How Does a “Bridge” Protocol Enhance Interoperability between Different Blockchain Standards?
A bridge protocol enables the transfer of assets and data between two otherwise incompatible blockchains, such as Ethereum and Solana. It works by locking the native token on the source chain and minting an equivalent "wrapped" token (often following a standard like ERC-20) on the destination chain.
This wrapped token adheres to the destination chain's standards, making it instantly usable in its DeFi ecosystem. The bridge ensures that the value and functionality of the asset are maintained across different token standards.
Glossar
Bridge
Nexus ⎊ The term "Bridge" within cryptocurrency, options trading, and financial derivatives signifies a mechanism facilitating the transfer of assets or value between disparate systems, protocols, or markets.
Wrapped Token
Definition ⎊ A Wrapped Token is a cryptocurrency token pegged in value to another underlying asset, typically a non-native cryptocurrency, that resides on a different blockchain network.
Standards
Framework ⎊ Standards within cryptocurrency, options trading, and financial derivatives represent a codified set of protocols and rules governing market participants, ensuring operational integrity and mitigating systemic risk.
Interoperability
Protocol Integration ⎊ This capability allows distinct blockchain networks or decentralized applications to communicate and exchange value or data seamlessly, which is vital for cross-chain derivatives settlement.