Bridges

Blockchain bridges play a crucial role in addressing the limitations of blockchain technology. Despite its advancements, one of the major challenges faced by blockchain projects is the lack of interoperability. For example, a decentralized application (DApp) built on the Ethereum blockchain cannot be used on the Bitcoin blockchain.

To overcome this challenge, blockchain bridges act as protocols that facilitate the seamless transfer of tokens between different platforms. These bridges serve as a connection between various blockchain protocols. Under the mint-and-burn protocol, when a token is locked up in one blockchain, an equivalent token is minted on the second blockchain, enabling interoperability.

Developers greatly benefit from blockchain bridges as they allow them to leverage faster processing speeds on less congested blockchains. An excellent example of a successful blockchain bridge is the one between Tezos and Ethereum. Wrapped tokens, such as Wrapped Bitcoin (WBTC), provide an easy way to achieve interoperability between blockchain protocols. These tokens are ERC-20 compatible and can be used within the Ethereum ecosystem. Similarly, the blockchain bridge for Tezos enables Ethereum-based tokens to be compatible with the Tezos FA2 token standard through the Wrap Protocol.

While blockchain bridges primarily connect different blockchains, there are also instances where side chains are bridged to their source blockchain. This occurs when the parent and child blockchains operate on different consensus mechanisms. A notable example is the side chain bridge for the Ethereum blockchain created for the game Axie Infinity. The Ronin side chain and the original Ethereum blockchain were bridged to allow users of the Ronin blockchain to utilize ERC-20 tokens and NFTs deposited on Ethereum.

Stablecoin protocols, particularly tokens like Tether (USDT), are actively interested in creating bridges for their blockchains due to their growing popularity. Currently, stablecoins have expanded the number of exchanges that support them. However, through successful bridges, they can further expand their services at a rapid pace.

Blockchain bridges offer significant value and numerous benefits to users. Interoperability between different blockchains allows developers to optimize their applications’ performance by delegating tasks. Some blockchains excel at processing transactions quickly, while others are designed for handling multiple smart contracts simultaneously. Blockchain bridges serve as the perfect tool for developers to combine these functionalities and achieve interoperability.