Crossing the Bridge

Vol #56 - October 15th, 2021

Nothing rivals the power and function of a simple bridge. These feats of engineering span across the open air to connect two sides of a river, valley or chasm. 

In the physical world we have suspension bridges, trusses, and arched bridges for every use case and architectural style. In decentralized finance, we have blockchain bridges.  

In order to move assets between different blockchains, there needs to be some kind of bridge that connects the two. If we continue to think of blockchains as simply being an accounting record, in order to have new journal entries the validators on the chain must approve the existence of those assets. 

When a new blockchain organizes, some of those validators will also be running nodes on other chains. At the same time as they are processing transactions on Avalanche, they are also validating Ethereum blocks, and keeping track of the state of those transaction outputs. 

The simplest bridge does not look much different from a fallen tree connecting two river banks. The technical bridge looks to confirm that a wallet has certain assets on one chain, and then takes custody of those, to then validate their existence on another immutable ledger. 

While the design of a bridge seems relatively simple, the experience of using it feels like putting your money in a teleporter and hoping it pops out the other side. 

More advanced designs seek to improve security, and give users the comfortability to transact with significant and meaningful sums of money. Rather than giving your tokens to a single person and hoping magic internet money appears somewhere else, multi-sig bridges with audited code and reputable backers are becoming the norm with larger projects. 

The further out into the DeFi jungle you travel, the more risks there are with bringing your assets back and forth. As a way to bootstrap liquidity, new protocols will offer compelling incentives. Users can pledge tokens to earn triple digit yields. Projects will “airdrop” or give free tokens to people participating in their ecosystem. 

This begins to have the feel of a Full Moon party on a deserted island. The reverie is intoxicating, until the party stops, and everyone has to take the slow boat back to the mainland. Sometimes there’s a risk that the bridge is gone, right when you need to get out. 

Bridges connect places together, bringing freedom of movement and encouraging commerce. In a world where we have multiple different chains operating for specific purposes, the need for fast and reliable connectivity between them becomes critical. 

They are symbols of our advancement as a society, and for centuries civilizations have dedicated their sweat and blood to these functional trophies. In order for DeFi to truly mature and become functional for broad and consumer use cases, the experience of crossing bridges must improve.