Thread by @Athina_AI

Blockchain bridges moved $25Bn worth of assets in Mar'22 alone.

Bridges enable free flow of capital b/w blockchains.

Here's a thread 🧵 on what they are and how do they work? 👇

The blockchain ecosystem has evolved rapidly and we have already entered into a multi-chain era.

We now have various L1 chains & L2 scaling solutions.

A lot of Dapps are deploying their systems cross-chain.

E.g. @AaveAave is available on @0xPolygon, Avalanche, @fantom etc.

@AaveAave @0xPolygon @fantom Blockchain interoperability has become a necessity now.

This requires blockchains to communicate with each other.

However, every blockchain has a different architecture and consensus mechanism.

This does not allow them to communicate natively.

@AaveAave @0xPolygon @fantom They need a gateway called a “Bridge” for this purpose. A bridge can be used for 2 distinct purposes:

1. Two-Way Asset Transfers

Used for transferring assets from one chain to another.

For e.g., you need to transfer your ETH from the @ethereum to the @avalancheavax chain

@AaveAave @0xPolygon @fantom @ethereum @avalancheavax 2. Generalized cross-chain messaging

Ability to call a contract on another chain without switching your current chain.

Imagine you're on @avalancheavax and you want to withdraw funds from Compound deployed on the Ethereum.

A cross-chain messaging bridge enables such txns.

@AaveAave @0xPolygon @fantom @ethereum @avalancheavax Blockchain interoperability is a complex problem and there is no one generic solution for all scenarios.

Moreover, due to the interoperability trilemma, bridges have different designs with unique strengths and trade-offs.

@AaveAave @0xPolygon @fantom @ethereum @avalancheavax Interoperability trilemma states that interoperability bridges could only have two of the following 3 properties:

- Trustlessness

- Extensibility

- Generalizability

PC: @ConnextNetwork

@AaveAave @0xPolygon @fantom @ethereum @avalancheavax @ConnextNetwork Bridges could be Trusted or Trustless in nature:

Trusted Bridges

They use a central authority that keeps the custody of the user’s funds. E.g - Binance <-> Ethereum bridge

@AaveAave @0xPolygon @fantom @ethereum @avalancheavax @ConnextNetwork Trustless Bridges

They are governed by smart contracts and algorithms. Users have custody of their funds. E.g - @ConnextNetwork, @HopProtocol

Bridges work on 3 types of mechanisms:

Lock & Mint, Burn & Mint and Atomic swaps

@AaveAave @0xPolygon @fantom @ethereum @avalancheavax @ConnextNetwork @HopProtocol Lock & Mint mechanism

These bridges lock your native asset on the source chain and mint a wrapped asset on the destination chain.

E.g. You can transfer your ETH from the Ethereum chain to receive wETH on the avalanche chain. E.g. Polygon PoS bridge, Avalanche bridge

@AaveAave @0xPolygon @fantom @ethereum @avalancheavax @ConnextNetwork @HopProtocol Burn & Mint mechanism

These bridges burn your asset on the source chain and give you another equivalent token on the destination chain. E.g. @HopProtocol

@AaveAave @0xPolygon @fantom @ethereum @avalancheavax @ConnextNetwork @HopProtocol Atomic Swaps

These bridges swap assets on the source chain for assets on the destination chain.

They are the most trustless type of bridge as they rely on smart contracts for asset swaps. E.g. cBridge by @CelerNetwork, @ConnextNetwork

@AaveAave @0xPolygon @fantom @ethereum @avalancheavax @ConnextNetwork @HopProtocol @CelerNetwork Bridges are the channels through which blockchain economy could reach "Cross-chain globalization"

This is essential for the development of new applications and use cases in web3.