1/ ICYMI we’re doing scaling week at DeFi Pulse and today we’ll be talking about BRIDGES!
Do you know about the different approaches to bridging assets?
Join us for an informational thread!
🌉🌉🌉🌉🌉🌉
2/ Let’s start with some basics:
When you transfer assets to a scaling solution, you’re interacting with a minimum of three protocols:
📫The base chain
🎯The target chain
🌉The bridge
In this txn, your assets are only as safe as the weakest link!
3/ In other words, if you’re bridging from Protocol A with 1000 nodes to Protocol B with 300 nodes, but the bridge is controlled by 3 people - you might as well be reading CeFi Pulse!
4/ So what is a bridge?
A bridge is a protocol that:
- Verifies you own Asset X
- Custodies that Asset X on Protocol A
- Mints or releases Asset X to you on Protocol B
5/ There are three types of bridges:
1⃣ Natively verified (ex: Cosmos)
2⃣ Externally verified (ex: Thorchain)
3⃣ Locally verified (ex: Connext)
Every approach has pros and cons so grab your notebook!
6/ Natively Verified:
If Protocol A and B have the same underlying consensus mechanisms, they can verify each other w/o relying on a 3rd party bridge!
Pro: trustless
Con: if the consensus mechanism aren't the same a custom mechanism is needed (e.g. ETH-PoW and Tendermint-PoS)
7/ Externally Verified:
A 3rd party set of validators manages the bridge (typically using a multisig or MPC). This approach usually requires validators to post a bond as an economic incentive.
Pro: Universally applicable
Con: Relies on trust, less capital efficient
8/ Locally Verified:
Often referred to as a state channel - two parties independently verify each other and then settle later with the chain.
Pro: trustless and can work across consensus mechanisms
Con: Doesn’t work for all types of txns
9/ So which txns do locally verified bridges not work for?
👉When there is no *logical owner*.
To bridge an NFT you need to mint it on a new chain. Only the smart contract on the original chain can call that mint function - so there is no *logical owner* on the new chain😿
10/ This brings us to the Interoperability Trilemma (b/c everyone on CT loves a good #trilemma)
PICK 2
a) Trustless
b) Easily scaled (extensible)
c) Universal (generalizable)
A natural tradeoff for token bridges.
📸PC: @ConnextNetwork
11/ And with that, we’d like to introduce the worst meme ever made in the #ethereum and broader #crypto community
12/ A big thanks to @arjunbhuptani from @ConnextNetwork for helping us put together this thread!
To dive deeper into the interoperability trilemma and learn about NXTP, check out Arjun’s post here:
medium.com/connext/the-in…
13/ If you have any questions about bridges, we'd love to hear them!
Feel free to:
👉Join our discord: discord.gg/PgqFQ8tr
👇 or comment with your questions below
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