How Polkadot Achieves Cross-Blockchain Operability Using Bridges
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How Polkadot Achieves Cross-Blockchain Operability Using Bridges

March 22, 2021      Anubha Jain

Currently, different blockchain networks are providing various functionalities available to users and developers. The multiple chains are cut-off from one another. Polkadot is a next-gen blockchain protocol that combines an entire network of these independent blockchains to provide trust-free, cross-chain interoperability.

Polkadot bridges connect blockchains with diverse communities, set of governance rules and models. Many such bridges are developed or currently being developed to connect Polkadot and other networks.

As an example, consider a decentralized insurance application. Polkadot could be used by employing a separate parachain of the insurance marketplace for the buyers and sellers. Such an application could use an oracle parachain for external data, as well as a parachain for data from off-chain IoT sensors.

Now, consider a case where you have purchased an insurance policy against a flight delay. You can leverage the Polkadot parachains data in a way that you would be granted claim if:

  • The oracle parachain confirms a delay in your flight.
  • The IoT parachain confirms your on-time presence at the airport for the flight.

If the insurance application on the parachain gets triggers from both the oracle and IoT parachains, then it could use an Ethereum bridge to trigger a transaction using a stablecoin, such as DAI, to pay the claim amount to the policy-holder from the insurance company account. Many other complex logics could be built leveraging bridging between Polkadot parachains and external chains.

Image Source: Polkadot

Polkadot is designed for such innovative future applications that are primarily deployed on one network and occasionally use other networks for simple transactions, but also for the applications that further live across different specialized blockchains.

Polkadot Network

The main components of a Polkadot network are:

  • Relay chain: It is the main chain of Polkadot. It acts as the consensus layer and validates the state transitions of the parachains. 
  • Parachains: These are the parallel chains on Polkadot. These can be layer-1 blockchains like Bitcoin or Ethereum which have sovereign governance and economics.
  • Bridges: These are specialized parachains on Polkadot which facilitate interconnection of other parachains. These bridges can be either decentralized or trustless in their governance.

Polkadot Bridge Architecture

Decentralized bridges are more preferred in Polkadot architecture. For Substrate-native chains like Kusama and Polkadot, a bridge pallet is used. In case the network is not substrate-based, a bridge smart contract on the non-substrate chains like Ethereum is used that initiates transactions based on triggers. For e.g., the Parity bridge is used for connecting Proof of Authority (PoA) chains with Proof of Work networks like Ethereum. It is a combination of two smart contracts, one deployed on each chain to facilitate cross-chain transfers. The initial parity bridge POC connected two Ethereum chains, main and side. Ether deposited into a contract on the main chain generates a balance denominated in ERC-20 tokens on the side chain. Conversely, ERC-20 tokens deposited back into the contract on the side chain can free up Ethers on the main chain. 

In case, if a chain does not support smart contracts and is not Substrate-based, like Bitcoin, protocols like XClaim could be used to bridge networks. In XClaim protocol, a swappable asset is backed by collateral of higher value.

Polkadot Bridge Examples

Following are some bridges supported by Web3 Foundation grants programs:

  • Interlay: It is a trustless bridge connecting Bitcoin and Polkadot. It allows to mint 1:1 Bitcoin-backed asset, PolkaBTC onto Polkadot. This fungible token represents Bitcoin in the Polkadot ecosystem which can be used with any application or parachain just like a native asset. It is seen as a tool to unlock BTC liquidity on Polkadot chains for Polkadot’s DeFi ecosystem. Currently, it is in its beta testnet phase which went live in Feb 2021. It locks Bitcoins on the bitcoin blockchain and unlocks PolkaBTC on Polkadot. These tokens can remain on the Polkadot network indefinitely and can be redeemed at any point in time.
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Image Source: Interlay

Users can also transfer these tokens to other users or migrate them to other parachains within the Polkadot ecosystem. They can easily integrate them with other stablecoins, DEXs, or other DeFi protocols.

  • Snowfork: It is a Polkadot parachain for bridging between Ethereum and Polkadot. It enables the transfer of ETH or ERC-20 assets or any arbitrary data from Etherum to Polkadot. It also supports cross-chain smart contract calls. For e.g., any application built on Polkadot could use the bridge to send DAI from one account to another directly on the Ethereum blockchainSnowbridge parachain also allows applications on other parachains to send and receive messages from smart contract applications on Ethereum. It allows wrapping ETH on Ethereum into a Polkadot-based asset, SnowETH. It also facilitates the wrapping of ERC20 tokens on Ethereum into Polkadot-based assets, SnowERC20. You can also wrap DOTs into Etherum-based assets via SnowDOT. It uses a relayer to send messages which are RPC calls across both blockchains via channels.

Image source: Snowbridge documents

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Components of different chains at the same layer of its layer-specific protocol communicate with each other via messages to achieve interoperability.

  • Darwinia: Developed by a blockchain technology company, Iteration, it is a permissionless and non-custodial bridge protocol. It has launched a bridge between Polkadot and Ethereum in Feb 2021. It is working on bridges for other blockchains like EOS, Tron, Near, Filecoin, BSC, etc.

Image source: Darwinia

The native token for Darwinia Network is RING which can be used as gas for transaction fees, contract execution fees, network bandwidth charges, and storage fees.

Some applications based on the Darwinia cross-chain bridge are Evolution land, a simulation blockchain game; Subscan, a high precision data explorer and visualization for substrate-based blockchains; Defi Token DEX, an exchange to facilitate cross-chain exchange; and an NFT auction market.

  • Centrifuge: It is a Proof-of-Stake blockchain built on Substrate that enables users to bring their digital assets on-chain as non-fungible tokens (NFTs). It acts as a multidirectional bridge between Substrate-based blockchains and Ethereum. It has collaborated with Chainsafe which enables other teams within the ecosystem to build bridges to their projects. Its Substrate-based testnet Amber has gone live. Using centrifuge parachain, users can exchange and tokenize business documents like invoices as NFTsA security protocol called Tinlake built on top of the Centrifuge chain enables greater security when using these tokenized assets. The centrifuge uses substrate for financial supply chain-specific use cases which require faster execution of logic and safety of transactions. The centrifuge uses zero-knowledge verification to ensure the privacy of on-chain documents. It also uses multi-signature accounts and ERC-721-based NFTs to correlate to on-chain documents. Its native token, Radial (RAD) provides governance and incentivizes validators to operate the chain.

Image source: Centrifuge

  • ChainX: It is a project planning to make bridges to several networks. It has already implemented a BTC to Substrate bridge. The bridge is a PoS consensus chain that uses BTC multi-sig wallets. Its native token is PCX which can be used for staking, paying fees, on-chain governance, and distributing inter-chain mining rewards.
  • BitFrost: The goal of Bifrost is to unlock liquidity of the staked funds from the Proof of Stake chains within the entire Polkadot ecosystem. Its testnet, Bitfrost Asgard CC3 has recently been released. It is also working on interoperability with contracts on the EOS chain.

Using liquid staking, a user can bond his tokens as a stake on a PoS network and still use the tokens for trading on DeFi or any other purpose. These tokens can be unbonded at any moment and the user will receive the tokens back immediately. For example, when a user bond his DOT token, he will receive a vDOT token which he can further trade on the Bifrost DEX which serves as a gateway to the rest of the Polkadot ecosystem and its DeFi capabilities. He can also use the bridge to Ethereum to exchange it with ETH or any ERC-20 token.

Conclusion

Like the internet, the future of the fast-growing Blockchain infrastructure also lies in the cooperation between multiple chains. The Polkadot ecosystem aims to fulfill this functionality and to bridge the gaps between different architecture. We expect to see the development and evolution of several bridge projects to allow users to take advantage of resources anywhere in the blockchain network.

#BitFrost #Centrifuge #Cross-Chain Interoperability #Darwinia #Interlay #Parity Bridge #Polkadot #Polkadot Bridges #Snowfork
Anubha Jain
Anubha Jain

Anubha is a keen follower of the manifold applications of blockchain technology. She is a doctoral candidate researching privacy constraints of the blockchain and is working to enhance user privacy in cryptocurrencies. She is a strong supporter of the vision of user-owned internet and believes blockchain as the key to it.