Cross-chain Bridges Overview: Current Status, Technology and Trends

According to statistics, there are currently at least 126 Layer 1 blockchains. Each of these blockchains has its own characteristics, such as Bitcoin focusing on electronic cash transfers, while Ethereum is a rich but congested network of applications. The flow of assets and information between different chains has become an inevitable trend, leading to the emergence of cross-chain bridges.

This article will provide a comprehensive overview of the cross-chain ecosystem from three aspects: ecological status, technical solutions, and development trends.

Cross-chain ecosystem status

Cross-chain has become a widespread phenomenon:

1. There are many cross-chain bridges. The number of cross-chain bridges on mainstream public chains is numerous and may further increase in the future.

2. There is a wide variety of cross-chain assets. In addition to fungible tokens, NFT cross-chain is also developing.

3. Cross-chain has penetrated into various ecosystems and applications. Mainstream public chains and Layer 2 have adopted cross-chain solutions, and cross-chain assets are widely used in DeFi.

The most prosperous ecosystems for cross-chain at present include Ethereum, BNB Chain, Polygon, etc. Among cross-chain assets, USDC has the highest proportion, followed by USDT, MATIC, etc. The cross-chain bridges with higher TVL include Polygon Bridge, Arbitrum Bridge, etc.

Cross-chain technology solutions

There are three main technical solutions for cross-chain:

Lock-up + Minting/Burning

A typical representative is WBTC. The user's native assets are locked, while an equivalent cross-chain asset is minted on the target chain. Security mainly relies on the bridge itself.

liquidity pool

Establish liquidity pools on the source chain and target chain, allowing users to directly exchange cross-chain assets. The security risks are primarily borne by LPs. LayerZero has made further optimizations based on this.

atomic swap

Achieve direct exchange through hash time-locked contracts without the need for intermediary assets. The highest level of security, but with higher compatibility requirements for chains.

Cross-chain Development Trends

1. Layer2 official bridge focuses on security.

2. Cross-chain aggregator optimizes user experience

3. More and more cross-chain bridges provide liquidity mining.

4. NFT bridges become a new potential track

5. Cross-chain funding pool participation in the DeFi ecosystem

6. Other innovations such as supporting CEX cross-chain, multi-currency cross-chain, etc.

Despite security challenges, cross-chain still has broad prospects. Future opportunities may lie in full-chain interoperability, integration with DeFi, and NFT cross-chain, among other directions. The paradigm of the cross-chain bridges track has yet to be determined and remains full of potential and variables.