How Do Blockchain Bridges Manage Data Sharing, and What’s the Importance?
Tags: blockchain, database, bridges, tutorial
Published: 2022-12-20 07:20:18

Bitcoin, Ethereum, Solana, Polygon, etc., are some popular entities across the blockchain community network. These networks possess so many facilities that you people are aware of. It includes immutable ledgers, decentralized finances, secure databases, NFTs, etc.

Blockchain bridges or Cross-chain bridges made transactions possible between assets, data/information. It keeps the flow of transactions and conversion seamless between the two different blockchains. Furthermore, it also enables the interoperability possible along with fund transfer, lends transfer, asset staking, deposit, swap, etc.
## Understand the Functionality, Classification of Cross Chain Bridges and their Significance
### Classification of Blockchain Bridges
Be its business owners or developers; everyone is concerned about the blockchain bridge’s usage, liquidity status, and security measures. 
Cross Chain bridges can be classified into two categories: 

- Trust-oriented and 
- Trustless.

Trust-based bridges can manage the crypto-assets transfer rapidly and at comparatively low fuel costs. It has a centralized behavior which is not possible by the trust and federation of users. These bridges do not seem concerned about security or asset fraud and only depend on the incentives to keep the transactions running without disruptions.

Trustless bridges possess decentralized behavior and are dependent on smart contracts. It truly complies with the blockchain principle and has an isolated independent network. It offers top-notch level security and translation validation but also has some vulnerabilities.

Let’s first talk about its functionality. 
### The functionality of Blockchain Bridges
#### Lock and Mint
Users can lock and wrap assets on the original chain if they are part of any smart contract. After that, they can treat the secondary new chain as an IOU. Users can mint the wrapped and locked assets on this chain.
#### Burn and Release
The first chain will work to burn the crypto assets, and the second new chain will mint or release the assets.
#### Lock and Unlock
Blockchain Bridges manage asset transfer by locking and unlocking mechanisms. The primary chain will function as the locking, and the second chain will manage the unlocking of crypto assets.
Importance of Cross Chain Bridge/ Blockchain bridges
We have numerous globally accepted, interoperable finance management systems to transfer data, assets, tokens, and cryptocurrencies. This system is responsible for managing foreign exchange. 
### Efficient and Reliable
Here, Cross Chain Bridge has a significant impact on the blockchain community. It is a far more efficient, reliable, and modest way to manage token transactions and other activities. 
### Low Transcationational Activities
Having a cross-chain bridge saves you from unnecessary fuel of transaction activity and saves time that could be wasted in currency conversion activities.

Crosschain bridge operations do not stop here. Further, it made the NFTs and smart contract transfer too. Moreover, it can facilitate better dApps transaction liquidity, user experience, asset productivity, etc.

Layer-1 and layer-2 protocols were launched to offer data transmission at low fuel consumption and higher network throughput. They need to be able to manage asset transmission across different layers, even being scalable and rapid. Here we are adding some more interesting capabilities offered by the Cross Chain Bridge.
### Productive Asset Management
dApp is emerging as one of the most significant ways to strengthen the financial condition. Users can accumulate an ideal interest by staking, yielding, lending tokens,dApps, NFTs, etc. It can easily wrap the asset from one blockchain to another. Cross Chain Bridge extends productivity and adds extra value.
### Better User-experience
Ethereum is one of the best stages to construct dApp and other blockchain accessibilities. But it is expensive and a bit slower in managing the transaction speed. Suppose we leave it and build the dApps through Polygon, Arbitrum, Solana, etc. It is a comparatively cheaper option with low fuel, better UX, and higher network throughput. With cross-chain bridge accessibility, users will enjoy a top-notch and productive user experience.
### dApps liquidity transaction
Every developer desires to access the liquidity pools as it supports the successful development and growth of the dApps. Crosschain bridges eliminate all the crucial things providing better access across on-chain liquidity.
## Is there any liability associated with the blockchain or cross-chain bridges?
We have shared the brief info about the cross-chain bridge, but it has boxed some liabilities too. Want to know what are the hidden risks associated with this? Here we are mentioning the significant points.
### Non-decentralized
The custodians manage so many tasks, and they overrule the blockchain principle. They may misuse their rights and influence the asset transfer.

- Minting & Burning Wrapped Tokens
- Transaction Proof Verification
- Holding Frozen Tokens
- The bridge may access the transaction information

### Doubtful Liquidity Experience
When we think about the dApps bridges, their low liquidity is always discussed. To keep things on a perfect and balanced track, they take support from crosschain bridges. Due to this cross chain bridges face a shortage of liquidity. In this situation, users take a toll on its capabilities.
### Technical risk
They are on the bucket list of hackers because it contains user funds. They can easily expose and exploit the blockchain’s exploit nature. Smart contracts offer different types of flaws and influence decentralized bridges. The blockchain community has witnessed two major theft events. One happened on the Wormhole cross-bridge chain($320M), and another was with Qubit Finance’s ETH-BSC bridge($80M).

We all know cross-chain bridges have support from the developers. They look after security and manage the flaws. If they put the best practices in place, user investment will fail.
### Loss of User Funds
The custodians also participate in this fund theft activity because they better understand bridge services and freezing user tokens. They know the loopholes in how to do this. However, a bond is also available here to prevent such occurrences.
### Lack of Censorship Resistance
Native chains offer censorship resistance to tokens. But when the same tokens are transferred over to the other blockchain environment. They need to sacrifice this censorship and bear the risk of funds burnt events. Additionally, by the accessibility of the crypto cross-chain bridge, there’s a risk of token freezing or locking.

## Wide Variety of Crosschain Bridges
There is a wide variety of crosschain bridges. Make an informed choice by considering different aspects and features. Each one has different behavior, network, and dependency. A few of them we have mentioned below:
### Wormhole
Wormhole token has a dependency on smart contracts and targets on the blockchain. First, we will wrap it into a wormhole token and mint it to the new blockchain. A wormhole can support an extensive set of tokens and blockchain networks.

Ethereum, Shiba Inu, frax protocol, USD coin, Binance USD, tether, Frax protocol token, Huobi Global, Terra USD, Serum, Maker DAO, OKEx, Sandbox, Decentraland, Axie Infinity, Uniswap, BNB Chain, Polygon, Fantom, Oasis, Avalanche.
### Binance Bridge
It can support numerous blockchain networks, including the top market players. BNB chain, Ethereum, Solana, Tron, etc. It was one of the most prominent projects by the native Binance Smart Chain Blockchain Project.
### Multichain
Multichain is also one of the promising cross-chain bridge or protocol options. Perfect for managing the token, data flow, and asset transfer. It can manage all the available blockchain networks and cryptocurrency tokens.

There are many other blockchain bridges to manage cross-chain data sharing. I hope this guide has given me some knowledge about different aspects of the blockchain environment. Keep engaged with our blogs. We welcome insightful inputs to add and make them more valuable.

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