Cross-chain bridges enable considerable value to move out of Ethereum. Bridges allow assets to be transferred across blockchains. Crypto Briefing deconstructs some of the most important bridges that provide interoperability between Ethereum and other chains.
Ethereum Bridges Usher in the Era of Multi-Chain
Cross-chain bridges on Ethereum have grown in popularity since the famous “DeFi summer” of 2020. The usage of bridges to transport assets from one network to another has increased dramatically, owing to the expanding variety of DeFi choices available across numerous Layer 1 networks and the rising expenses of accessing Ethereum mainnet. Today, Ethereum users may move ERC-20 tokens to other networks using the top cross-chain bridges.
Bridges are permission-less apps that enable users to transfer currencies and other data between blockchain networks. Various rival or complementary networks have sought to acquire a share of the value created on Ethereum, the most often used blockchain for DeFi and NFTs, by installing bridge links. Ethereum bridges enable the transfer of assets to EVM-compatible networks such as Binance Smart Chain, Avalanche, and Fantom, as well as non-EVM-compatible networks such as Solana and Terra. Interoperability with Ethereum Layer 2 solutions and sidechains is also possible via multiple bridges.
Users deposit assets into a bridge contract launched on the Ethereum mainnet to bridge tokens from Ethereum to other networks. On the other network, the identical quantity of the asset is minted. When the assets are burnt, the tokens are destroyed when the assets are moved back to mainnet, and are then made available on the network.
In principle, all Layer 1 and Layer 2 networks may contain a mechanism for sending and receiving Ethereum assets to and from other networks. Sending money to an EVM-compatible network is a lot easier; users may join using an Ethereum-based wallet like MetaMask. The bridge linking the two networks employs two separate wallet addresses and token standards for transferring Ethereum-native assets to a non-EVM-compatible chain like Solana. Users must link both an Ethereum and a Solana-compatible wallet, such as MetaMask or Phantom.
As the competition to capture DeFi and NFT activity has heated up in recent months, multi-chain bridges have emerged as critical components of the crypto ecosystem. By utilizing Ethereum smart contracts, solutions such as Hop Protocol and Celer Network have become popular. These contracts let users transfer assets from mainnet multiple Layer 1 and 2s.
Binance Bridge is a popular way for Ethereum users to connect to Binance Smart Chain, an EVM-compatible blockchain established by the world’s largest cryptocurrency exchange. ERC-20 tokens are wrapped into BEP-20 assets through the bridge for usage on Binance Smart Chain apps such as PancakeSwap, Venus Protocol, MDEX, and Alpaca Finance. Users of Ethereum can gain access to the bridge by adding Binance Smart Chain to their MetaMask or another Web3 wallet. The Binance Bridge now has around $5.78 billion in it.
Avalanche is one of Ethereum’s most prominent competitors. It has a high throughput and EVM compatibility, with support for Aave, Curve, and Sushi, as well as a variety of native dApps. The Avalanche Bridge is the best way to transfer ERC-20 tokens from Ethereum Avalanche. The Avalanche Bridge, like the Binance Bridge, is accessible via MetaMask. Tokens are added with the symbol “.e” once the assets have been bridged. The bridging USDC token, for example, is known as USDC.e.
All transfers across the bridge must be allowed by three of the Avalanche Foundation’s four trusted partners, known as wardens. The bridge deal is presently worth roughly $4.8 billion. Because the Avalanche bridge does not handle ERC-721 tokens, NFTs cannot be moved into the network.
Solana Bridges: Wormhole, Sollet and Allbridge
Solana is likely the most serious challenger to Ethereum’s current supremacy. Solana is quicker and less expensive than Avalanche, with block times of less than half a second. To transmit ERC-20 tokens to Solana, two major bridges are available: Sollet and Wormhole. Tokens transmitted from Ethereum to Solana are wrapped and minted to the SPL token standard via Wormhole and Sollet, making them usable across Solana dApps. Wormhole has around $265 million locked up, while Sollet has about $217 million.
Tokens that bridge to Solana via Sollet or Wormhole will not be interoperable because Sollet-wrapped tokens are not the same as Wormhole-wrapped copies of the identical ERC-20 tokens. Wormhole Bridge is the most popular of the two. Unlike Sollet, it also allows users to transfer NFT tokens, regardless of whether they were issued as an ERC-721 token on Ethereum or an SPL token on Solana. While the two bridges charge less than a penny per cross-chain transaction, Ethereum gas expenses are far higher.
In addition to Sollet and Wormhole, Allbridge recebtky is a multi-chain bridge solution. Allbridge facilitates token transfers to Solana from Ethereum and other blockchains like as Binance Smart Chain, Avalanche, and others by utilizing liquidity pools with over $1.5 billion in locked value.
AnySwap Bridge by Fantom
Another strong contender in the Layer 1 race is Fantom. It, like Avalanche, runs an EVM-compatible network dubbed Opera, which is quicker and less expensive than Ethereum mainnet. Fantom may be the first blockchain that does not employ a 1:1 independent direct bridge link with Ethereum. Instead, it primarily employs a multi-chain approach known as AnySwap to do cross-chain transfers between various EVM networks. The Fantom AnySwap bridge is now the preferred method for transferring tokens from Ethereum to Fantom and vice versa.
AnySwap, as a multi-chain liquidity solution, bridges using pools comprised of particular tokens deployed across various chains. Tokens may be transmitted to Fantom using this mechanism from Ethereum, Avalanche, Polygon, and Binance Smart Chain. AnySwap’s Ethereum-Fantom bridge is presently holding around $2.1 billion in value locked. There are presently three sites for transferring tokens between Ethereum and other chains to Fantom: multichain.xyz, SpiritSwap, and SpookySwap. These systems, which employ AnySwap as their backend, have grown in popularity due to their user-friendly online interfaces.
Many bridge solutions have also been developed to allow ERC-20 tokens to be moved to and from Ethereum sidechains such as Polygon.
Polygon is the largest sidechain network running alongside Ethereum. It has grown at an exponential rate in the last year, thanks to the addition of multiple Ethereum-native DeFi applications to the network. It presently has almost $9 billion in total value locked up.
The Polygon POS Bridge is the primary entry point from Ethereum. Users can send ETH or any other ERC-20 token to Polygon and then back to the Ethereum mainnet. Deposits take a few minutes on average, while withdrawals back to mainnet take around an hour. Polygon also maintains another Ethereum bridge called Plasma, which is largely used for withdrawing ETH to the mainnet. The disadvantage is that all ETH withdrawals are frozen for up to seven days before being redeemed on mainnet.
Hop Network, in addition to Polygon’s own bridges, provides for the transfer of ETH and other assets to Polygon. It transfers tokens through liquidity pools and has gained popularity because to its rapid deposits and withdrawals. It normally takes no longer than 10 minutes to deposit and withdraw to the bridge. Rollup Bridges Optimistic Layer 2 Rollups are off-chain protocols that are governed by an Ethereum contract on the Ethereum mainnet, allowing for cheaper and quicker transactions than on the Ethereum mainnet. Rollups compute off-chain, but publish proofs on-chain, allowing the data to be rolled back to mainnet if an error occurs.
Optimism and Arbitrum are the two most valuable Optimistic Rollups, with a combined total value locked of over 2.5 billion. Layer 2 solutions have grown in popularity as DeFi initiatives such as Uniswap and Sushi have declared ambitions to debut on networks. To get access to Layer 2, users must deposit funds into an Ethereum mainnet bridge, which credits the same amount on the rollup at the same specified address. While deposits to Layer 2 Rollups are completed in 15 to 20 minutes, withdrawals need a seven-day delay.
Thousands of users have already used the Arbitrum Bridge to transfer cash from Ethereum mainnet to Arbitrum. To transfer tokens to Optimism, use the Optimism Gateway bridge. Deposit and withdrawal requests to these Layer 2 rollups may be made using a MetaMask wallet. Multi-chain liquidity solutions such as Hop Network and Celer may be utilized as an alternative to the official bridge platforms to make deposits and withdrawals to Arbitrum and Optimismm, with substantially quicker withdrawal times. Both systems may also bridge ERC-20 tokens across two Layer 2 networks without requiring a move to the mainnet.
Terra’s Shuttle Bridge
Terra is a growing DeFi hub created with the Cosmos SDK. Mirror Finance and Anchor Protocol are two popular Terra dApps. Terra runs the Shuttle bidirectional bridge with Ethereum. The bridge was created to encapsulate Terra-based assets and transport them to Ethereum, but not the other way around. As a result, only whitelisted assets may be transferred between the two chains. To transfer money from Ethereum, users must first convert ETH to Terra-based ERC-20 tokens such as wrapped UST.
Since shuttle does not allow ETH, customers cannot bridge the asset straight onto Terra. Users can, however, stake ETH on Lido Finance and get staked ETH (stETH), which can be bridged to Terra using Lido’s interface on Anchor Protocol. stETH is wrapped into bETH, which may be redeemed on Anchor.
Other Developmental Bridges
Other non-EVM networks, such as Polkadot and Cosmos, are constructing bridges, but the majority of them are in the early stages of development. Cosmos will provide bridge services with the soon-to-be-launched Gravity Bridge, while Evmos is working on another bridge. ChainBridge intends to connect Ethereum to Polkadot’s Moonbeam parachain in the same way. There are other more bridge systems in use or development. Bridges are likely to make composable interoperability a reality in the coming years as additional Layer 1 and Layer 2 networks hope to grab some of Ethereum’s market share as their ecosystems flourish.