Although cross-chain bridges have proven useful so far, the time has come to look beyond these semi-archaic solutions. When suer funds are at stake, it is safe to say the approach may not be ideal. Portal puts an end to wrapped tokens and third-party custody through its multi-chain atomic swap-based approach.
Cross-chain Bridges Fail To Deliver
There is much to be excited about where the concept of cross-chain bridges in cryptocurrency is concerned. Enabling users to convert value from one chain to another without signing up for a service is a powerful idea. But, more importantly, it has proven to work, even though there are some caveats most people may not be aware of. Unfortunately, numerous security risks have led to various incidents over the past year and a half.
A cross-chain bridge operates under the idea of wrapping tokens and locking funds onto other chains. Although that makes sense, it also introduces extra attack vectors for culprits to exploit. Secondly, the wrapping and locking often rely on third-party validators or federations that may not necessarily be centralized or trustless. In a world where decentralized is the primary selling point, unnecessary intermediaries work counterproductive.
Liquid Federation inventor Johnny Dilley explains:
“Custody is hard — explaining to people in DeFi why their assets are often in the custody of others is even harder! Thefts from platforms like Moonbeam underscore the difficulty associated with properly safe & secure means of transfer between chain environments — without an attitude of constant vigilance (like those used by systems with dedicated hardware security, or strict key-ownership-is-ownership policies), users without the capacity to evaluate the trustability of the systems they use will continue to be robbed blind. The industry needs a smarter, permanent answer for cross-chain asset movement, and Portal represents the best step forward on that path. ”
Sadly, there are numerous security incidents involving cross-chain bridges to choose from. Victims include users of MultiChain, pNetwork, Wormhole, Poly Network, THORChain, and many others. When so many security incidents occur, one must wonder whether these bridges are viable enough to be used on a large scale. Additionally, now is a good time to explore alternative solutions requiring less “intervention” to enable cross-chain value transfers.
It’s Time For Something New
Although cross-chain bridges will be actively developed and improved upon for some time, one shouldn’t overlook alternative solutions. A concept such as Portal, for example, takes a very different approach to enabling cross-chain transactions. More importantly, it does so without using validators, federations, or any other centralized solution. Avoiding the potential for a 51% attack is crucial in this space.
Portal foregoes the option of wrapping tokens and locking funds. Instead, funds are only locked during the trade execution, and there is no replication of tokens on other chains. If the transaction fails, everything is rolled back, and users receive their initial funds back with no additional costs. Transactions complete via peer-to-peer atomic swaps to trade native Layer-1 assets across different networks.
Portal’s executive chairman Chandra Duggirala adds:
“Bridges are hard to reason about and secure. Wrapping assets on other chains basically inherits the guarantees of an IOU. When hundreds of Millions and Billions of dollars are being secured by poorly engineered systems and custodians with untested security practices, it becomes hard to secure user funds. Especially given the balance of incentives, with hackers and attackers basically having to get out of jail free cards due to the “code is law” nature of public blockchains, security is especially important. We like simplicity, and trusting proven, lasting contract types and transaction models that Bitcoin has versus all sorts of experimental approaches to real user money.”
Another aspect setting Portal apart is how it is built on the Bitcoin blockchain rather than Ethereum or other ecosystems. It also provides zero-knowledge transactions, granting users anonymity without compromising the transparent market nature. Furthermore, Portal provides Layer-2 and Layer-3 technology to help developers easily build swapping, communication, and media layers on Bitcoin.