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. Nevertheless, cross-chain crypto bridges are rising as a strong 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 various kinds of crypto bridges, and the dangers related to them.

What are Cross-Chain Crypto Bridges?

Cross-chain crypto bridges, often known as blockchain bridges, are protocols that join two or extra blockchains, permitting for the switch of belongings and information 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 typical consumer.

One other relatable instance of that is utilizing SOL tokens on the BNB Chain. With a crypto bridge, you possibly can bridge the native SOL token from the Solana blockchain to the BNB chain. One other fashionable software is transferring 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 numerous 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 not too long ago that they’ve grow to be prepared for mass adoption. The rise of fashionable blockchains like Solana, Arbitrum, and Avalanche, which have captured vital 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 software then mints an equal quantity of Wrapped BTC (wBTC) on the Ethereum blockchain. You may 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.

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

When you’ve been within the crypto house for some time, you might need used a centralized trade like Binance, Bybit or Kraken to maneuver your USDT freely between completely different blockchains. On these exchanges, you possibly can deposit or withdraw USDT on a number of blockchains. Nevertheless, as DeFi turns into extra user-friendly, many customers want to not work together with centralized exchanges for blockchain bridging.

Because of technological developments, there at the moment are many high-quality and near-instant cross-chain crypto bridges that permits you to bridge tokens from one blockchain to a different with decrease charges than a centralized trade. Critically, approach lower fees than using a centralized exchange.

Sorts 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. Whenever 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 any such 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 technique is usually used to extend capital effectivity and appeal to 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 threat to any decentralized software is the hacking of its smart contracts. Decentralized crypto bridges aren’t resistant to this, and quite a few notable hacks have occurred up 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 trade.

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 keeping with 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 a few of 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 permits you to 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 more cost effective than utilizing a bridge after which a decentralized exchange (DEX) to carry out a swap.

EVM vs. Non-EVM Bridges

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

EVM-compatible chains embrace Ethereum, BNB Chain, Polygon, Avalanche, and Arbitrum. Bridges connecting these chains are usually simpler to construct as a result of their shared technical requirements.
Non-EVM chains embrace 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 kind of service has emerged: the bridge aggregator. Much like how DEX aggregators discover one of the best costs for token swaps, bridge aggregators search throughout a number of bridges to search out probably 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.

Prime 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 an important element of the evolving multi-chain panorama, enabling better interoperability and liquidity throughout the crypto ecosystem. Whereas the expertise has confronted vital 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 develop, bridges will play an more and more essential function in connecting disparate blockchains and unlocking new prospects for decentralized finance.