What are chain bridges and why are they important?

While DeFi promises a world where people can transfer their money without the hassles and transaction fees of banks, anyone who has tried to convert some ETH into some BNB recently knows that it is not that simple.
The fees make Bridge Smart Contract Development Services transactions very expensive, hampering the free flow of crypto assets. It is therefore not surprising that cross-chain bridging has grown at an unprecedented rate — a TVL increase of 89% MoM in October — as DeFi transaction volume soars in the bull market.

However, did you know that Cross chain bridge development solve other problems besides cryptocurrency transaction fees (which are essential)?

This article will look at the nature of chain bridges, specifically:

How does a cross chain bridge work?
Market performance of cross-chain bridges
Issues Addressed by Cross-Chain Bridges
Selecting a cross-chain bridge
What is a cross chain bridge?
An inter-chain bridge or inter-blockchain bridge enables the transfer of token assets, smart contract instructions, or data between blockchains. Two chains may have different protocols, rules, and governance models, but a cross-chain bridge connects these disparate blockchains by securely interoperating.

A chain bridge allows users to:

Deploy digital asset transactions quickly and easily
Enjoy low operational difficulty
Take advantage of lower transfer rates on non-scalable blockchains
Deploy dApps on multiple platforms
Here is an example of how assets are transferred between chains with a bridge:

When a user needs to convert an asset like an ERC20 A token on Ethernet to another asset like a BEP20 Build a token bridge on the BSC chain via AnySwap, the ERC20 A will lock on the source chain and then notify the bridge to generate the BEP20 A in the BSC string before sending it to the user.

In this example, the entire cross-chain bridge operation takes between five and 20 minutes, with an approximate gas fee ranging from $10 to $20, depending on the pre-congestion conditions in Ether at the time.
How has the Crosslink bridge been behaving recently?
Currently, the market is mainly dominated by layer 2 cross-chain bridges, which are mostly built on Ethereum for better interconnection and interoperability.

According to Footprint, the TVL of cross-chain bridges was $16.2 billion as of October 26, an increase of more than 72.25% in the last 30 days. The four largest cross-chain bridges, viz. , Avalanche Bridge, Polygon Bridge, Arbitrum Bridge, and Fantom Anyswap Bridge, account for 95.61% of all cross-chain bridge, with their largest monthly increase of 401.23% last month.

Data from the CoinTofu Cross-ChainBridge tool reveals that these four cross-chain bridges also have excellent user experience ratings.
The chart above shows that Optimism has had the most active deposits from early September to today, followed by Avalanche. Current transfer fees are as low as $0.25 (based on L2 Fees) and their transfer fees are variable, but with relatively little change.
The main asset traded on the cross-chain bridges is ETH (WETH), with total ETH locks on the 15 cross-chain bridges valued at $6.882 million as of Oct. 26. This represents approximately 42.6% of total blocks and the most used asset by investors, followed by WBTC and the USDC stablecoin.
What problems do chain bridges address?
Cross-chain bridges create cross-chain growth (reflected by Fantom and Avalanche prices, which posted gains of 12% and 18%, respectively, in the first week of November) that offer interoperability of disparate assets, a high level of security and better asset performance.

Without a bridge, investors have to go through different exchanges and incur higher fees.

Chain bridges also take care of the following:

Lower gas costs with higher transaction speed
Users’ assets can be freely interacted with for a great user experience
Improving the productivity and utility of existing crypto assets
Better security, better privacy
The use of chain bridges is appropriate in the following scenarios:

Token transfers between Ether and a Layer 2 network, with cross-chain interoperable assets such as faster and easier fund deposit, asset withdrawal and exit times to reduce operational complexity
High commissions and use in times of Ether congestion
Few assets supported by single chains and more assets supported by cross-chain bridges
Investors can use cross-chain bridges when investing in new chains to get to the main mine faster, but they need to assess the full mechanics of the new chain and its safety.
Arbitrage trading via the DEX on Optimism, Arbitrum and Polygon etc.

Consider the following criteria when selecting a cross-chain jumper:

A stable TVL in excess of $1 billion with a strong cross-chain mechanism and a credible execution environment that reflects gradual changes rather than wild fluctuations. The Build a cross chain bridge information verification method and the cross-chain funds management method also need to be considered.
Reasonable transfer costs ($1 to $5) across the chain and interaction speeds with an estimated arrival time of 10 to 30 minutes.
Security to ensure against hackers exploiting vulnerabilities
In addition, there are also a number of aggregation tools that offer a one-time cross-chain bridging solution, of which CoinTofu has a better overall experience in terms of getting to the cross-chain page in one click and displaying the cross-chain links. advantages of supported cross-chain bridges, estimated arrival times, transaction fees, and user experience ratings.
Conclution
With the development of the DeFi industry, cross-chain bridges have become more popular than traditional exchanges. They enable interoperability and mutual integration of blockchain applications to support project owners, various blockchains, and investors and address the issue of capital flow and lower transaction costs for users.