$BRIDGE: Bridging Solutions

$BRIDGE Composition & Weighting

The multi-chain future will depend on a number of intra-chain and intra-layer solutions for moving tokens/value between chains/layers in a variety of different ways. It is still too early to know how value/fees/yield will eventually be distributed among these solutions, suggesting a broadly-diversified early-stage VC approach involving a diversified basket auto-harvested for intrinsic yield and actively-managed for staking options for earning extrinsic yield and hedging.

In addition to direct minting/investment in the $BRIDGES token, constituents of the basket and possibly the entire $BRIDGES basket could also be included in broader pools-of-pools like $ALTL1 and $L2DEFI

Bridging Solutions and Bridge Aggregation

In the article titled, ‘Blockchain Bridges: Building Networks of Cryptonetworks’ Dmitriy Berenzon from 1Kx, classifies bridges into the following categories:

  1. Asset-Specific — These bridges are used to exclusively provide users access to a specific asset from a foreign chain. For example, Wrapped BTC or wBTC.
  2. Chain-Specific — Such bridges are typically used for locking and unlocking tokens on the source and subsequently minting wrapped assets on the destination chain. For example, Polygon’s POS bridge.
  3. Application-Specific — These bridges are built by specific applications to gain access to two or more blockchains for exclusive use within the application. For example, Compound Chain’s Compound Cash.
  4. Generalized — These are bridges that allow the transfer of information across numerous blockchains. For example, Inter-Blockchain Communication Protocol (IBC).

In Dmitriy’s article, he also talks about 3 types of bridge designs. These designs are categorized based on the cross-chain transaction validation mechanism. They are:

  • External validators and Federations
  • Light clients and Relays
  • Liquidity Networks

We won’t go into detail about these 3 bridge design categories here. Our main point of focus here is that there are many different types of bridges, and even bridges that fall into the same category can further be differentiated based on design and features. As a result, there are too many bridge options, and each bridge has its own strengths and weaknesses.