Understanding Cross-Chain Bridges

Quick Take

• As the blockchain space evolves into segregated Layer 1 chains, liquidity and ecosystems become increasingly fragmented
• While ecosystems can technically be “bridged” by porting code across compatible chains, the liquidity remains isolated across chains
• Cross-chain bridges are essentially liquidity pools that allow users to move liquidity across supported chains
• Several cross-chain bridges have surfaced over the past year, and while they fundamentally share the same concept, there are minor differences in their implementations
• As cross-chain bridges start growing in total value locked, it becomes increasingly important to understand the security assumptions associated with each of these bridges