrency ecosystem. Similar to bridges connecting roads and places in real life, cross-chain bridges enable different Layer 2 projects and blockchains to transfer information, data, and crypto assets to one another. Originally, many blockchains had their own unique mechanisms and could not interact, but with cross-chain bridge technology, users can transfer assets from one blockchain to another, aiding in asset integration and promoting the development of a multi-chain ecosystem.

Main Functions of Cross-chain Bridges:

1. Asset Transfer: Through cross-chain bridges, users can transfer cryptocurrencies and assets between different blockchains. For example, transferring Bitcoin (BTC) from the Bitcoin blockchain to the Ethereum blockchain, where it can then be used in a wrapped form (such as WBTC, Wrapped Bitcoin).
2. Data Interoperability: Different blockchain networks have varied data structures and formats, making data sharing between blockchains challenging. However, through cross-chain bridges, smart contracts and applications on different blockchains can communicate and share data. For example, a smart contract on one blockchain can trigger a smart contract on another blockchain.
3. Protocol Compatibility: Cross-chain bridges enable the compatibility of different blockchain protocols, allowing developers to create decentralized applications (dApps) that span multiple blockchains.

Types of Cross-Chain Bridges

Blockchain cross-chain bridges can be categorized into two main types: Trusted Bridges and Trustless Bridges. Each type differs in its trust process, with its own advantages and disadvantages.

1.Trusted Bridges

Trusted Bridges are controlled by centralized entities or operators to achieve interoperability. Users must trust these centralized entities or operators, which comes with both benefits and drawbacks. Compared to trustless bridges, trusted bridges are usually faster, cheaper, easier to access, more developer-friendly, and can be deployed on different blockchains, making them suitable for beginners.

However, because users must entrust the control of their assets to these entities for bridging, this introduces the risk of centralization, where users’ assets and data may be threatened. Well-known trusted bridges include Ronin Bridge, Avalanche Bridge, Harmony Bridge, and BN Bridge.

2.Trustless Bridges

On the other hand, trustless bridges are fully decentralized, meaning users do not need to trust any third party. Instead, cross-chain transactions and data transfers are executed through smart contracts and cryptographic algorithms, with security relying on code and the underlying blockchain. With trustless bridges, users have full control over their funds without needing to trust any specific entity or central authority.

However, trustless bridges require more funds and time to operate, and users need to have a deeper technical knowledge, resulting in higher usage barriers. Notable trustless bridges include Connext Network, Rainbow Bridge, and Hop Protocol.

Cross-Chain Bridge Transaction Methods

1.Lock and Mint

In the lock and mint method, a cross-chain bridge locks native tokens in a smart contract on the source chain, then issues an equivalent amount of wrapped tokens to users on the destination chain. These wrapped tokens serve as IOUs and can be destroyed to redeem the original tokens on the source chain.

This method has an advantage in terms of staking efficiency since it doesn’t require additional staking or liquidity. However, it disperses liquidity on the destination chain by creating multiple wrapped versions of assets, which could pose systemic risks to the destination chain if attacked.

2.Burn and Mint

In the burn and mint method, the cross-chain bridge burns native tokens on the source chain and mints an equivalent amount of tokens on the destination chain. Since this method doesn’t involve wrapping tokens or using automated market makers (AMMs), it doesn’t disperse liquidity or introduce slippage. However, the bridge must have the authority to mint native tokens across multiple chains, which typically applies only to real-world assets (RWA).

3.Cross-Chain Liquidity

Cross-chain bridges can enhance the liquidity of blockchain ecosystems, allowing more assets to flow between different blockchains. This helps improve market efficiency and reduce transaction costs.

Popular Cross-Chain Bridge Projects

Below is a chart showing the top ten cross-chain bridges ranked by transaction volume. Additionally, a cross-chain bridge search tool is recommended to readers. By entering the network you want to bridge to, the system will automatically search for protocols that support that chain.

Source: Bridgeinfo

The top ten cross-chain bridges by transaction volume. (Photo: DefiLlama, June 6, 2024)

Potential Risks of Cross-Chain Bridges

Smart Contract Vulnerabilities: Errors in the smart contract code can lead to hackers stealing funds.

Custodial Risks: Trusting centralized cross-chain bridge operators can result in the theft of user funds.

Transaction Failures: Overloaded or insufficient liquidity pools can cause transaction failures.

Technical Risks: Human errors, software malfunctions, program bugs, and hacking attacks can disrupt user operations and even result in the loss of user funds.

Comprehensive News on Cross-Chain Bridges

Popular Cross-Chain Bridge Projects

April 26, 2024

Guide to Choosing Cross-Chain Bridges in the Multi-Chain Era: Which Projects Are Worth Anticipating for Airdrops?

As the cryptocurrency market returns to the multi-chain era, the demand and importance of cross-chain protocols are increasing. This article introduces the key points for using cross-chain protocols, including cost, speed, and security. Additionally, it recommends nine major cross-chain protocols that not only provide convenient cross-chain functions but also offer opportunities to receive airdrop rewards.

March 29, 2024

Bringing BTC to SOL? A Quick Overview of the Zeus Cross-Chain Bridge Architecture and Tokenomics

Zeus is a cross-chain communication network designed to facilitate permissionless communication between the Solana and Bitcoin ecosystems. The main components of the ecosystem include two DeFi suites, Apollo and Artemis, with Apollo primarily responsible for integrating BTC into Solana.

January 12, 2024

What is the Bitcoin Cross-Chain Bridge “Shell Trade”? Integrating BTC with the Solana Ecosystem and Expanding Support for BRC20

Currently, the construction of BRC20 infrastructure has become a market focus. The upcoming public sale of the BRC20 cross-chain protocol, Shell Trade, aims to bridge Bitcoin and Solana networks seamlessly, potentially initiating a new narrative for BRC20 liquidity.

August 8, 2023

Solving the Cross-Chain Trilemma! Detailed Features of the LayerZero-Based Cross-Chain Bridge “Stargate”

Stargate Finance is a multi-chain cross-chain bridge protocol based on LayerZero, established by LayerZero Labs in March 2022. It is the first DApp based on the LayerZero protocol and enables asset transfers between multiple blockchains.

Cross-Chain Bridge Hack Incidents

January 1, 2024

Orbit Bridge Hacked for $81.5 Million, Orbit Chain Ecosystem Plummets

According to Twitter user Kgjr, Orbit Bridge was hacked, with approximately $81.5 million in tokens transferred out in five suspicious transactions, each into a new wallet.

July 7, 2023

Multichain Cross-Chain Bridge Suffers $126 Million Outflow, Suspected of Another Attack

Within two months, the cross-chain protocol MultiChain experienced another crisis with a massive outflow of tokens from several bridges, totaling approximately $126 million. The largest outflow was $122 million from the Fantom Bridge, leading some users to sell their assets at a discount through DLN Trade.

Cross-Chain Bridge Security Issues

September 7, 2023

Frequent Failures of Multi-Signature Cross-Chain Bridges: How to Mitigate Centralization Risks and Improve Security?

ZKBridge, Optimistic Bridge, and TEE Bridge are promising solutions aiming to build more trustless cross-chain bridges, reducing centralization risks and improving security. However, ZKBridge and Optimistic still face performance sacrifices and scalability limitations, while TEE-Bridge is vulnerable to collusion attacks.

August 11, 2023

Bankless: Why Are Cross-Chain Bridges So Fragile? Understanding the Security of Three Verification Methods

The collapse of Multichain has highlighted the vulnerability of cross-chain bridges. This article delves into the three most common verification systems currently used by cross-chain bridges, examining the pros and cons of each.

October 11, 2022

Vitalik Buterin Warned About Cross-Chain Bridge Security Issues! Reflecting on the BNB Bridge’s $560 Million Incident

At the end of March this year, Axie Infinity’s cross-chain bridge hack for $600 million is now history. However, incidents still occur with various “bridges.” Recently, the BNB Chain BSC cross-chain bridge was hacked, resulting in $560 million worth of BNB being minted out of thin air. BNB Chain had to pause to resolve the issue.

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