The mechanism for moving assets between different blockchains is called a "bridge."
Many bridge services use a liquidity pool model to transfer assets. In this model, assets are prepared in advance on both the source and destination networks, and the available liquidity is used to facilitate the transfer.
As a result, if liquidity on the destination side is insufficient, the transfer may incur significant slippage or the requested amount may not be able to be processed.
One way to avoid these liquidity-related constraints is to use official bridges provided by the respective networks.
- Polygon PoS Bridge - https://portal.polygon.technology/bridge
- BNB Chain Bridge - https://www.bnbchain.org/en/bnb-chain-bridge
These official bridges use a mechanism in which assets are locked on one network and corresponding tokens are issued on another, rather than transferring assets using liquidity pools.
What Is the Lock-and-Mint Method?
In the lock-and-mint method, assets are processed as follows:
- On the source network (e.g., Ethereum), the original asset is locked in the bridge contract.
- On the destination network (e.g., Polygon), tokens corresponding to the locked asset are minted.
With this method, the original asset does not need to be prepared as liquidity in advance on the destination network. As a result, it is less directly affected by the balance of the liquidity pool on the destination side and is less likely to be subject to constraints caused by insufficient liquidity, such as slippage.
With official bridges, it may take several hours for a transaction to be completed.
However, bridges that use liquidity pools also have their own advantages. Choose a bridge that suits your needs based on factors such as available liquidity and supported networks.
Things to Keep in Mind
Bridges facilitate asset transfers between networks by locking or depositing assets on the source network and issuing or exchanging corresponding tokens on the destination network. The use of a bridge also requires gas fees.
When using a bridge, always access it through a trusted source, such as its official website or official app. Avoid depositing assets into unfamiliar bridges found through search results or links shared on social media.
Related article: What is a Gas Fee?