Is it possible to make your own “binance bridge” with a smart contract?
A cross-chain smart contract is actually a complete d App that deploys logic on different blockchains.
Although this deployment can be implemented in various ways, at the very bottom it is necessary to design cross-chain smart contracts that allow developers to split the application into different modules. In this way, developers can take advantage of different blockchains to realize unique value. For example: Decentralized applications can take advantage of the manipulation resistance of the first blockchain to track asset ownership; take advantage of the high throughput of the second blockchain for low-latency transactions; take advantage of the third blockchain’s Privacy to identify users; and utilize the decentralized storage capabilities of the fourth blockchain to store metadata.
In addition, this design paradigm of cross-chain smart contracts can also enable more fluid interactions between copies of the same smart contract deployed on multiple blockchains. This will help unify the user experience of multi-chain applications on different blockchains. Therefore, cross-chain smart contracts can solve many bottlenecks faced by existing multi-chain smart contracts and create new application scenarios. To further show you the unlimited potential of cross-chain smart contracts, here are a few use cases.
Cross-chain trading platform:
When users execute transactions on a cross-chain decentralized exchange (DEX), they can obtain liquidity across the token pools of each blockchain to solve the problem of liquidity differentiation in multi-chain DEXs. For example, when users trade, their deposited tokens can be split and bridged to different blockchains to obtain the best transaction execution price; then the tokens after the transaction is completed are bridged back to the original blockchain and Deposit into user wallet. In this way, the liquidity on all blockchains will be activated, users can enjoy lower transaction slippage, and liquidity providers on each chain can obtain higher transaction fee income.
In addition, users of cross-chain DEXs can also exchange native tokens on one chain for native tokens on another chain. For example, users can exchange ether on Ethereum for bitcoin on the Bitcoin blockchain. In this way, users can flexibly trade native tokens on each blockchain without going through packaged tokens or centralized exchanges.
Cross-chain revenue aggregation:
Cross-chain revenue aggregation can place funds deposited by users in DeFi protocols on each chain. In this way, users do not need to manually bridge their token assets to other chains to maximize their yields, and can easily obtain higher yields. Therefore, this will greatly improve the multi-chain yield farming experience and all the tedious processes will be simplified.
In addition, this mechanism can also expand the TVL of DeFi applications on emerging blockchains, and thereby revitalize the liquidity of the multi-chain ecosystem.
Cross-chain lending:
The cross-chain currency market can promote the development of the cross-chain lending market. Users can deposit collateral assets (such as Ether) on one chain and lend token assets (such as USDC) on another chain. In this way, users can not only put mortgage assets on a more secure blockchain, but also lend token assets on a blockchain with higher throughput, and put the assets into applications on this chain generate income.
Users of the cross-chain money market can also lend token assets on another blockchain with a lower interest rate, and then bridge the assets back to the second blockchain to repay the loan. This will help unify yields on different blockchains and reduce the cost of lending for low-liquidity, high-interest money markets.