Overview of Major Cross-Chain Asset Bridges: How to Make Your Assets Flow?

This article was published on PANews, original title: "Cross-Chain Bridge Guide! How Can I Make My Assets Flow Across Chains?", written by: Jiang Haibo

Recently, the high APY mining on Fantom has attracted many yield-seeking DeFi farmers to cross-chain for profit. Although many users report long cross-chain times and lagging operations, it hasn't affected its popularity. The official claim states that the total transaction volume has now exceeded 10 million.

Why Do We Need Cross-Chain?

Starting with the most popular DeFi among users, according to data from DeFi Llama, the locked value of DeFi on Ethereum has surpassed $100 billion, while other public chains like BSC, Solana, and Avalanche have attracted $49 billion in funds, which can no longer be ignored.

Although many public chains have already amassed significant funds, different chains are like isolated islands, and assets on different chains cannot be freely exchanged. Additionally, many emerging public chains still lack essential infrastructure, such as stablecoins, with no native stablecoins backed by fiat issued by strong centralized institutions like Tether or Circle, nor decentralized stablecoins like DAI, which are collateralized by relatively stable cryptocurrencies like ETH through over-collateralization.

Therefore, there is a need to bring assets from other chains onto one's own public chain through cross-chain methods. Among the commonly used cross-chain methods, aside from centralized institutions like exchanges and wallets for cross-chain withdrawals, the most common are various decentralized cross-chain asset bridges.

Cross-Chain Bridges

A cross-chain bridge is a connection method for transferring tokens or data between blockchains, allowing two chains to have different protocols, rules, and governance models. Cross-chain bridges provide a compatible way to securely interoperate between the two.

How do two independent blockchains know what happens on the other chain? This is essentially an oracle problem. The simplest current solution is to have multiple nodes simultaneously listen for contract events on the blockchain. When the vast majority of nodes agree they have seen the event, consensus can be reached among the nodes, triggering the next event in the sequence. Based on the consensus method and whether custody is needed, cross-chain bridges can be categorized into the following types.

• Custodial + Centralized (e.g., centralized exchange cross-chain, WBTC, etc.)

• Custodial + POA (Proof of Authority)

• Custodial + PoS (Proof of Stake) (Matic, xDAI)

• Custodial + MPC (Multi-Party Computation) (Thorchain, Anyswap)

• Non-Custodial + MPC (Multichain)

Centralized exchange cross-chain bridges are the most convenient for users, but they may also have single points of failure. Most cross-chain bridges hold user assets in custody, and how consensus is reached is also crucial for the security of the custodial assets. Current cross-chain solutions are gradually evolving towards non-custodial models.

Multi-Chain Tokens

To use assets from one chain on another, the same asset must exist on both chains, forming a multi-chain token. When new assets are generated on the target chain, the assets on the old chain can either be directly destroyed or staked in a specific contract. Each implementation of a multi-chain token can be built on any of the aforementioned custodial and consensus mechanisms. Andre Cronje, the founder of yearn.finance, categorizes multi-chain tokens into four types. Below, we will illustrate using the example of bridging assets from Ethereum to Fantom.

Balance Fluctuation

If you want to bridge tokens from Ethereum to the Fantom network, the tokens on Ethereum will first be locked, and then the bridge will be notified to transfer the corresponding tokens to the recipient on Fantom. The bridge contains the maximum supply of tokens, and the user's process does not involve the minting or destruction of tokens.

Minting / Burning

If this method is used, when tokens are destroyed on Ethereum, corresponding tokens are minted on Fantom. Similarly, when tokens are destroyed on Fantom, new tokens will be minted on Ethereum.

Liquidity Swap

Literally understood, this requires liquidity and intermediary tokens. For example, to convert USDC (Ethereum) to USDC (Fantom) in anyswap, there needs to be liquidity for USDC (Fantom) and anyUSDC on Fantom. USDC (Ethereum) is first converted to anyUSDC (Fantom), and then converted to USDC (Fantom). The entire process does not require custody of user assets, only the provision of liquidity.

Packaging + Minting / Burning

This is a combination of the second and third cross-chain methods. Using the same example, first, staking USDC will yield anyUSDC, then burning anyUSDC (Ethereum) and minting anyUSDC (Fantom), and finally swapping anyUSDC (Fantom) for USDC (Fantom) through a liquidity pool.

Commonly Used Cross-Chain Bridges

Multichain.xyz (Anyswap)

Multichain.xyz primarily focuses on cross-chain operations between platforms that support the Ethereum Virtual Machine (EVM). It was co-developed by Andre Cronje, the founder of yearn.finance, and the Anyswap team, and is currently the most widely used multi-chain cross-chain platform. Compared to other platforms, Multichain.xyz's greatest advantage is that it allows developers to deploy their own cross-chain tokens.

As of May 13, Multichain.xyz supports cross-chain operations for 263 tokens across ten blockchains, with network security maintained by 30 nodes, holding $535 million in funds.

Multichain.xyz has broad compatibility and is likely to develop into the most widely used cross-chain bridge, giving developers ample autonomy, allowing anyone to define their own cross-chain tokens.

However, the cross-chain operations of Multichain.xyz typically cannot independently form universal assets on the target chain. The anyUSDC (Fantom) in the above example will also be swapped for the more universal USDC (Fantom) on the liquidity pool. This is necessary to achieve non-custodial cross-chain operations.

RenBridge

RenBridge is primarily used for cross-chain operations between traditional public chains like BTC and smart contract platforms like Ethereum and BSC. The Ren Protocol's cross-chain operations consist of two parts: RenVM for developers and RenBridge for users. RenVM is a decentralized custodial platform based on secure multi-party computation, and the miners maintaining RenVM are called Darknodes. Developers can choose to integrate RenVM to support their cross-chain assets. Users can directly use RenBridge to cross-chain native assets like BTC to smart contract platforms, thereby releasing asset liquidity between blockchains. RenBTC is also the most widely used decentralized BTC-pegged token, with a total of 11,690 issued on Ethereum.

Currently, RenBridge can only achieve cross-chain operations for four public chain assets: BTC, BCH, DOGE, and ZEC to Ethereum and BSC. Relatively speaking, the development cost of cross-chain operations with RenBridge is higher because nodes need to stake REN tokens, and the scale of cross-chain assets is also limited by the market value of REN.

Poly Network

Poly Network is not limited to asset cross-chain operations; it can also achieve cross-chain operations for fungible and non-fungible tokens (NFTs) and any information across heterogeneous chains, maximizing the value transfer capability and application scope of blockchains. For example, in collateralized lending, cross-chain margin can ensure the safety of users' debt positions. By adopting cross-chain technology, projects on Ethereum do not need to redevelop on new chains; they can lock assets and send deposit messages to the Ethereum chain, where smart contracts will verify the legitimacy of the messages to achieve cross-chain collateral.

Currently, PolyBridge supports cross-chain operations for 44 assets across public chains like Ethereum, BSC, Heco, Neo, and Ontology. PolyBridge can directly achieve cross-chain operations between assets on BSC and Heco, while Multichain.xyz typically requires Ethereum for transfer.

ShuttleFlow

ShuttleFlow is an asset cross-chain protocol developed by Conflux, collaborating with participants in the Conflux ecosystem, such as wallets, custodians, decentralized exchanges, etc., to form a cross-chain asset custody alliance, completing cross-chain asset mapping through a 2/3 multi-signature method. ShuttleFlow uses the Conflux chain as a relay bridge to enable flexible cross-chain operations between multiple chains. For example, to cross-chain ETH to BSC, ETH must first be bridged to Conflux, and then from Conflux to BSC.

Specific Asset Cross-Chain Bridges

In addition to these general cross-chain bridges, there are also some designed specifically for cross-chain operations of certain assets.

Binance Bridge

No Binance account registration is required to use it, primarily aimed at bringing assets onto the Binance Chain and Binance Smart Chain, supporting cross-chain operations for assets like BTC, ETH, BCH, DOT, FIL, ATOM, ADA, etc.

xPollinate

Supports fund transfers across three chains: Polygon, BSC, and xDAI, allowing assets supported by BSC to be transferred to Polygon and xDAI.

Popsicle

In collaboration with Andre Cronje, the founder of YFI (yearn.finance), and the Tether team, the first wrapped version of fUSDT was launched, which is the first and only official cross-chain USDT from Tether.

Dex Self-Built Cross-Chain Bridges

Mdex, as the largest project on Heco, can rely on the centralized cross-chain support of Huobi Exchange for its assets, but there are also some projects that Huobi does not support for deposits and withdrawals, so Mdex has built its own cross-chain bridge, currently only allowing FEI, TRIBE, and SHIB to be bridged from Ethereum to BSC and Heco.

Public Chain Project Self-Built Cross-Chain Bridges

Some projects will issue tokens on one chain during the token distribution and then gradually transfer them to other chains based on demand. For example, Harmony (ONE) initially distributed tokens on the Binance Chain and later built a cross-chain bridge from BEP2 to ERC20.

Conclusion

The growth of old blockchain performance cannot keep up with the expansion of scale, and new chains take a long time to re-establish a complete ecosystem. Cross-chain bridges can effectively solve these problems. As blockchain technology matures, various forms of cross-chain bridges are already operating between blockchains, addressing interoperability issues.

Among the existing cross-chain bridges, Multichain, which offers better compatibility and autonomy, is currently in a leading position. Multichain is essentially a combination of cross-chain and AMM, reflecting the composability of DeFi.