Understanding Cross-Chain Bridges

Over the past year, various siloed blockchains have surfaced, each with its own validators and user base, turning the blockchain ecosystem into a multi-chain environment. However, this fragments liquidity and ecosystems since applications cannot share liquidity or communicate autonomously across chains, creating major pain points. Cross-chain bridges have sprung up to address these pain points, that is, to provide liquidity for users to move their assets across chains.

The logic behind how all cross-chain bridges work is simple: accept crypto assets on the origin chain and issue them on the destination chain. However, there are nuances behind these mechanisms that differ across protocols, such as the smart contract logic in which the funds are pooled and the parties involved in a cross-chain transaction. These differences, though subtle, can have varying degrees of impact on the bridges in terms of their security.