Ever since its birth, crypto have become one of the most groundbreaking innovations of the 21st century. The entire crypto space has witnessed an enormous increase in the number of tokens, projects, and total valued locked in them. Unlike the previous years’ Ethereum trends, projects such as DeFi, NFTs, and many others show that they can be scaled in both horizontal and vertical directions.
About Bridging Solutions
Crypto bridging solutions are methods that allow users to quickly and cost-efficiently move their own crypto tokens between different networks and blockchain. In other words, bridging solutions provide the means to connect different chains, allowing the transfer of the token and/or arbitrary data from one chain to another.
Each blockchain has a different infrastructure, different token standards (ERC, SPL, TRC,…), different regulations and rules. Therefore, to ensure security, traders must comply with the rules of the blockchain when verifying transactions on the chain. And just like countries need to trade, blockchains also need a way to transfer value between each other. So bridging solutions (or cross-chain bridges) were born.
Bridging works by the lock-mint-burn model. User deposits their original tokens in chain A into a bridge (could be a centralized or decentralized bridge), the bridge will mint new tokens in chain B in equivalent value, then lock the original tokens in chain A. If the users want to cancel the trade, they can send new tokens in chain B into the bridge and the bridge will unlock the token in chain A while also burning tokens in chain B.
Advantages of Bridging Solutions
We can think of each blockchain as a country with distinct rules and regulations, and bridges are the silk road that enables countries to trade. Thanks to this silk road, users are able to transfer digital assets from a blockchain with significant value but few apps of its own, such as Bitcoin, to one with a completely different ecosystem, such as Ethereum. The role of the silk road is paramount to countries’ development and the same is true for bridges and blockchains.
The isolated nature of each blockchain has reduced crypto’s growth opportunities and limited users’ ability to take advantage of the opportunity. Therefore, bridges are important as they offer a solution to this, especially in the current time when blockchains have developed to a certain extent, with each blockchain owning a certain amount of assets and users, not being dominated only by Bitcoin and Ethereum as before.
As a user, having a cross-chain bridge will help us:
- Work efficiently. Users can make and receive micro transfers quickly and without paying high transaction fees. This will result in better operating and ecommerce experiences, reduce unnecessary drawbacks and hindrances. For example, if you want to transfer assets from BSC to Solana, you won’t need to go through various steps from transferring assets from BSC to Binance and then to FTX and to Solana, but you can simply make the transaction through a bridge.
- Maximizing profit by developing more cross-chain apps. For example, an Aggregator project helps users deposit tokens in one chain but mint in another.
- Enable greater scalability. Some specific bridges allow high-volume transactions. This enables greater scalability without forcing users to give up the liquidity and network effect of the original chains.
Disadvantages of Bridging Solutions
Although bridging solutions can be considered as the inevitable trend of the crypto world, that does not mean there is no drawback. We need to take into consideration of current hindrances with bridges, including:
- There are too many bridges operating nowadays. Having too many bridges creates fragmented liquidity and makes it difficult for users. There are more and more bridge projects developed in recent years, including trust-based solutions and trustless solutions. Users have to continuously search and learn how to use different bridges. In the future, the need for a tool that aggregates cross-chain bridges – a tool that allows users to use multiple bridges on a single app will rise.
- Bridges are not really secure. Bridges are prone to hackers. The fact that there are many hacking incidents is a warning about the lack of security of bridges at the moment. Although centralized bridges operated by trustworthy third parties can be somewhat secure, there is nothing to guarantee that the third parties won’t make false transactions or scam the users. With decentralized bridges, the security threat is even bigger although there are no third parties taking charge. This is because current decentralized bridge models are very new so they are good prey for attacks. The hack in Poly Network that caused $611 million damage is a prime example of a cross-chain project being attacked. In addition, insurance companies can also take advantage of the situation.
- Many bridges today have a poor user experience. Long wait times, limits on the amount of the assets that can be transferred, limits on withdrawals, to name a few. Bridge projects will need to further improve and enhance their user experience in order to address these current issues.
Celadon Coin’s Bridging Solutions
CELADON Coin is a cutting-edge bridging token technology that will enable three chain standards (Ethereum, Binance Smart Chain, and Polygon) to speak, communicate, and exchange the digital asset, CELA token, with one another.
Users will be able to purchase CELA – our bridging token in any of the provided blockchains and convert the token into other blockchain standards as they see fit. For example, if users purchased ERC-20 CELA, they can convert it to BEP-20 CELA by simply paying the gas fees.