Cross-Chain

cross-chain

Learn Crypto

Beginner
Intermediate
Advanced
Coin Crash Course: Litecoin ⚡ | Digital Silver Explained in 2 Minutes
Subscribe

Cross-chain is the ability of two or more independent blockchains to communicate and share data or value with each other. Now imagine if blockchains were independent islands. Each island has its own currency and rules. So you can’t use Bitcoin on the Ethereum island because they don’t speak the same language. Here comes cross-chain technology, which acts as the bridge or ferry system connecting these islands.

Since you can’t literally send a coin from one chain to another, most cross-chain systems use a lock and mint mechanism. So when you send your original crypto, like Bitcoin, to a digital vault on its home blockchain, it is safely locked up. This means that the Bitcoin is held securely and cannot be used until it is released from the vault.

A bridge protocol then sees that your Bitcoin is locked and creates an identical “wrapped” version (e.g., Wrapped Bitcoin or WBTC) on a different blockchain, like Ethereum. When you want to go back, the wrapped version is destroyed, and your original Bitcoin is released from the vault.

Tools like Across, Stargate, and Wormhole are popular bridge services used to move funds between networks like Ethereum, Solana, and various Layer 2s. Then there are wrapped tokens like WBTC, which allow you to use the value of your Bitcoin inside Ethereum’s financial apps. And finally there are interoperability networks like Cosmos and Polkadot that are built specifically to be “Blockchains of Blockchains,” where every sub-chain is cross-chain compatible by design.

Join our newsletter

Disclaimer: Coin Medium is not responsible for any losses or damages resulting from reliance on any content, products, or services mentioned in our articles or content belonging to the Coin Medium brand, including but not limited to its social media, newsletters, or posts related to Coin Medium team members.

Related Terms

Concentrated Liquidity

Concentrated liquidity is used in decentralized exchanges (DEXs). This allows liquidity providers to deposit their funds in a certain price range instead of distributing them across the full range of possible prices. Your capital is not wasted across the entire market but rather goes to use exactly where the trades are likely to happen, thus earning you more fees. To paint a picture, think of a liquidity pool as a water sprinkler showering an entire football pitch, even though the

Epoch

An epoch is a fixed period of time that a blockchain network uses to organize certain key actions such as validator duties, award distributions, and governance votes. The network organizes the processes into predictable intervals instead of allowing them to occur randomly. The following epoch begins automatically when the current one ends and from then on as long as there’s a blockchain. Think of an epoch like a school that divides its year into terms. Teachers are assigned to a

Time-Weighted Average Price (TWAP)

The Time-Weighted Average Price or TWAP function calculates asset value through its complete time range. The TWAP method uses multiple price points throughout the selected period to create an average value, which reduces short-term price movements from individual market trades. The basic idea behind TWAP is straightforward. The price of an asset is recorded at consistent time intervals. The recorded prices create a time-weighted average, which results from their multiple price points. The final result uses every price point of