Cross-chain Bridges to the Rescue
Without a robust mechanism that extends the composability of DeFi and promotes dynamic liquidity migration across various blockchains, there will be a cap on current as well as upcoming L1s/L2s achieving their full potential. The self-evident and almost natural solution to the problem of liquidity fragmentation is cross-chain bridges. Cross-chain bridges can enable liquidity to flow seamlessly between blockchains and increase capital efficiency in the system. Such bridges can operate between two blockchains, between a blockchain and a side chain, or even between two side chains. This interoperability allows the transfer of tokens, data, and even smart-contract instructions between independent platforms. With cross-chain bridges, projects can also migrate assets deployed on one network to dApps on other networks.
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