2022 Review of Cross-Chain Bridges

Cross-chain interactions are becoming an integral part of the blockchain space, stemming from the various siloed ecosystems proliferating. This calls for interoperability frameworks that would allow individual blockchains to interact with one another. However, interoperability necessitates trade-offs, such as those introduced by the Interoperability Trilemma coined by Arjun Bhuptani, the founder of Connext. Generally, the more chains an interoperability protocol supports, the more trust is required.

The most common interoperability protocol today would be a liquidity bridge, as liquidity has been fragmented across multiple siloed chains. Fragmentation of liquidity causes higher slippages for DEX trades and higher costs of borrowing from lending protocols. As such, transferring tokens across chains became one of the commonly used solutions for traders. However, most of these bridges are Arbitrary Messaging Bridges (AMBs) that are capable of transferring arbitrary data across chains.