Imagine that the crypto ecosystem is a collection of isolated islands, and each island represents a particular blockchain. You need to send some goods to a friend who lives on a different island. How would you send them to her? With a Crypto bridge, of course!
Crypto bridges connect these islands, allowing you to transact effortlessly. Meanwhile, onramps are the boats that take you from the mainland (traditional financial institutions) to the crypto islands.
Bridges and onramps are essential for creating a more interconnected and accessible blockchain ecosystem. They facilitate smooth asset transfers between blockchains and make it easier for new users to enter the crypto space.
In this post, we’ll take a trip across the sunny crypto islands and dive into the world of crypto bridges and onramps. We’ll discuss why they’re important, how they work, the types of onramps, and the benefits they bring to the crypto ecosystem.
What are crypto bridges?
As touched upon above, crypto bridges are protocols that enable users to move digital assets between different blockchains. This can mean cryptocurrencies, NFTs, and other digital assets. This ability is crucial to the interoperability of the crypto ecosystem, which has expanded from just Bitcoin and Ethereum to thousands of blockchains, including Layer 2 (L2) chains built on top of Ethereum to make transactions faster and lower cost.
Someone taking advantage of the super low fees and fast transactions on Starknet, for example, at some point might want to move their assets back to Ethereum. Bridges like StarkGate enable users to transact on a Starknet decentralized application (dApp)—whether a DeFi platform, onchain game, or NFT platform—and then move their assets back to Ethereum whenever they want. Some bridges, known as cross-rollup bridges, even allow you to transfer assets between rollups and other L2 chains.
It’s important to note that in most cases, bridged tokens do not actually “leave” their source blockchain. Most native bridges employ a lock-and-mint mechanism, which effectively means that when you “bridge” your assets from one chain to another, the original assets are locked on the source chain, and a corresponding representation (or “wrapped” version) is minted on the destination chain.
Why do we need crypto bridges?
Crypto bridges are important for a host of reasons. Here are a few of the functions they serve:
- Cross-chain liquidity: Bridges allow users to move their assets seamlessly between blockchains, allowing crypto users to reap the unique benefits of various blockchains and their dApps.
- Scalability: By enabling transfers between L1 and L2 networks, bridges enable users to transact on faster and cheaper L2s.
- Interoperability: Bridges open up access to a wider range of decentralized applications (dApps) and services built on other blockchains, expanding user options and opportunities.
- Cross-rollup liquidity: By enabling the movement of assets between rollups and similar L2 solutions bridges help mitigate the problem of liquidity fractionalization. This, for instance, allows for the use of gaming NFTs across various L2 networks, further enhancing liquidity and interoperability within the blockchain ecosystem.
Types of bridges
Bridges can be classified based on which kinds of networks they allow for transfers between. Let’s briefly cover three of the most common ones.
1. L1 to L1, or cross-chain, bridges
Imagine you have some bitcoin (BTC) but want to use it in a DeFi application built on Ethereum. A cross-chain bridge would enable you to transfer your BTC to the Ethereum blockchain as a wrapped token (like wBTC). This wrapped token represents your original BTC and can be used on the Ethereum network. However, as earlier mentioned, the original BTC remains locked on the Bitcoin blockchain until you choose to bridge it back.
2. L1 to L2 bridges
As the name implies, L1 to L2 bridges allow you to move assets between L1 and L2 networks. A popular example is StarkGate, which enables users to bridge tokens between Ethereum and Starknet, the L2 validity rollup that massively scales Ethereum. This enables you to use Starknet dApps with the assets you hold on Ethereum, and vice versa.
3. Cross-rollup bridges
Numerous Layer 2 networks–such as rollups–have been built on Ethereum, with more emerging daily. Cross-rollup bridges enable you to seamlessly transfer assets between these networks.
For example, if you have tokens on Arbitrum, another L2, you might use a bridge like RhinoFi to transfer them to Starknet. This unlocks the ability to use your Arbitrum tokens within the Starknet ecosystem.
Learn how to bridge funds to Starknet
What are crypto onramps?
Crypto onramps are platforms that allow users to convert traditional fiat currencies (like dollars or euros) into cryptocurrencies. They serve as entry points to the crypto world (the “boats” to our crypto islands).
Onramps make it easy for people to buy cryptocurrencies with the fiat currencies they already have, reducing barriers to entry and drawing new users into the crypto ecosystem. Examples of onramps include behemoths like Coinbase and Binance, as well as Ramp and Unlimit Crypto.
What are crypto offramps?
Offramps are services that allow users to exchange cryptocurrencies for fiat currency. While onramps facilitate the purchase of cryptocurrencies, offramps allow users to convert their crypto into fiat currency. They are the boats that take you back to the mainland, if we stick with our island analogy. Most onramps also serve as offramps.
Conclusion
Bridges and onramps have become fundamental infrastructure pieces of the blockchain industry, enabling cross-chain interoperability, and even cross-rollup interoperability within the Ethereum ecosystem. As the industry matures, the development of solutions that foster greater interoperability and accessibility will pave the way for expanded crypto adoption.
Now that we’ve explored the concepts of crypto bridges and onramps, you’re probably wondering how you can get started using them. While there’s an abundance of bridges and onramps, the one you choose will depend on your specific needs and preferences.
For example, if you wanted to use Ether (ETH) on Starknet to use a certain dApp or for faster and cheaper transactions, you might use the StarkGate bridge to send funds from Ethereum to Starknet. If you wanted to move funds you have from a different rollup you’re using, such as Artbitrum, to Starknet, you might choose RhinoFi. For a complete list of the bridges and onramps on Starknet:
