What is a Bridge? Why we partnered with Wormhole
As the DeFi ecosystem grows, we are starting to see many different DeFi applications being built, attracting users and capital to it. Users are often attracted by the value proposition of these applications and the risk/reward ratio they offer. Most of the time, these DeFi applications are also native to a certain chain. This means that users need to move their token over to a different chain, in a process known as bridging.
Bridges are a core part of the DeFi ecosystem, connecting blockchains to allow the transfer of tokens and information. However, not all bridges are built equally. There are centralised and decentralised bridges.
Centralised and Decentralised bridges
Centralised bridges rely on some type of central authority or system to operate, meaning that users are required to place trust in a third party to use a given app or service. One common use of centralised bridges would be when you transfer your tokens into a centralised exchange such as FTX or Binance from a particular chain, and then withdrawing it to a different chain.
However, having to trust a middleman with your funds means that there is always a risk that they will seize or freeze your funds.
Decentralised bridges, on the other hand, enable funds to be bridged without relying on a third party to take control of it. Users interact with the smart contract within the bridges in order to move their tokens over. This is a process that does not require your faith or trust in a third party with your funds.
Atlas DEX is one of the leading cross-chain DEX aggregators in the DeFi space that allows tokens to be seamlessly swapped between the different chains. One of our key partners that make this possible is Wormhole, a decentralised, generic message-passing protocol, that connects more than ten blockchains.
The mechanism behind Wormhole
Wormhole achieves this through emitting messages from one chain which are observed and verified by a Guardian network of nodes. After verification, this message is submitted to the target chain for processing. There are 19 guardians and each one of them observes every chain supported by Wormhole independently. A Wormhole message is not considered valid until 2/3 of the guardians have observed and signed it.
This simple message passing primitive enables cross-chain functionality. Users interact with xDapps (cross-chain decentralized applications) to transfer xAssets (cross-chain assets) between networks or access their xData (cross-chain data) to provide them services on their current network.
On top of the Wormhole message protocol, there are two specific applications that help concentrate liquidity for xAssets. The Portal Token Bridge and Portal NFT Bridge enable token and NFT transfers across the Wormhole bridge through a standard message format.
Through Wormhole, existing projects, platforms, and communities are able to move tokenized assets seamlessly across different blockchains.
The Portal bridge is one of the primary bridges for Solana, and is one of the largest in the DeFi ecosystem. It has over $35B in total outbound volume within the protocol and is set to grow even further with the growth of the DeFi ecosystem.
Wormhole aims to unify the DeFi ecosystem by improving interoperability between different blockchains, and Atlas DEX is excited to partner with Wormhole on this vision!
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