What are blockchain bridges?
Cross-chain bridges are services that allow you to transfer cryptocurrency from one blockchain to another in the decentralised finance (DeFi) sector. Bridges are the only option for such an exchange. For example, you will not be able to transfer cryptocurrency to another blockchain on a decentralised exchange. Exchanges there occur exclusively within the same network.
Cross-chain bridges allow Ethereum users to migrate ERC-20 tokens to other networks. These are applications that facilitate the transfer of tokens and any data between blockchain networks. By implementing these types of connections, various competing networks are trying to grab a slice of the pie from the DeFi.
Ethereum bridges offer a way to send assets to EVM compatible networks such as Polygon, BNB (formerly Binance Smart Chain), Avalanche, and Gnosis Chain. They also support blockchains incompatible with EVM, including Solana. Interoperability with Ethereum can also boast layer 2 solutions and Ethereum sidechains, such as Arbitrum and Optimism.
How do bridges work?
To transfer tokens from Ethereum to other networks, users contribute assets to a bridge contract deployed on the main Ethereum network while paying some transaction fees for that. The assets can be minted and burned or just allocated from the pool on that network and re-allocated when bridged back, it all depends on the type of bridge you’re using.
In theory, all Layer 1 and Layer 2 networks could have a mechanism to send and receive assets from Ethereum to other networks and vice versa. However, sending funds to an EVM compatible network is a simpler process. For example Pillar wallet users can utilize any bridge that Wallet Connect supports.
You can manage your entire crypto portfolio — cross-chain, cost-optimised, and user-friendly (powered by Pillar’s native Etherspot SDK).
What’s more, very soon, using the Etherspot dashboard, you’ll be able to automatically swap tokens cross-chain. All this, without needing native tokens for gas fees on the destination chain in order to complete a simultaneous DeFi transaction! All you need is to select the token and chain, then select the destination chain you want to swap to and VOILA your tokens have been bridged!
This is just another way Pillar Project is taking you forward in decentralized finance.
If decentralized apps and web3 developments are your bag, make sure to join the Pillar Discord channel and consider joining PillarDAO, where you can own a piece of the future.