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Best Cross-Chain Bridges Powering Interoperability in DeFi
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What are crypto bridges?
7 Best Cross-Chain Bridges
Are Blockchain Bridges Safe?
Crypto bridges as the solution for DeFi industry.
The further we are down the road to mass-scale decentralization, the less we will need to rely on legacy finance. It seems to be easier said than done, but if you’d like to benefit from utilizing multiple chains in your project–there’s no shying away from using bridges. How to approach that?
The daily headlines, top tech publications, social media platforms, and crypto price charts have all shown no mercy in bombarding people with stories of DeFi’s (decentralized finance) colossal success over the years. What started as a peer-to-peer electronic system over a decade ago, blossomed into a full-fledged financial system that promises a superior financial infrastructure to people across the globe.
The industry is now home to myriad different blockchain ecosystems that in their own capacity are contributing to the success of the industry. However, each of these individual ecosystems is siloed from the rest of the industry, and for valid reasons. The siloed nature helps protect the blockchains’ security but in the long-run limits users to a single ecosystem.
With more and more people entering the decentralized finance realm, problems like scalability, high transaction fees, and slow speeds have become evident. Users prefer to have a system that lets them move assets between networks to overcome the problems on one blockchain network and in this regard, the lack of interoperability between chains poses a threat to the overall success of DeFi. Enter crypto bridges.
How Crypto Bridges Promote Cross-Chain Interoperability
What are crypto bridges? As the name suggests, crypto bridges are portals between two vastly different blockchain ecosystems, allowing for the transfer of information, smart contracts, and digital assets between them. There are unidirectional, single-chain bridges that allow users to send assets only to a single blockchain network. Then there are also multichain bi-directional bridges that allow two-way transfer of assets between two chains and extend their support to multiple blockchain networks.
To perform cross-chain swaps, they create synthetic derivatives for native chain assets that are compatible with the destination chain. For instance, if a user wants to swap ETH for BNB, a wrapped token for ETH compatible with the BEP-20 format is created and sent to the user’s wallet. This simple mechanism allows users to swap assets between multiple chains in the industry, allowing them to leverage the low-cost, high scalability, and high speed of other new chains in the industry. They can even borrow funds and participate in better investment and farming opportunities on other networks.
Moreover, decentralized applications can also leverage bridges to access the signature features of other blockchain networks and enhance their own capabilities. Developers from different blockchain networks can also collaborate to build superior decentralized applications for users. These bridges allow for a significant outflow of value from Ethereum to other chains and as such power DeFi’s interoperability movement.
Best Crypto Bridges in the DeFi Industry
In the past few years, major blockchains in DeFi resorted to building bridges between networks to meet the growing need for interoperability within the industry. Here’s taking a look at some of the best bridging platforms powering the DeFi industry. So, here is a list of the best blockchain bridges:
Portal Token Bridge (formerly Wormhole)
Binance Bridge
Avalanche Bridge
Tezos Wrap Protocol Bridge
Synapse Bridge
Bitcoin Cash SmartBCH Bridge
Fantom AnySwap Bridge
Here’s taking a look at some of the best bridging platforms powering the DeFi industry:
Portal Token Bridge (formerly Wormhole)
Portal is one of the most popular cross-chain bridges in the industry. This decentralized bridge was originally built on the Solana Network for bi-directional crypto token transfers between Solana and Ethereum. Now, however, Portal is a multichain network that connects seven of DeFi’s leading blockchains including Solana, Ethereum, BSC, Polygon, Terra, Avalanche, and Oasis which account for 88% of the DeFi industry.
Portal employs special validator nodes called Guardians to provide users with the best cross-chain swap experience. Guardians monitor the activity on the bridge and verify user requests. When a user wants to transfer a crypto token from one chain to the other, Guardian nodes burn the requested amount of tokens on the initial chain. They then mint the same amount of tokens in a platform-specific wrapped format for the destination chain.
Portal Token Bridge stands out from the rest for its extremely low transaction fees of $0.0001 per transfer and its beginner-friendly interface. The bridge has a TVL of $3.5 billion and has processed over $400K transactions so far.
