Content created by Web3 Foundation on behalf of Polkadot.
Blockchain technology has come a long way since 2008 when the Bitcoin white paper was published. Since then, an explosion of blockchain networks have been created, with a huge variety of designs and intended functionality.
One of the key value propositions of blockchain technology revolves around the promise of decentralization — the ability for networks to be “owned” and run by several, sometimes thousands or even millions of stakeholders rather than the conventional, more centralized corporate model of governance.
But as the number (and often the size) of blockchain networks continues to grow, they remain largely cut off from one-another, like islands with their own communities and economies that can’t exchange information or value with the outside world. The siloed nature of today’s blockchain networks goes against the principle of decentralization and re-establishes the Balkanization of the existing centralized web (often called Web 2.0).
Not only does the lack of interaction between blockchain networks limit decentralization, it hinders the advancement and relevance of the technology by placing boundaries around innovation, economic growth and free trade. Generally, applications designed for one network only work within that network, limiting their potential for broader adoption.
As blockchain technology matures, several projects are addressing this problem by building “bridges” between networks. The move to a world where blockchains and systems are interoperable will allow applications to build on each other’s services and strengths. This will likely have a major impact across a wide range of services, as a new, decentralized and interoperable internet begins to take shape. Applications such as decentralized finance (DeFi) will benefit from increased liquidity and the ability to build a network of services that interact with each other across communities, increasing their user base and expanding the resources available.
What Is a Blockchain Bridge?
A blockchain bridge is a connection that allows the transfer of tokens and/or arbitrary data from one chain to another. Both chains can have different protocols, rules and governance models, but the bridge provides a compatible way to interoperate securely on both sides.
There are many different designs for bridges, but they can generally be divided into two camps: more centralized bridges that rely on trust or federation, and so-called “trustless” bridges that are more decentralized. Centralized bridges rely on some type of central authority or system to operate, meaning that users are required to place trust in a mediator to use a given app or service.
By contrast, trustless bridges are those in which users don’t have to place trust in a single entity or authority. Rather, the trust is placed in the mathematical truth built into the code. In a decentralized blockchain system, this truth is achieved by many computer nodes reaching a common agreement according to the rules written into the software. This removes many of the problems of centralized systems, which are open to corruption or abuse of power, by using transparency and incentivization of widespread participation.
Bridges can be created to suit various purposes. They are not only capable of enabling a token on one network to be used on another network, they can also be built to exchange any type of data, including smart contract calls, decentralized identifiers, off-chain information from oracles such as stock market price feeds and much more. For example, a chain anchoring verifiable credentials on Polkadot could be used for KYC (Know Your Customer) requirements by a gaming company built on Ethereum. Bridges allow applications to be even more decentralized, as they are no longer limited by their network of origin.
Building Bridges with Polkadot
Polkadot was designed as a “blockchain of blockchains,” with the belief that no single blockchain can do everything. Polkadot allows sovereign blockchains called parachains — each potentially with their own designs, rules, use cases and tokens — to be interoperable, while all benefiting from the security provided by Polkadot’s central “Relay Chain.”
But Polkadot also allows parachains and external networks like Bitcoin or Ethereum to interoperate via bridges. Polkadot bridges can be designed in a number of ways, and can be composed of various configurations of blockchains, smart contracts and what are called runtime modules (aka pallets)—configurable blockchain components for developing custom Polkadot-compatible blockchains with the Substrate blockchain framework.
Bridges on Polkadot can be implemented in a number of ways — some may be built as a common good public utility for the entire community to make use of, while others may be operated by community teams on a for-profit basis.
Polkadot’s design will also enable bridging between two external chains. For example, Polkadot could allow the transfer of Bitcoin (BTC) to Ethereum in a decentralized manner in the following way:
A bridge running as a parachain on Polkadot may have collators monitoring and translating the information between the Polkadot Relay Chain and an external chain, for example, Bitcoin. Another parachain bridge may be working in the same way with a different chain, for example, Ethereum. Using cross-chain message passing (XCMP) between the two bridges within the Polkadot ecosystem, it’s possible to build a custom user interface to interact with these bridges, allowing a user to interact with both of these external chains. In this way the user could use their BTC to take part in a decentralized finance (DeFi) smart contract on Ethereum via Polkadot.
Several bridges have already been built or are in development in the testnet stage for the Polkadot ecosystem.
Bridges Supported by Web3 Foundation Grants
To further their mission of supporting a decentralized and fairer internet of the future, Web3 Foundation has supported the following bridge projects with grants:
Interlay is building a trustless bridge from Bitcoin to Polkadot. Users can mint 1:1 Bitcoin-backed assets onto Polkadot as PolkaBTC, currently at the beta testnet stage.
Snowfork is building a general-purpose bridge between Ethereum and Polkadot. This will enable ETH, ERC-20 assets and arbitrary data to be transferred from Ethereum to Polkadot. The bridge can be also used for more sophisticated interactions such as cross-chain smart contract calls.
Darwinia is building a permissionless non-custodial bridge protocol featuring efficient, low cost, decentralization of cross-chain tokens and non-fungible token (NFT) transfers, as well as other cross-chain operations. Darwinia has already launched its bridge to Ethereum and aims to implement more bridges in the future connecting significant heterogeneous blockchains such as BSC, Tron, Filecoin, etc.
Centrifuge collaborated with ChainSafe to develop a modular, asset-agnostic and multidirectional bridge between Substrate-based blockchains and Ethereum. The ChainBridge allows Centrifuge to move fungible and NFTs between chains. Being open source, ChainBridge also enables other teams within the ecosystem to build bridges to their projects.
ChainX, a crypto assets gateway, is planning bridges to several networks and has implemented a BTC-to-Substrate bridge.
Bifrost has developed an EOS network bridge that enables trustless cross-chain asset transfer. Bitfrost is also planning to work on interoperability with EOS contracts.
Open Interoperability as the Future of Blockchain Tech
Building the future of an open, decentralized web (Web 3.0) requires a spirit of open collaboration and interoperability, with teams across the blockchain space working together to bring about a new paradigm. Blockchain bridges provide a promising way to move beyond the Balkanization of blockchain networks in an effort to promote greater innovation, user adoption and technological relevance. By enabling different blockchain protocols to work together, bridges can help move us toward the next-generation decentralized web, ending the relevance of powerful centralized mediators that don’t have users’ interests in mind.
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