A wormhole is a decentralized, generic message-passing protocol connected with numerous chains (Ethereum, BSC, Avalanche, etc). By emitting messages on one chain (observed and verified by the network of nodes) and submitting it to the target chain, Wormhole can be used as a cross-chain bridge.
The most well-known and used feature of a Wormhole is a Wormhole Token Bridge. It enables token transfer between different layer one blockchains (e.g. between Ethereum and BSC).
Token transfers are secured by node validators (guardians) who monitor activity on different chains. Some of the biggest staking providers such as Certus One and Everstake act as guardians to Wormhole.
The process of cross-chain token transfers is pretty simple – a user sends a request to the network to transfer funds, guardians verify it, and lock the assets in a smart contract while minting a wrapped version of them on the target blockchain. It goes without saying that transaction and gas fees are to be paid for these actions – both on issuer and receiver chains.
What makes Wormhole unique?
First and foremost – the amount of supported chains including Ethereum, Solana, Terra, Binance Smart Chain, Polygon, Avalanche, Oasis, Fantom, Karura, Celo, Acala, Aurora, and Klaytn. It allows users to access various DeFi applications and tokens on different chains without relying on centralized solutions.
Another point worth mentioning – Wormhole also allows cross-chain NFT transfers. Given NFTs’ popularity and lack of similar features in other bridges, Wormhole Token Bridge definitely stands out!
And even without the bridge, Wormhole has enough functionality to get the public’s attention – Wormhole protocol also supports decentralized applications built on top of it. This allows developers to build chain-agnostic protocols that can utilize various chains simultaneously and get the best features from all of them.
Is Wormhole secure?
While crypto bridges make life easier for many users, there are fundamental security limits to them, best described by Vitalik Buterin, the Ethereum creator. Wormhole bridge is no exception to these limitations – back in February 2022, it was exploited for 120,000 ETH from the Solana side of the bridge.
Given the security limitations of crypto bridges, we do recommend exercising caution when transferring tokens from one chain to another via bridge – and using risk management tools such as Apostro to monitor activity and see if there are any malicious activity or possible vulnerabilities found in the bridge.
