Custodial vs. Non-Custodial Blockchain Bridges
Bridges are an essential component of the blockchain infrastructure that allows for interoperability between different networks. Yet, the wave of bridge cyberattacks in 2022 that cost more than $2 billion in lost assets has prompted questions about the security of bridges.
Blockchain Bridges: What Are They?
A blockchain bridge is a technology that joins two blockchains and allows data or values to move back and forth between them. Interoperability that might otherwise be segregated due to incompatibility is made possible via blockchain bridges. This interoperability encourages decentralization in the sector by giving customers access to new protocols and giving developers the capabilities to create and work on new products across numerous blockchains. It offers information and money with an effective means of transmission. Future success will depend on the capacity of numerous new blockchains to interact as they emerge and develop with their distinct use cases and communities.
A Custodial Bridging Option, Stably Bridge
Stably is a partner in the Nevada-based trust company Prime Trust. Anyone can transfer their digital assets between blockchain networks using the Stably Bridge. As an example, let’s use Stably USD ($USDS) to show how Prime Trust’s API was used to create Stably Prime. A person can “burn” their $USDS using Prime Trust, which credits their account with the appropriate number of USD credits to convert each $USDS into real USD. They can then “mint” $USDS onto a different blockchain of their choice using this USD. This technique is entirely safe and legal because there is a genuine USD equivalent. Additionally, since it is based on Prime Trust’s API, a hacker would have to successfully compromise Prime Trust, which is challenging.
Exploring the Possibilities of Improved Blockchain Communication
There are other methods of communication between blockchains than bridges.
Based in Vancouver, Canada, LayerZero transfers data or cryptocurrency assets through low-level communication between blockchains. Although LayerZero is a communication primitive that serves as a bridge for transferring assets across blockchains, it is not necessarily a bridge in and of itself.
With the ability to intelligently route any asset from any chain to any asset on another chain, LI.FI is a cutting-edge bridge and DEX aggregator. In a single solution that is offered as an SDK, widget, or API, we have introduced support for 13 bridges across 15+ EVM-compatible chains, together with all DEX aggregators & DEXs on those chains.
To sum up, this sector is poised to enter a new phase of development and opportunity and can bring the next billion users into its ecosystem. We can overcome the barriers to blockchain adoption and build a more open and accessible platform for everyone by utilizing the power of cooperation and invention. By focusing on user education, providing a great experience, and continuing to develop innovative technologies such as non-custodial bridges, we can realize the full potential of blockchain and usher in a new age of decentralized finance and applications.