Bridges offer a way to migrate assets between blockchains. Crypto Briefing unpacks some of the top bridges offering interoperability between Ethereum and other chains.
Ethereum Bridges Usher in Multi-Chain Era
Since crypto’s fabled “DeFi summer” of 2020, cross-chain bridges on Ethereum have exploded in popularity. Fueled by the growing number of DeFi options across various Layer 1 networks and the rising costs of using Ethereum mainnet, the use of bridges to move assets from one network to another has soared.
Today, the leading cross-chain bridges allow Ethereum users to migrate ERC-20 tokens to other networks.
Bridges are permissionless applications that allow users to send tokens and arbitrary data between blockchain networks. By deploying bridge connections, various competing or complementary networks have attempted to capture a portion of the value generated on Ethereum, the most used blockchain for DeFi and NFTs.
Ethereum bridges offer a way to send assets to EVM-compatible networks like Binance Smart Chain, Avalanche, and Fantom, as well as non-EVM-compatible networks like Solana and Terra. Ethereum Layer 2 solutions and sidechains also boast interoperability with Ethereum via several bridges.
To bridge tokens from Ethereum to other networks, users deposit assets into a bridge contract deployed on Ethereum mainnet. The same amount of the asset is then minted on the other network. The tokens get burned when the assets are moved back to mainnet, and are then made available on the network.
In theory, all Layer 1 and Layer 2 networks could have a mechanism to send and receive assets from Ethereum to other networks. Sending funds to an EVM-compatible network is a simpler process; users can connect through an Ethereum-based wallet like MetaMask.
When migrating Ethereum-native assets to a non-EVM-compatible chain like Solana, the bridge connecting the two networks uses two different wallet addresses and token standards. This means that users have to connect both an Ethereum and Solana-compatible wallet, such as MetaMask and Phantom.
As the race to capture DeFi and NFT activity has intensified in recent months, multi-chain bridges have begun to play a crucial role in the crypto ecosystem. Solutions like Hop Protocol and Celer Network have proven popular by deploying Ethereum smart contracts that let users transfer assets from mainnet multiple Layer 1 and 2s.
Binance Bridge is a popular point of entry from Ethereum to Binance Smart Chain, an EVM-compatible blockchain developed by the world’s largest crypto exchange. Through the bridge, ERC-20 tokens are wrapped into BEP-20 assets for use on Binance Smart Chain applications like PancakeSwap, Venus Protocol, MDEX, and Alpaca Finance. Ethereum users can access the bridge by adding Binance Smart Chain to their MetaMask or alternative Web3 wallet. There is currently over$5.78 billion locked in the Binance Bridge.
Avalanche is one of Ethereum’s top challengers. It boasts high throughput and offers EVM compatibility with support for Aave, Curve, and Sushi, along with a host of native dApps.
The best way to transfer ERC-20 tokens from Ethereum Avalanche is through the Avalanche Bridge. Similar to Binance Bridge, the Avalanche Bridge can be accessed through MetaMask. Once the assets are bridged, tokens are appended with the symbol “.e.” For example, the bridged USDC token is called USDC.e.
All transfers across the bridge must be approved by three of four trusted partners of the Avalanche Foundation, also known as wardens. There’s currently around $4.8 billion locked into the bridge contract. The Avalanche bridge does not support ERC-721 tokens, so it’s not possible to move NFTs onto the network.
Solana Bridges: Wormhole, Sollet and Allbridge
Solana is arguably the strongest competition to Ethereum’s dominance today. Solana is faster and cheaper than Avalanche, with block times of around half a second. Those who want to send ERC-20 tokens to Solana can use two primary bridges: Sollet and Wormhole.
Tokens sent from Ethereum to Solana are wrapped and minted to the SPL token standard via Wormhole and Sollet, which allows them to be used across Solana dApps. About $265 million is locked in Wormhole, and $217 million in Sollet.
It’s worth noting that tokens that bridge to Solana using Sollet or Wormhole will not be compatible with each other because Sollet-wrapped tokens are different from Wormhole-wrapped versions of the same ERC-20 tokens.
Wormhole is the more popular of the two bridges. Unlike Sollet, it also lets users transfer NFT tokens, whether they were minted as an ERC-721 token on Ethereum or an SPL token on Solana. While the two bridges charge less than a cent for a single cross-chain transaction, Ethereum gas fees are significantly higher.
In addition to Sollet and Wormhole, a multi-chain bridge solution called Allbridge recebtky launched. Using liquidity pools containing more than $1.5 billion in value locked, Allbridge enables token transfers to Solana from Ethereum and other blockchains like Binance Smart Chain, Avalanche, and others.
Fantom’s AnySwap Bridge
Fantom is another top contender in the Layer 1 race. Like Avalanche, it operates an EVM-compatible network called Opera that is faster and cheaper than Ethereum mainnet.
Fantom is perhaps the only chain that does not use a 1:1 standalone direct bridge service with Ethereum. Instead, it predominantly uses a multi-chain solution called AnySwap to execute cross-chain transfers across multiple EVM networks. The Fantom AnySwap bridge is currently the go-to solution to send tokens from Ethereum to Fantom and vice versa.
As a multi-chain liquidity solution, AnySwap uses pools consisting of specific tokens deployed across multiple chains for bridging. This system allows for tokens to be sent to Fantom from Ethereum, Avalanche, Polygon, and Binance Smart Chain. AnySwap’s Ethereum-Fantom bridge currently holds about $2.1 billion in value kicjed,
There are currently three other platforms for bridging tokens to Fantom from Ethereum and other chains: multichain.xyz, SpiritSwap, and SpookySwap. These solutions use AnySwap as their backend but have gained popularity by offering user-friendly web interfaces.
Many bridge solutions have also been created to allow for moving ERC-20 tokens to and from Ethereum sidechains like Polygon.
Polygon is the biggest sidechain network that runs parallel to Ethereum. It has experienced parabolic growth over the last year, helped by several Ethereum-native DeFi projects expanding to the network. It currently holds more than $9 billion in total value locked.
The main entry point from Ethereum is via the Polygon POS Bridge. Users can deposit ETH or any other ERC-20 token to Polygon and then send them back to Ethereum mainnet. Deposits typically take a few minutes, while withdrawals back to mainnet take about an hour.
Polygon operates another bridge with Ethereum called Plasma, which is primarily used for withdrawing ETH to mainnet. However, the drawback is that all ETH withdrawals get locked for up to seven days before they can be redeemed on mainnet.
Besides Polygon’s own bridges, Hop Network also allows for bridging ETH and other assets to Polygon. It uses liquidity pools to transfer tokens and has gained traction thanks to its quick deposits and withdrawal times. It usually takes no more than 10 minutes to deposit and withdraw to the bridge.
Layer 2: Rollup Bridges
Optimistic Rollups are off-chain protocols managed by an on-chain Ethereum contract, allowing for cheaper and faster transactions than on Ethereum mainnet. Rollups compute off-chain, but they publish proofs on-chain, so the data can be rolled back to mainnet if there is an issue.
The two leading Optimistic Rollups are Optimism and Arbitrum, which have a combined total value locked of over 2.5 billion. The Layer 2 solutions have soared in popularity as DeFi projects like Uniswap and Sushi have announced plans to launch on the networks.
To access Layer 2, users have to deposit funds into a bridge deployed on Ethereum mainnet, which credits the same funds on the rollup at the same specified address. While deposits to Layer 2 Rollups are finalized in a matter of 15 to 20 minutes, withdrawals have a seven day waiting period.
Thousands of users have already moved funds from Ethereum mainnet to Arbitrum via the Arbitrum Bridge. Moving tokens to Optimism requires using a bridge called Optimism Gateway. The requests for deposits and withdrawals to these Layer 2 rollups can be made through a MetaMask wallet.
As an alternative to the official bridge platforms, multi-chain liquidity solutions like Hop Network and Celer can also be used to make deposits and withdrawals to Arbitrum and Optimismm, with much faster withdrawal times. Both solutions can also make it possible to bridge ERC-20 tokens between two Layer 2 networks without moving to mainnet.
Terra’s Shuttle Bridge
Terra is a rising DeFi hub built using the Cosmos SDK. Popular Terra dApps include Mirror Finance and Anchor Protocol. Terra operates a bi-directional bridge with Ethereum called Shuttle.
The bridge was designed to move Terra-based assets to Ethereum via wrapping, but not the other way around. For this reason, only whitelisted assets can be moved back and forth between the two chains. To move funds from Ethereum, users must first convert ETH to Terra-based ERC-20 tokens such as wrapped UST.
As shuttle does not support ETH, there is no way for users to bridge the asset directly onto Terra. However, users can stake ETH on Lido Finance and get staked ETH (stETH), which can be bridged to Terra through Lido’s interface on Anchor Protocol. stETH is wrapped to bETH, which can be used to earn rewards on Anchor.
Other Bridges in Development
Other non-EVM networks like Polkadot and Cosmos are building bridges, but most of them are at a very early stage of development. Cosmos will offer bridge services with the soon-to-launch Gravity Bridge, and there is another bridge being developed by Evmos. Similarly, ChainBridge plans to connect Ethereum to Polkadot’s Moonbeam parachain.
There are many more bridge solutions running or in development. As more Layer 1 and Layer 2 networks hoping to capture some of Ethereum’s market share see their ecosystems develop, bridges look set to make composable interoperability a reality over the coming years.
Disclosure: At the time of writing, the author of this feature owned ETH and SOL.
#Top #Bridges #Interoperability #Ethereum