Bridges

Bridges are tools that allow you to transfer your data or assets from one network to another within a network. If you want to use your Ethereum network Ether on the Avalanche network, you can do so through bridges. Bridges are used because the assets between networks are incompatible. Understanding and exploring different DeFi protocols and taking advantage of opportunities in other networks with our existing assets is desirable. Bridges play a crucial role in enabling interoperability between different blockchain networks. They work by establishing communication channels between two blockchain networks. Just like in the real world, there are multiple ways to facilitate communication in the blockchain world. Hence, there are multiple bridges using different methods. In an ideal world, blockchains would communicate only with each other, but in reality, this is not feasible. So, how do bridges address the incompatibility between networks, and how many types of bridges are there? Let's take a look.
Trusted Bridges (Centralized):
These are bridges that rely on trust. When using these bridges, you are entrusting control of your assets to a centralized system. The reliability of these bridges depends on the reliability of their operators. Although multiple verifiers are required for security, the assumption is that these individuals will not collaborate in stealing funds. Therefore, while these bridges may be fast, their reliability is debatable. Examples of trusted bridges include WBTC, Binance, and Multichain.
Trustless Bridges (Decentralized):
These bridges operate through smart contracts and algorithms. Users do not need to trust a third party to use these bridges; they operate in a decentralized manner. However, trust is still required in the code written for smart contracts and algorithms. The better the code, the more efficiently the bridge operates. Examples of trustless bridges include Connext, cBridge, and Hop.
Now, let's explore how these bridges move our assets from one network to another:
Lock&Mint:
This mechanism locks the assets you want to transfer from the source chain and mints representative assets on the target chain. For example, when you want to transfer Ether from the Ethereum network to Polygon, your Ether on the Ethereum network is locked and stored in a vault. On the Polygon network, a representative asset representing your Ethereum is delivered to you, allowing you to perform transactions with it. When you want to return to the Ethereum network, you return the representative asset (which will be burned), and your original locked Ether is released and delivered to you. Examples of bridges using the Lock&Mint mechanism include Polygon POS, Avalanche, and WBTC.
Burn&Mint:
These bridges burn the assets on the source chain and mint the same assets on the target chain. Your original asset on the source chain is essentially destroyed, and a new one is minted and delivered to you on the target chain. Examples of Burn&Mint bridges include Hop Protocol and Accross.
Atomic Swaps (Swaps):
Unlike other bridges dependent on centralized assets and verifiers, with Atomic Swaps, you directly swap your assets with the counterparty. You retain ownership of your assets until you receive the desired asset on the chosen network. It's like exchanging your car in City A with another car in City B. When you want to return to City A, you can repeat the same process. Examples of bridges using Atomic Swaps include Connext and Orion Bridge.
The topic of bridges goes beyond what has been covered here. There are many more aspects to explore, and there are additional limitations based on their functions and usage. We can delve into these details later. In conclusion, bridges are indispensable in the blockchain world. They offer many advantages, such as enabling collaboration between blockchain networks for increased efficiency and swift transfer of assets between networks. However, they also come with risks, as evidenced by the hacking of several bridges, resulting in the loss of billions of dollars. Systemic risks such as smart contract vulnerabilities, verifier malfeasance, and issues in weakly secured networks connected by bridges persist today. Hopefully, these challenges will be addressed in the future, even though they may seem distant for now.