Cross-chain bridges and how they work

Some blockchains are based on Ethereum. They have an identical address starting with 0x. To exchange between such networks, it is enough to connect the wallet and change the network of the token.

Otherwise, you need to enter the wallet address where the coins will go after the exchange.

Creating a cross-chain bridge is a technological challenge. It is not enough to create a smart contract that will act as a transaction guarantee between users. To integrate cross-chain exchanges, it is necessary to create a whole algorithm for the interaction of several blockchains. Transfers will involve liquidity providers (DEX exchanges), credit oracles and protocols, wrapped tokens, etc.

Cross-chain bridges are often hacked. The largest attacks include the $625 million theft from the Ronin bridge, the Wormhole hack of $323 million, and the Horizon bridge hack, with the estimated damage of $100 million.

Cross-chain bridges profit from the fees that traders pay for the exchange. Some bridges also launch their own token, which can be used both in the exchange and in internal control (through voting) of the project’s future.

Here is a short list of cross-chain bridges that are popular among users:

This project supports Layer2 of the Ethereum blockchain. Smart contracts and cross-chain transfers are used for exchanging. Traders can move stablecoins between EVM networks (HECO, Arbitium, Polygon). Also, the latest update made it possible to change the network for NFT. 

Specializes in changing the blockchain of $BTC, $ETH, $LTC coins and other assets. It is well synchronized with Ethereum, BSC networks and supports many relevant ERC-20/BEP-20 format tokens. It has its own $RUNE token, with a value of $1.5. Project capitalization is $470 million.

Cross-chain bridge to transfer $BTC, $ETH, $DOGE and other coins by creating wrapped tokens. The emphasis is on Ethereum and its Layer2, although the functionality for other networks is also well developed. It has a native $REN token with a current value of $0.11. Project capitalization is $113 million (220th place in the rating of crypto-assets according to Coingecko).

Other cross-chain bridges include Hop Exchange, xPollinate, AnySwap, DODO, Allbridge and others.

The field of blockchain is actively growing, and so does the need for interaction between different networks. This has a positive effect on the cross-chain bridges dynamics, the demand for which is constantly growing. Probably, this trend will only intensify with the growth of the entire crypto market.