Blockchain Bridge

Blockchain bridges exist because blockchains are built to be self-contained. Bitcoin's ledger has no way to read Ethereum's state, and vice versa, so moving value between them requires an intermediary system rather than a native transaction. A bridge fills that gap by observing an event on one chain and triggering a corresponding action on another.

Most bridges use one of three mechanisms. In lock-and-mint, a user deposits tokens into a vault contract on the source chain; once validators confirm the deposit, an equivalent "wrapped" token is minted on the destination chain, redeemable later by burning it to release the original. Burn-and-mint destroys tokens on the source chain and issues native tokens on the destination, the model Circle uses for USDC transfers via its Cross-Chain Transfer Protocol. Liquidity-pool bridges instead swap between pre-funded reserves on each chain, avoiding wrapped assets entirely but depending on sufficient pool depth.

Wrapped Bitcoin is the best-known example, letting BTC circulate on Ethereum as an ERC-20 token for use in DeFi. Bridges can be centralized, run by a single custodian, or decentralized, secured by validator networks or cryptographic proofs, with faster designs generally trading away some security.

That tradeoff has proven costly. Bridge contracts often hold enormous locked collateral, making them prime targets: the Ronin Bridge lost roughly $625 million in 2022 to compromised validator keys, Poly Network lost over $600 million to a smart contract exploit the same year, and Wormhole and Nomad each lost hundreds of millions to signature and verification bugs. These incidents make bridge security, not just cross-chain functionality, central to evaluating any bridge protocol.