This Bridge Might Be Shaky
Plus headlines you might have missed
One of the biggest trends in DeFi is the cross-chain bridge.
Never heard of one? To keep it simple, these are applications that allow crypto users on various blockchains to cross over from one to the other. Think of DeFi bridges just as you would bridges in the real world. They are connectors.
And often, connectors are good. People use these applications to maximize yields, participate in borrowing/lending, make purchases without the hassle of exchanging funds, and more. In short, bridges help broaden the crypto ecosystem.
Still, they have their own level of risk.
Many of these applications are led by competent and professional times, but not all are. Not all crypto projects are the same, and any bridge that links one to another should not be taken as a marker of legitimacy for that particular chain. If hackers can find an exploit on a bridge, they will.
Case in point:
I’m not saying Nomad is illegitimate or fronted by bad actors. But… the incident serves as a reminder for investors. While bridges offer a lot of benefit, and can open up a world of usage, they can also incur plenty of risk. Using a bridge can mean giving up security.
And in crypto, security is everything.
Plus…
The Crypto Connection is for entertainment purposes only and is not meant to be financial advice. Please do your own research before investing in any asset class. Sara Celi is not a financial advisor, and holds several cryptocurrencies. To purchase her books on Amazon, please click here.