Bridges: blockchains’ communicators and connectors
Cross-chain bridges enable users to send assets between blockchain, solving the interoperability issue.
Cross-chain bridges, otherwise called blockchain bridges, are protocols allowing users to move assets between two certain blockchains by connecting them just like physical bridges would connect two river banks. Without bridges, it wouldn’t be possible to simply send funds and NFTs from one chain to another, since every blockchain is designed in an isolated environment and has its smart contract and native tokens. To some extent, this is similar to currencies, as those issued in one country cannot be accepted as payment in another.
Cross-chain bridges ensure seamless transfers of various token types (ERC-20, BEP-20 and others) across blockchains. They also facilitate movement of funds between blockchains built on different technologies (Bitcoin, Ethereum, Litecoin, Dogecoin), as well as between Ethereum and its L2 chains (Arbitrum, Optimism and Polygon).
Why bridges are crucial for blockchain interoperability
A user goes to a bridge for multiple reasons. The most common one is getting a native crypto asset of another blockchain, for example, BTC, when having funds only on Ethereum or vice versa. Bridges make it possible to get other blockchains’ tokens without going through exchanges, which can sometimes be an expensive and pretty long process. Bridges also solve the issue of using dApps on different core networks by helping to transfer native tokens to interact with a platform running on another L1 blockchain.
And on top of that, L2 solutions continue to evolve, enabling users to benefit from lower gas fees and more favorable lending platform terms when interacting with them. To embrace features that the main chain might lack, users need to bridge tokens from L1 to L2, for example, ETH from Ethereum Mainnet to Arbitrum or Optimism.
Most commonly, when tokens are sent between chains over bridges, an amount of chain A’s token is locked in a smart contract. Then, an equivalent amount of chain B’s token is minted. Once those “newborn” tokens appear in the user’s wallet, they can be freely moved and used within any protocol and platform that supports chain B. For instance, ETH bridged via Polygon, enables users to trade, lend, stake and conduct any other activity within the network. However, tokens can always be converted back to the origin blockchain version.
Just like exchanges and tokens, bridges can be centralized or decentralized.
Centralized, or trusted bridges rely on some type of central authority–this means that users have to trust the intermediary.
Decentralized, or trustless bridges are those in which users do not have to rely on a single entity or authority, but only trust the code.
Typical bridge risks and the ways to avoid them
Trusted bridges have all risks related to centralization where users have to rely on the bridge operator’s reputation and where they don’t have control of their crypto assets. Hacking into a central node and taking over a blockchain bridge is attractive for malicious actors who can steal customers’ funds or mint non-collateralized tokens.
Trustless bridge security is similar to that of the underlying blockchain. While immune from centralization-related risks, trustless bridges are still vulnerable to bugs in their software and coding.
In addition, both centralized and decentralized bridges share the common risks of code and security design attacks.
Malicious actors take advantage of errors in codes and vulnerabilities in smart contracts. They exploit traditional social engineering attacks, a current favorite hackers vector, not only bridges are suffering from.
One more common threat is the validators´ node, which can be also compromised. Hackers can get control of validators, especially if there is a small group of them.
Safety measures to follow
To avoid security risks, users have first to check whether there is a published audit confirming the quality of smart contracts that power the bridge. Audit reports are always publicly available.
It’s also important to make sure the target chain has sufficient liquidity of required tokens.
Regular smart contracts auditing and publishing are the most important proof of code and bridge reliability. As hacker attack schemes evolve, smart contracts security must be one step further.
If choosing a trusted bridge, it is worth exploring its custody reputation and previous attacks` history.
The number of validators is also a crucial factor. The more validators, the better decentralization and, therefore, security. Some of the recent big attacks exploited the small number of validators.
Easily bridging with 1inch
1inch provides a choice of nine blockchains, including L2 solutions, to operate with. Bridges enable users to take advantage of all of them in a fast and straightforward way. All bridging options appear right after clicking the “Bridges” tab in the 1inch dApp, then the selected bridge offers to connect the wallet to deposit, convert and withdraw users´ tokens and enjoy interaction with a different network. But users must be aware that converting tokens from Ethereum to its L2s and xDai, just like regular transactions, requires some ETH for gas fees. Here you can find a step-by-step guide on how to bridge via 1inch.
You can explore a variety of supported networks and benefit from moving tokens between them by using the 1inch dApp.