Definition of cross-chain bridges

Cross-chain bridges are technical tools that allow the transfer of assets and data between different Blockchains. They act like “bridges” that connect independent Blockchain systems, enabling users to transfer assets from one chain to another, such as from Ethereum to BNB Chain.

Why do we need cross-chain bridges?

The current blockchain ecosystem is characterized by a multi-chain coexistence, such as Bitcoin, Ethereum, Solana, Arbitrum, etc., which cannot communicate directly with each other, resulting in limited circulation of assets and information. Cross-chain bridges have emerged to solve the following problems:

• Asset isolation, difficult collaboration
• Users need to frequently operate across platforms.
• The project struggles to expand its ecological coverage.

Common types of cross-chain bridges

Figure:https://layerzero.network/

1. Decentralized cross-chain bridges (Trustless Bridges): Verified through smart contracts or lightweight client verification mechanisms, such as LayerZero and Axelar, minimizing trust and ensuring strong compatibility.
2. Centralized cross-chain bridges (Trusted Bridges): rely on custodians (such as exchanges or project teams) for asset custody and cross-chain transfers, such as Binance Bridge.
3. Federated Bridges: Controlled by multiple parties managing a multi-signature account for cross-chain control, such as the joint custody mechanism used by WBTC.

The application scenarios of cross-chain bridges

• DeFi cross-chain trading: Users can perform asset arbitrage, liquidity mining, and other operations across multiple chains.
• NFT cross-chain transfer: allowing NFTs to circulate between different chains, for example, transferring NFTs from Ethereum to Polygon.
• GameFi multi-chain interoperability: Achieving the free flow of items and characters in a game ecosystem deployed across multiple chains.
• Asset bridging: The issuance of USDC across multiple chains relies on cross-chain bridges for consistent management.

Security risks and challenges

Cross-chain bridges are important, but they are also a hotspot for attacks. For example, the Ronin bridge was attacked in 2022, resulting in losses exceeding $600 million. Common risks include:

• Contract vulnerabilities or audit deficiencies
• Centralized verification mechanism
• Malicious behavior of the signer
• Asset custody security

Future development trends

• Modular cross-chain protocol: For example, LayerZero introduces the roles of finalizers and relayers to enhance flexibility and security.
• Native interoperability standards for blockchain: such as Cosmos IBC and Polkadot XCM, building a native cross-chain ecosystem.
• ZK technology joins cross-chain verification: using zero-knowledge proofs to achieve trustless cross-chain operations.