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. 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 blockchain. Snowbridge 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 … Continued
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