This week we have the final episode in our Blockchain Series and the finale of Season 1 of Cut the Cryp. We'll be back with a new avatar, and we'll share more on that in the coming weeks. But for now, here's this weeks episode where Rohas explains what blockchain bridges are, how they work, and more!
[00:00:03] Hi there, welcome back to Cut The Cryp, a weekly podcast where we deepen your understanding
[00:00:08] of the crypto world and in the coming weeks on the blockchain world as well.
[00:00:13] I am your host, Rohas Nagpal.
[00:00:17] Over the past few weeks, we discussed the basics of blockchain technology.
[00:00:21] We also discussed some of the popular blockchains in detail.
[00:00:25] Now we are onto the final episode of this series and also our finale of the first season
[00:00:31] of Cut The Cryp.
[00:00:32] We will be back soon in a new avatar and we will share more on that in the coming weeks
[00:00:37] as well.
[00:00:38] But for now, let's move on to the topic of this week's episode, blockchain bridges.
[00:00:43] So what is a blockchain bridge?
[00:00:45] Let's say you live in India and are travelling to Singapore.
[00:00:48] In India, we use Indian rupees while in Singapore they use Singapore dollars, let's
[00:00:53] call them Singh dollars for short.
[00:00:55] So you would convert some money from rupees to Singh dollars using a bank or you could
[00:01:01] use an international credit card that enables you to pay in Singh dollars while you are in
[00:01:06] Singapore.
[00:01:08] This is simple in the world of banks, but a lot more difficult in the world of blockchains.
[00:01:14] Ethereum Mainnet and Terra are two independent blockchains.
[00:01:17] Yes, I know Terra is going through really bad time and it's gone bust, but for the
[00:01:21] sake of this episode, let's still talk about it as an example.
[00:01:26] So Ethereum Mainnet and Terra are two independent blockchains.
[00:01:30] They have different rules and consensus mechanisms.
[00:01:34] The native token of Ethereum Mainnet is EtH while that of Terra is Luna.
[00:01:39] Now, suppose that you have a bunch of Luna on the Terra blockchain but you want to use
[00:01:45] it on the Ethereum Mainnet.
[00:01:47] How do you do that?
[00:01:49] That's where a blockchain bridge comes into the picture.
[00:01:53] A blockchain bridge enables the movement of assets between blockchains.
[00:01:58] You could use the Terra bridge to buy wrapped Luna which is an ERC20 token native to the
[00:02:05] Ethereum Mainnet.
[00:02:08] In simple terms, here's how a typical bridge works.
[00:02:12] Step one, it receives one type of crypto.
[00:02:15] Let's say Luna.
[00:02:17] Step two, it locks this Luna as a deposit.
[00:02:21] Step three, it ments an equal amount of another crypto for example wrapped Luna
[00:02:28] and releases it on another blockchain for example Ethereum Mainnet.
[00:02:33] Now let's talk a little bit about trusted versus trustless bridges.
[00:02:38] So bridges can either be trusted or trustless.
[00:02:41] A trusted bridge depends upon a central entity
[00:02:45] and you lose control of your cryptos when you use it.
[00:02:49] A trustless bridge operates using smart contracts
[00:02:53] and you remain in control of your cryptos.
[00:02:57] Some of the top bridges are WBTC, Multi-Chain, Portal, HBTC and just cryptos.
[00:03:08] Let's talk a little bit about hacking bridges.
[00:03:11] Because bridges hold a ton of crypto, they are juicy targets for hackers
[00:03:16] and because writing the code for bridges is insanely complex,
[00:03:20] hackers are having a field day plundering them.
[00:03:23] When a bridge gets attacked, the hacker withdraws crypto from one side of the bridge
[00:03:28] for example wrapped Luna without depositing anything on the other side
[00:03:32] for example Luna.
[00:03:34] One of the biggest crypto hacks took place in March 2022
[00:03:38] when the Ronin Bridge built for Axie Infinity
[00:03:42] was hacked for over $600 million in ETH and USDC.
[00:03:48] Ronin worked off-chain.
[00:03:51] It interfaced with the blockchain but existed on external servers
[00:03:55] that were not part of the blockchain.
[00:03:58] It relied on nine validator nodes
[00:04:01] of which five nodes were needed to validate transactions.
[00:04:05] The hackers exploited code vulnerabilities
[00:04:08] and also used social engineering.
[00:04:11] Another major bridge hack targeted Wormhole
[00:04:14] which supports six blockchains
[00:04:17] Terra, Solana, Ethereum, Binance Smart Chain, Avalanche and Polygon.
[00:04:23] The cost of the hack was $325 million.
[00:04:28] And with that it's a wrap on this week's episode
[00:04:31] and season one of Kartikrip.
[00:04:34] As I mentioned earlier, we'll be back soon with a new season
[00:04:38] and I also look forward to seeing you at the blockchain bulls meetups
[00:04:42] in Delhi, Bombay, Bangalore and Chennai.
[00:04:46] Blockchain Bulls is an open community for anybody who's bullish on blockchain
[00:04:50] and its amazing use cases.
[00:04:52] To join, all you need to do is follow me on Twitter at Rohasnakpal.
[00:04:58] Thanks for listening in. I'm your host, Rohasnakpal.