Interoperability remains a persistent issue in the world of gazillion blockchains and interesting protocols and projects. The need for interoperability leads to many practical problems, one of which comes down to token liquidity and crypto swapping between blockchains, writes Cointelegraph.

Moving tokens from one blockchain to another has become a crucial part of the DeFi sector. It allows users to use these tokens on different chains than their native ecosystem. However, most blockchains are closed systems and thus aren’t directly compatible with each other. The problem can be compared to using a European power plug in the United States — it’s just not going to fit. At least, not without an adapter.

Within DeFi, these adapters — better known as bridges — can be found everywhere. With bridges, users lock tokens on one blockchain to unlock wrapped versions of them on another chain. These wrapped tokens can then be used in whatever DApp on that blockchain.

One caveat of this approach is that bridges form a significant attack vector. Hackers could exploit a vulnerability and steal all locked tokens on one side or simply create large amounts of wrapped tokens. One such attack targeted the Wormhole bridge, in which hackers managed to steal 120,000 wrapped Ether worth $321 million. This vulnerability applies to other centralised platforms as well.

Bridges can be considered as a sort of intermediary in the crypto space. Without them, users couldn’t use BTC in Ethereum-based DApps. However, as hacks in the past have shown, bridges form a significant vulnerability surface for the crypto ecosystem. Luckily, some projects are working hard to solve this issue and minimise the risks of exchanging tokens between chains.

One of the projects tackling this is Maya Protocol, a decentralised liquidity protocol. Its goal is to enable noncustodial and efficient native swaps across blockchains. In simpler terms, this translates to a protocol that enables its users to swap native assets without the need to lock liquidity on a third-party platform like a bridge or wrapped tokens like WETH. For instance, a BTC holder can easily swap these tokens into ETH through Maya without having to wrap them and transfer them through bridges.

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July 2024