How Blockchain Bridges Works?

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8 Nov 2023
62

What are bridges in cryptocurrency?


Blockchain bridges connect two ecosystems together. Bridges facilitate communication between blockchains by transferring information and/or assets. Bridges allow users to make exchanges similar to those made on any DEX, with the difference being that it uses at least two different blockchains or layers. The most know bridges are now working with EVM chains, it means that the 99% are able to transfer with Ethereum's compatible chains.
Let's say you want to exchange ETH on Ethereum Mainnet for ETH on Optimism. A mechanism is needed to move our ETH from Ethereum to Optimism, and bridges make such a transaction possible. In this case, Optimism has native bridges that can transfer ETH from Mainnet to Optimism. Arbitrum & others are working in the same way basically.

At the bottom of the post I shared some Official Bridges Links

 

 

The adoption of blockchain-based web3 technologies has fueled the need for interoperability. Interchain bridges or blockchain bridges ensure interoperability between web3 technologies, in addition to providing an answer to volatility not only in price, but also in liquidity. It is now possible to migrate holdings from one chain to another or manage liquidity on a situation-by-situation basis in a few seconds. Generally, except for changes involving a transfer on the Ethereum main chain, fees are almost symbolic on most new chains. It is a crypto space that is constantly evolving and providing that point of flexibility that the market is demanding.
 


3 basic and "classic" use cases for bridging are as follows:

 
Lower transaction fees
If we own ETH on Ethereum Mainnet but want to trade with cheaper transaction fees to explore different dapps. By bridging ETH from Mainnet to an Ethereum L2 rollup, lower transaction fees can be enjoyed.

Dapps on other blockchains
In decentralized lending and/or derivatives trading protocols, using Ethereum Mainnet is within the reach of traders with large capital. Being able to handle bridged funds in mere seconds provides the necessary flexibility that allows you to take advantage of market opportunities.

Explore blockchain ecosystems
To have balance available for testing or other preferences for use in other layers 1 the bridge allows us to efficiently obtain balance by bridging Ethereum or other tokens.

As always when I post, I would like to thank you for reading. You can expect more in-depth crypto related content soon, I hope I don't disappoint you fellows! Good hashes.

Sources & Links:

  1. https://www.bridgenetwork.com/token-bridge
  2. https://stargate.finance/transfer
  3. https://ethereum.org/en/bridges/


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