Blockchain Bridges: What They Are and What Benefits They Have

A blockchain bridge offers a link that allows for transferring of tokens or data between two blockchain ecosystems. An essential difficulty of blockchains is their lack of interoperability – as soon as a developer creates their decentralized application on any platform, they are usually locked into that platform with no chance to leverage any of the advantages of other blockchains.

For instance, Ethereum has well-known scalability problems that numerous developers probably hoped would be solved. Suppose they move to a different, faster platform, such as EOS. In that case, they lose all the benefits that Ethereum delivers: a massive community, a broadly-supported token standard, and the most used smart contract platform.

Therefore, a developer can utilize a bridge to send their token from a blockchain to another, leveraging the advantages of both. In a fully interoperable blockchain ecosystem, tokens, data, and smart contracts could travel between various platforms.

Bridges usually use some type of mint-and-burn protocol to keep the token supply constant across all platforms. Once the token leaves a blockchain, it is burned or locked, and a corresponding token is minted on the other blockchain. Similarly, when the token moves back to the original network, the other minted token is burned or locked.

What are the Benefits of Blockchain Bridges?

There are numerous benefits to using blockchain bridges. For instance, DApp developers using Ethereum typically encounter poor user experience issues because of the slow transaction processing speed and expensive gas fees during periods of high traffic and congestion.

​By utilizing a bridge, developers can send their tokens onto another blockchain to be processed at a higher speed and a lower cost. This means that the developer can keep running their DApp on Ethereum, using ERC-20 token standards and joining Ethereum’s massive developer and user community.

Both blockchain ecosystems also are at an advantage because of the use of the bridges. It reduces network traffic on the blockchain by sending it over another, less congested blockchain, therefore somehow solving Ethereum’s scalability issues. The other blockchain also gains exposure and adoption by the community.

Some use cases for the bridge could include payments at the point of sale, which have been virtually impossible until now, considering the scalability issues of Bitcoin (BTC) and Ether (ETH). Bridges could also be useful for DApps, which need instant settlement for a smooth user experience, such as casino games.

How do Blockchain Bridges Work?

Similar to blockchains, bridges can be run on a wide range of decentralization. These bridges can be split into two categories: federated and trustless.

A federated bridge is operated similarly to a private or permissioned blockchain. The protocol established a set of criteria that someone can meet to become part of the federation that manages and oversees bridge transactions.

For instance, in Wanchain, specialized nodes known as ‘storemen’ lock tokens on the Ethereum blockchain utilizing secure multiparty computation. The equal value of tokens is minted on Wanchain, and when the user wants to transfer the assets back onto Ethereum, a threshold of storemen has to provide their part of the secret key.

A trustless bridge can run through a decentralized network of agents. Dissimilar to the federated bridge, anyone can join the ecosystem as agents, and agents are motivated to make sure that bridge transactions are appropriately validated.

For instance, the Syscoin bridge uses a series of agents that stake Ether and earn fees from bridge transactions, sorted into superblocks. If any agent considers that another is not acting in the network’s interests by sending out invalid superblocks, they can raise a challenge. If the challenge is upheld, the challenger wins three ETH from the submitter. On the other hand, the challenger loses three ETH if their challenge is believed to be unfounded.

The Bottom Line

The bridges that are currently operating hold a lot of promise, particularly for stablecoins. Overall, it seems inevitable that with the focus on scalability and interoperability, bridges will form an integral part of the blockchain world.

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