How Does Cross-Chain Bridging Affect the Overall Liquidity of a Derivative Asset?

Cross-chain bridging allows a derivative asset, like a wrapped token or a synthetic asset, to be moved and traded on different blockchain networks. This increases the total addressable market and consolidates liquidity across ecosystems.

By making the asset accessible to more traders and protocols, bridging typically enhances overall liquidity and can contribute to a tighter bid-offer spread across all connected markets.