A Step-By-Step Guide To Multichain: What Are Blockchain Bridges And How Do They Work?

At first, there were only a few blockchains in the whole crypto space. But as time went by, many projects emerged and we have started to move into a multi-chain era.

Blockchain bridges started to explode in popularity as they are fuelled by the demand to move assets from one blockchain to another.

What is a blockchain bridge?

A blockchain bridge is a connection that allows the transfer of tokens or data from one blockchain to another.

One of the biggest issues of blockchain to date is their inability to work together.

A blockchain is a self-contained ecosystem with its very own protocols, rules and governance models. Once a developer builds their decentralized application (dApp) on the blockchain, it is generally locked into that particular blockchain.

Due to the lack of interoperability, a bridge is necessary to provide a compatible way to transfer tokens from one blockchain platform to another securely.

How does a bridge work?

Image Credit: MakerDao

If you're holding on to Bitcoin and want to transfer it to Ethereum, all you have to do is deposit the $BTC onto the bridge and select to withdraw in $ETH.

The bridge will lock the $BTC in a smart contract and mint an equivalent amount of $ETH on the Ethereum blockchain. The bridge would use some kind of mint-and-burn protocol to keep the token supply in check.

If you do not want to use a bridge, you can still 'bridge' your $BTC through a centralised exchange (CEX). What you have to do is transfer the $BTC into a CEX, sell it for $ETH then transfer it out. This whole process is more tedious and time-consuming than just using a blockchain bridge.

In general, blockchain bridges help to conduct fast transfer of tokens from one blockchain to another at a low cost.

Notable DeFi bridges

Here are some of the popular cross-chain bridges and the chains they support:

Step-by-step guide on how to use Multichain

Image Credit: Multichain

Previously known as Anyswap, Multichain has a wide array of tokens from some of the less known chains. It is by far one of the better-known bridges that connects to a number of blockchains.

Image Credit: Multichain

If you're familiar with Decentralised Exchange (DEX), you will be familiar with Multichain's interface. It is the same as a DEX but the only difference is that other than swapping a token for another in the same blockchain, you have to option to swap your token and bridge it into another blockchain.

Image Credit: Multichain

Like many other protocols, the first step is always to connect your digital wallet. It supports a range of wallets from MetaMask to Coinbase Wallet.

Image Credit: Multichain

The second step is to choose which blockchain you would like to bridge from. The number of chains it supports is just phenomenal. There are so many chains that I didn't know existed in the crypto world.

In this example, I chose to bridge from one of the most popular chains, Binance Smart Chain.

Image Credit: Multichain

Up next is to choose which token you would like to bridge over to the other chain. There are a lot of protocol tokens to choose from but I highly recommend bridging a stable coin. Stablecoin like USDC is a very good choice as it is widely accepted in a number of blockchains.

Repeat the second step but this time choose which blockchain you would like to receive the token. In this example, I chose the up and coming Fantom network.

Image Credit: Multichain

Once you reach this point, all you have to do is approve the token and you can start to swap the token. As this is a cross chain swap, it would take an estimated 10-30 minutes for it to process the transaction.

Take note that multichain.xyz is different from multichain.org. Multichain.xyz is founded by Adre Cronje (creator of Yearn Finance) and it uses Multichain as a backend service.

Happy bridging!

Featured Image Credit: Chain Debrief

Also Read: How To Add Terra To Your Keplr Wallet And Bridge Tokens To The Cosmos Ecosystem