Learn more about bridge & cross-chain

What are cross-chain protocols?

Cross-chain message protocols are systems that enable communication and data exchange between different blockchains, allowing them to interact seamlessly despite operating independently. Unlike traditional blockchains, which are isolated and cannot directly share information, these protocols act as intermediaries, facilitating the transfer of messages, instructions, or data—such as transaction details, smart contract triggers, or user authentication—across chains.

For example, a cross-chain message protocol might allow a decentralized application (dApp) on Ethereum to send a command to a smart contract on Polygon, or enable a token's status to be verified between Binance Smart Chain and Solana. These protocols typically rely on standardized frameworks, like relayers, oracles, or bridges, to ensure security, accuracy, and trust. By enabling interoperability, cross-chain message protocols unlock advanced use cases in DeFi, NFTs, and multi-chain ecosystems, bridging the gap between otherwise siloed networks.

What are bridge protocols?

Bridge protcols allow users to transfer tokens or assets from one blockchain to another. Since blockchains operate independently and lack built-in interoperability, a token bridge acts as a connector, facilitating the movement of tokens and assets across separate networks. This means that users can interact with applications, decentralized exchanges, and lending platforms on multiple chains without needing to sell their tokens or exchange them for other types of assets.

What are canonical bridges?

Canonical bridges officially designated and trusted system used to transfer assets, such as tokens or cryptocurrency, between a base blockchain - known as Layer 1, and its associated scaling solutions, called Layer 2 blockchains.

Benefits of token bridges in DeFi

Token bridges open a wide array of benefits and opportunities, including:

Cross-Chain Liquidity: Bridges allow liquidity to flow freely between blockchains, ensuring that assets are available where they're needed. This increases market efficiency and lets users access better trading opportunities.
Access to Diverse Ecosystems: Each blockchain has its unique strengths and dApps. Bridges give users the flexibility to move assets and engage with applications on multiple chains, expanding their DeFi horizons.
Reduced Transaction Fees: Users can leverage different blockchains to minimize transaction costs. For example, they might bridge tokens from Ethereum (with higher gas fees) to a more cost-efficient network like Polygon.
Enhanced Security and Redundancy: By spreading assets across multiple blockchains, bridges reduce reliance on any single network, increasing security against potential network congestion or vulnerabilities.

How do token bridges work?

Token bridges operate through a combination of smart contracts and cross-chain protocols. Here's a simple breakdown of how a typical token bridge process works:

Locking and Minting: When you want to transfer a token from one blockchain to another, you initiate a transaction on the source chain. The bridge protocol locks the specified amount of tokens in a smart contract on the source blockchain.
Creating a Wrapped Token: Once the tokens are locked on the source chain, an equivalent amount of tokens, often known as “wrapped tokens,” is minted on the destination chain. Wrapped tokens represent the locked tokens and can be redeemed for the original token on the source chain.
Transferring Back: If you want to return to the original blockchain, the wrapped tokens on the destination chain are burned, and the locked tokens are unlocked on the source chain, completing the transfer.

Challenges with token bridges

While token bridges provide valuable functionality, they also come with certain challenges:

Smart Contract Risks: Since token bridges rely heavily on smart contracts, they are susceptible to bugs and potential exploits, especially if they haven’t been thoroughly audited.
Bridge Fees: Moving tokens between chains often incurs fees for bridging. These can vary by bridge provider and network.
Network Delays: Transferring assets across chains can sometimes involve delays, particularly if one of the networks is congested.