Bridge

Blockchains cannot talk to each other directly, so bridges exist to transfer value between them. The typical design locks tokens in a smart contract on the source chain and mints an equal number of wrapped tokens on the destination chain. Burning the wrapped tokens later unlocks the originals. Bridges connect Ethereum to its layer 2s, Bitcoin to other chains, and layer 1 chains to each other.

Bridges differ in who controls the locked funds. Some rely on a small group of signers, some on a network of validators with their own token, and some, like the native bridges of Ethereum rollups, on the security of the base chain itself. The native rollup bridges are considered the most secure but can be slow, with optimistic rollup withdrawals taking about a week.

Bridges have been the single largest target for hacks in crypto. The Ronin bridge lost about 600 million dollars in March 2022 and Wormhole lost about 320 million dollars the month before, among many others. A bridge holding a large pool of locked assets is a concentrated prize, so users should prefer well-audited bridges with a long track record and avoid leaving funds in transit.