Step-By-Step Guide: How To Bridge Ethereum On Different Blockchains
Introduction To Bridging
As of August 21, 2023, there are 204 blockchains listed on DefiLlama. Each chain is accompanied by unique protocols to explore, different levels of speed and security and a loyal community.
The problem? Blockchains are not able to communicate with one another.
If you hold assets on Ethereum, you are not able to use those assets in protocols that are deployed on other blockchains. And if you want to purchase a token on a blockchain like Optimism, you need to find a way to get your funds there.
That’s where bridges come in. They allow users to send crypto from one blockchain to another, while ensuring that funds are transferred 1:1.
No blockchain is created equal. And with all of the recent hype around Layer 2s (L2s) and VC funding pouring into new chains, we decided to send the Milk Man into the multi-chain world.
Why Use A Bridge
Bridging to new networks can offer several benefits:
First off, new blockchains are often filled with early opportunities. While Ethereum has been known to be the gold standard, it is more expensive to transact on and less scalable than other blockchains. This makes it difficult to deploy applications that require a high frequency of transactions, such as trading or gaming.
Emerging blockchains are also a hotbed for new protocols to launch on. Being early to new trends and applications can pay serious dividends, but also brings greater risk. And when you account for the lower gas fees on other networks, it becomes much easier to transact and explore new things on-chain.
Lastly, interacting with a new blockchain could make you eligible for an airdrop. The biggest Layer 2 blockchains to date, Optimism and Arbitrum, both rewarded their early network users with a lucrative airdrop. And it is widely expected that others will follow in their footsteps.
Why We Bridged Ethereum
In Milk Road’s case, we decided to bridge for two reasons:
1/ To show Roaders what all the hype is about. We told you we would be getting our hands dirty, so it wouldn’t be fair for us to only stick with Ethereum.
We want Roaders to see everything that the world of DeFi has to offer. And that includes getting out of our comfort zone to interact with new and innovative protocols.
2/ To set us up to explore emerging protocols in the future. Bridging is the first step towards diving into other networks.
This will act as a precursor for some of the other things we will be doing with our public wallet. It also gives us the resources to be ready to take action on abrupt events, like the recent launch of Coinbase’s blockchain.
What We Did – Bridging Ethereum On Three Blockchains
We bridged 0.5 ETH to three different layer-2 blockchains:
Arbitrum
We bridged to Arbitrum because it has been the most widely adopted L2 by almost every metric. First off, L2Beat states that Arbitrum is currently holding ~56% of the total TVL locked in L2s.
TVL refers to the amount of funds that are locked in smart contracts on the network. This includes funds that are being staked, providing liquidity to DeFi or being used in other activities such as lending. While not a perfect metric, TVL gives you a glimpse into the strength and adoption of a blockchain.
Additionally, Arbitrum is in a league of its own when it comes to deployed protocols and active users. Arbitrum’s blockchain had ~150,000 daily active users on August 22nd. This was more than half of Ethereum’s count on this day.
Lastly, Arbitrum is home to over 400 protocols, with many of these being native to the network. Arbitrum’s ability to transact much cheaper than Ethereum has allowed new innovation to be launched. We will be exploring some of these in the future!
Optimism
Optimism is the clear second winner in terms of adoption. While it has significantly less TVL (27%) and protocols (179) than Arbitrum, it recently surpassed Arbitrum in daily transactions due to their ever-growing list of partnerships.
Optimism recently launched the OP Stack, a way for others to utilize Optimism’s resources to launch their own L2 networks. And its initial success has been very promising with two recent launches generating a lot of attention: Base chain and Worldcoin.
Since Optimism has established itself as a major player in L2 wars, we want to have some funds here ready to act on future developments and opportunities.
Base
Coinbase recently launched their own L2, Base. And it has raised all kinds of excitement from the crypto community.
It started off with a tribute to Brian Armstrong called the $BALD coin. This coin was one of the fastest rising token launches ever, reaching $100M before there was even a way to withdraw funds from Base’s chain. This token was later rug pulled with rumors the creator was SBF.
More recently, Friend.Tech launched on Base and took Twitter by storm. This application introduced a market to trade shares of creators and influencers. And it generated $1.5M in revenue on August 21st alone, only being beaten by Lido and Ethereum itself.
The ongoing craziness accompanied by the backing of Coinbase makes the Base chain a very interesting avenue to explore. It’s anyone’s best guess what happens next there.
Step By Step: How To Bridge ETH
Step 1: Choosing A Bridge
The first thing to be aware of is that there are many different bridges available to users. When choosing which is the best fit for your needs, there are two things to consider:
- Cost: In addition to gas fees for using the network, bridges also contain a bridge fee charged by the protocol itself. These typically range anywhere from 0.05-0.30% of the transaction volume.
- Timing: Some bridges have a wait time until you can access your assets, often being 7 days. Other bridges may allow you to receive the funds in as quick as a few minutes, but these may bring higher costs or lower security.
Step 2: How To Bridge
Now that you are familiar with the concept, bridging assets is just as simple as making a swap. To show you, we are going to dive into a screenshot from Stargate’s bridge:
- To start, connect your wallet to the site and select “Transfer” from the top bar.
- The top rectangle represents the origin, where you are bridging assets from. Simply select the token you want to transfer and the blockchain you want to transfer from.
- The bottom rectangle is your destination chain. Ensure you have the correct network selected and it will show you your expected output.
- Ensure that you have the gas fees to cover the transaction and confirm it in your wallet.
Depending on network congesting and the involved networks, your assets should arrive in a few minutes.
Step 3: Managing A Multi-Chain Portfolio
Now that we have assets all over, we need a way to stay on top of our portfolio.
Here’s our two favorite ways to see our assets in one place:
1/ MetaMask Portfolio dApp: This is the quickest method, as you can view your portfolio directly from your wallet. They also provide you with basic data and allow you to export everything to Excel yourself. Learn more about MetaMask Portfolio and how it works.
2/ DeBank: DeBank is great for those who want to dive deeper. They offer a wider range of blockchains to track, and organize wallets by chain and activity. You can also use DeBank as a social media site. Give us a follow!
Bridging Directly In MetaMask Portfolio
In addition to buying crypto or swapping tokens, MetaMask also has a bridge built directly into their portfolio dApp.
You can access this feature by opening your wallet and navigating to the bridge tab on the home page:
You will then be brought to the portfolio dApp, where you simply need to choose the origin network, the destination and the token you want to transfer:
It is important to note that MetaMask offers a convenient way to bridge, but they have a higher fee than the average bridge.
Concerns Around Bridging
Bridging has been revolutionary and opened up a whole new world for crypto users. However, bridges are not perfect and users should be aware of the risks associated with using them.
First off, bridging costs users a fee just like any service. It is important to consider the bridge fee, amount bridged and current network fees to ensure you want to transact. You will also need to ensure that you have native tokens on the destination network to cover gas fees.
Another consideration is that in some cases, there may also be wait times to have your funds available. Sometimes this is done by the bridge itself in order to verify the funds and transactions. In other cases, congestion of the blockchain can cause delays.
Lastly and most importantly, bridges have been prone to hacks and exploits in the past. Since bridges need to lock large amounts of funds in smart contracts, they are attractive targets for bad actors on the blockchain.
And this cannot be understated. In 2022, bridges were involved in ⅗ of the biggest hacks of the year. In total, 70% of all funds lost to exploits last year came from bridges.
Next Steps
Now that we have assets on several blockchains, things are going to start to get interesting! We will be exploring some new and interesting protocols in the near future and continuing to provide Roaders with the full tour of the blockchain.
For now, you can track our wallet on their own through DeBank. Simply go to their site, paste in our wallet address and follow our journey in real time under “portfolio”.
Here is the Milk Road Public wallet address:
0x455419210c0E31cC1aDEF14e1c8db81f1Dc80A83
This report is for informational purposes only and should not be relied upon as a basis for investment decisions, nor is it offered or intended to be used as legal, tax, investment, financial or other advice. You should conduct your own research and consult independent counsel on the matters discussed within this report. Part performance of any asset is not indicative of future results.
It should also be noted that the writer(s) of this report may hold assets mentioned in the article at the time of writing.
