A quick overview of the mainstream cross-chain bridges
The upsurge of DeFi, GameFi, and NFT has opened up the world’s imagination space for Ethereum, making the long-awaited application scenario truly from “castle in the sky” to landing, and the narrative story of Ethereum has become more mainstream and grand, the implementation of EIP-1559 , and the future transition to Ethereum 2.0, bringing the expectation of supply reduction and even deflation for Ethereum, “Ethereum will gain a larger market share relative to Bitcoin in the longer term”, “Ethereum’s Fundamentals and use cases are a powerful complement to Bitcoin’s broader store-of-value properties,” and so on. Fans of Ethereum even compare it to the financial behemoth of tomorrow. With the acceleration of the digitalization process of financial technology, it is bound to set off more waves, and the status of Ethereum will be more stable by then.
However, the three upsurges are promoting the development of the Ethereum ecosystem, and also accelerating the contradiction between the demand and scalability of Ethereum. On the one hand, this provides certain opportunities for competing chains. On the other hand, Layer 2 is also gaining momentum. hair stage. In the past few years, the crypto world has obviously not reached a conclusion about whether the future is “one-chain dominance” or “multi-chain prosperity”, but for now, we believe that the performance and architecture of existing blockchains It is still difficult to adapt to the diversity of the Internet. First, the carrying capacity of a platform is limited, and in extreme cases, a small number of applications will cause the network to be paralyzed. Standards to meet various needs, which is also the reason for the rise of public chains/side chains specially designed for games or NFTs in the past two years. We are in a multi-chain era where public chains, side chains, and Layer 2 develop simultaneously.
However, the coexistence of multiple chains means that assets will flow on different chains, and the exchange of assets between chains will naturally become a rigid demand for users on the chain, and the emergence of various Cross chain bridge development will reconnect the fragmented ecology. A whole. This article will discuss what a cross-chain bridge is, and briefly sort out the existing cross-chain projects.
What is a cross-chain bridge?
When it comes to cross-chain bridges, let’s start with WBTC, the simplest and most mature asset cross-chain bridge solution. WBTC, the full name of Wrapped Bitcoin, is an anchor currency of Bitcoin. It is based on Ethereum and can be exchanged 1:1 with Bitcoin. Generally speaking, it is the ERC 20 version of Bitcoin, which aims to use Bitcoin as an encrypted asset. Liquidity and stability are brought into the Ethereum ecosystem.
The operation of WBTC requires three participants, the WBTC DAO, the acceptor and the custodian. The user sends BTC to the acceptor and requests to exchange for WBTC; the acceptor checks the user through KYC/AML, then initiates a Mint coinage request to the WBTC smart contract, and then sends the user’s BTC to the custodian; after the custodian receives the BTC, it sends a message to the smart contract. Minting request; the contract sends WBTC to the acceptor through the request; the acceptor sends WBTC to the user.
In addition to the earliest WBTC, the Bitcoin anchor currency has made great progress under the DeFi wave. OKLink has included 9 kinds of Bitcoin anchor assets on Ethereum, from 97,449 Bitcoin anchors on September 18 last year. From the time of the fixed currency, the assets increased to 279,475 in one year, an increase of 187%.
After learning about WBTC, we have a preliminary understanding of the bridge. Patrick McCorry, CEO of PISA Research, defines a bridge as follows: A bridge is responsible for storing assets on the L1 blockchain, while the same assets are published on another (mainly external) service, and the bridge defines who comes Custody of funds, and the conditions that assets must meet before they can be unlocked. In short, bridges are used when an L1 blockchain like Ethereum is connected to any other system, and all bridges act like:
Deposit funds, the user can deposit assets to the bridge, and the bridge will give proof that this asset is represented in other systems; update the account balance, the information about the new account balance will be notified to the bridge, which can be used to assist the provisioning process; asset withdrawal, Users can withdraw assets from the bridge by virtue of their balances in other systems, as well as issued tokens destroyed in other systems;
At present, there are two main ways to cross-chain assets: First, through cross-chain aggregation and application of Swap, by aggregating the liquidity of assets on different chains, a cross-chain transaction pool is constructed, so that users can complete assets on different chains in the pool. Exchange, common such as AnySwap, Multichain.xyz, etc.
Second, Build a cross chain bridge channel between the two blockchains, and host the native assets on this bridge. At the same time, one chain obtains the asset transaction status of the other through the oracle machine, and maps it to the other in a ratio of 1:1. On-chain, such as WBTC.
Cross-chain protocol combing
1) OKEx Bridge
OKEx Bridge is the official cross-chain tool provided by OKEx, and currently provides asset cross-chain services for Ethereum, OKExChain, TRON and other networks. The cross-chain assets supported by OKEx Bridge include more than 20 mainstream assets such as USDT, BTC, ETH, DAI, etc., to meet the needs of users for asset interoperability.
When the user’s assets are in the OKEx station, enter the withdrawal page, select the withdrawal network to withdraw the currency, the system will automatically perform a 1:1 exchange of cross-chain assets, and withdraw the currency to the corresponding public chain. When the user’s assets are in on-chain wallets or other platforms, they can choose to recharge to OKEx first, select the network that needs to be cross-chain to withdraw money, or click “Connect Wallet” on the OKEx Bridge interface to directly exchange cross-chain assets.
2) Avalanche Bridge
Avalanche Bridge is the official cross-chain tool launched by Avalanche Protocol in early 2021. It is mainly used to solve the problem of users transferring assets under the ERC 20 standard on the Ethereum chain to the Avalanche network. Through the Avalanche Bridge, users can exchange ERC 20 assets with Avalanche’s C chain. Currently, only ERC 20 assets are supported between Ethereum and Avalanche, and native assets on the Avalanche chain are not supported to be transferred to Ethereum. In addition, Avalanche Bridge does not support native ETH or BTC, but can transfer WETH and WBTC encapsulated assets through the Bridge Smart Contract Development Services.
3) Multichain.xyz
Multichain.xyz is mainly aimed at the cross-chain between platforms that support the Ethereum virtual machine. It was jointly developed by the founder of yearn.finance Andre Cronje and the Anyswap team based on the Anyswap SMPC Network. It is currently the most widely used multi-chain cross-chain platform. Compared with other platforms, the biggest advantage of Multichain.xyz is that it supports developers to deploy their own cross-chain tokens. Some time ago, the Loot-like game Rarity character Mint developed by AC became popular. Many users converted the FTM of ERC 20 into the FTM of Fantom mainnet through Multichain.xyz.
Recently, Layer 2 has made a lot of progress. L2Beat data shows that as of September 18, the locked position of Layer 2 has exceeded 3.5 billion US dollars, an increase of 257.61% in the past 7 days. Among them, the locked position of Arbitrum has increased within 7 days. It has increased by 990.73% and exceeded 2.6 billion US dollars. The growth rate is eye-catching, and it has further promoted the popularity of the Layer 2 concept. In terms of the speed of capital inflow, Layer 2 networks that support general-purpose smart contracts are more popular.
We are in “After DeFi and NFT, will Layer 2 become the next explosion point of Ethereum? (Part 1)” and “After DeFi and NFT, will Layer 2 become the next explosion of Ethereum? In these two articles, from the Ethereum EIP-1559 upgrade, the new high-level computing power, to the Layer 2 topic, a series of discussions have been conducted, and interested readers can move forward.
4) Arbitrum Bridge
Arbitrum Bridge is a cross-chain bridge officially launched by Arbitrum, the Ethereum Layer 2 expansion protocol. It is mainly used to solve the asset transfer between Ethereum Layer 1 and Arbitrum. Currently, Arbitrum Bridge supports the transfer of ETH and ERC 20 assets between Layer 1 and Layer 2, and fees are settled in ETH.
It should be noted that the withdrawal from Layer 1 to Arbitrum basically only takes a few minutes, but if you withdraw Arbitrum assets, you need to wait at least 7 days.
5) Optimism Gateway
Optimism Gateway is a cross-chain bridge officially launched by Optimism for the expansion of Ethereum Layer 2. It is mainly used to solve the asset exchange requirements between Ethereum and Optimism. The cross-chain bridge currently supports the transfer of mainstream ERC 20 assets in the Ethereum ecosystem such as ETH, DAI, LINK, and UNI.
Optimism, which uses the same Optimistic Rollup technology as Arbitrum, may wait 7 days for asset withdrawal.
Epilogue
Under the circumstance that a single blockchain cannot meet the needs of scale expansion, and the new chain needs time to Build a token bridge perfect ecosystem, various cross-chain bridges operate between different blockchains, which solves the problem of capital flow and provides users with better services. With great convenience, it has become a new outlet.
Ideally, the cross-chain bridge can not only meet the needs of asset interaction, but also have extremely high security. On the premise of ensuring the transparency of the cross-chain environment, it is better compatible with various public chain protocols, applications and transactions. But in fact, in the past 2 months, there have been 3 security incidents in which cross-chain applications were hacked. Although the “value” of the cross-chain bridge has been proved to a certain extent, the demand for on-chain interaction has increased. , the growth of cross-chain funds has also made cross-chain protocols a new “sweet pastry” in the eyes of hackers. Although cross-chain products have begun to take shape in the market, they still face great challenges in terms of security. Considering that the development of technology is not achieved overnight, although the cross-chain protocol has great development prospects, its inspection and testing It still needs to be handed over to the market and time.