What is Bridge?
Infrastructure that moves assets between blockchains, typically by locking on one chain and issuing a representation on another.
Bridge: Infrastructure that moves assets between blockchains, typically by locking on one chain and issuing a representation on another.
The problem bridges solve
Blockchains cannot natively see each other. An asset on Ethereum has no existence on Solana, and there is no built-in mechanism to move it.
How most bridges work
The common pattern is lock-and-mint. You deposit an asset into a contract on the source chain, where it is locked. The bridge then mints a representation on the destination chain. To return, you burn the representation and the original unlocks.
What you hold on the destination chain is therefore usually not the original asset but a claim on it — a wrapped token whose value depends entirely on the bridge continuing to honour redemption.
Why bridges are attacked so often
Bridges have been among the most exploited components in crypto, with several of the largest losses in the sector's history coming from bridge compromises.
The reason is structural: a bridge concentrates a large pool of locked assets behind a mechanism that must validate events on one chain and act on another. That validation is the weak point, and the value locked behind it makes the attack worth attempting.
Types and their trust assumptions
| Type | Who you trust |
|---|---|
| Centralised / custodial | A company holding the assets |
| Multisig-validated | A set of validators, usually small |
| Light client / native | The consensus of the chains themselves — strongest, hardest to build |
| Liquidity network | Pools on both sides, with no minting |
Practical advice
- Prefer bridges with long operating history and substantial value secured over time.
- Understand what you receive on the other side — a wrapped asset is a claim, not the original.
- Bridge in smaller amounts rather than one large transfer.
- Do not leave assets sitting in a bridged representation longer than necessary.
- Verify the bridge URL independently; bridge phishing sites are common.
For Indian users there is also a record-keeping point: bridging may involve transactions that need recording, and reconstructing cross-chain activity at filing time is considerably harder than recording it as you go.
Wrapped assets and what they actually are
When you bridge an asset, what arrives on the destination chain is usually a wrapped representation — a separate token that is supposed to be redeemable one-for-one for the original.
Its value therefore depends on the bridge remaining solvent and functional. If the locked assets are compromised, the wrapped token can lose its peg entirely even though nothing happened on the destination chain. Holders of the wrapped asset are, in effect, unsecured creditors of the bridge.
Alternatives to bridging
- Centralised exchange transfer — deposit on one chain, withdraw on another. Uses the exchange as the bridge, replacing smart contract risk with custodial risk.
- Natively multi-chain assets — some stablecoins are issued directly on several chains, so no wrapping is needed.
- Staying on one chain — frequently the right answer, since the cost and risk of bridging often exceed the benefit.
For moving a stablecoin between major chains, using an exchange is often both cheaper and lower-risk than a bridge, and it produces a cleaner record for tax purposes than reconstructing cross-chain activity later.
Related terms
Educational content, not financial or tax advice. Indian tax rules change — confirm your position with a qualified chartered accountant.
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