Unlocking Liquidity: How Cross-Chain Interoperability Transforms Crypto Markets

The web 3.0 ecosystem is continuing to expand with a CAGR of 41.18%. With a variety of blockchains appearing on the horizon, along with existing ones introducing the newest features and functionalities, the entire decentralized finance industry is thriving.  

BUT this industry is expanding with one foundation issue: lack of interoperability. Each blockchain network has its own rules and natively the blockchains cannot interact with each other. This means that if you have tokens on one blockchain, you cannot benefit from the features of, or trade with other blockchain networks.

To address this, crypto bridges have been designed as the ultimate connectors. Much like highways linking different cities, cross-chain bridges enable assets and data to move effortlessly across blockchain networks.

Today, we will discuss how these bridges work and how cross-chain interoperability is building a more unified blockchain ecosystem. Let’s start:

Understanding Cross-Chain Bridges: The Backbone of a Unified Crypto Market

Cross-chain bridges facilitate interaction among blockchains by locking assets on one chain and minting or unlocking equivalent assets on other chain. This process involves the use of smart contracts and validators.

Let’s look at the main types of bridges:

Types of Cross-Chain Bridges

There are four main types of crypto bridges that offer cross-chain interoperability, each providing centralized and decentralized solutions, with different benefits. These include:  

Trusted Bridges

Centralized platforms operate using trusted bridges. This means you need to rely on a third party to manage the transfer of your assets. Although these bridges are usually quick and user-friendly, they come with a drawback of centralization.  

Trustless Bridges

Contrary to trusted bridges, trustless bridges are completely decentralized. They do not need a central authority. Instead, they use smart contracts and blockchain to perform transactions. As the process is transparent, independent, and secure, you don’t have to trust a third party to execute transactions.  

Unidirectional Bridges

As the name suggests, unidirectional bridges are used to perform transactions only in one direction. They are usually used in blockchains to convert tokens into their wrapped forms.  

Bidirectional Bridges

These bridges allow you to perform transactions in both directions. Users can move their tokens back and forth between two blockchains.

ARMswap and Cross-Chain Interoperability

ARMswap integrates trustless bridges to allow users to move assets across blockchains seamlessly and thus offer cross-chain interoperability. The process involves:  

Locking and Minting:  

The user deposits an amount of tokens on their source chain's smart contract. This asset is locked on the source chain to prevent double spending. At the same time, an equivalent amount of tokens is minted on the destination chain for further usage.

Validation and Security:  

ARMswap utilizes validators that verify transactions along with cryptographic proofs.

Reversal Process:

When the users want to transfer assets back, the minted token on destination is burnt, the bridge verifies this burn event and then the original asset is released from the smart contract on source chain.

Liquidity Fragmentation & The Role of Cross-Chain Liquidity Solutions

With assets locked in isolated chains, the liquidity is often fragmented in the blockchain ecosystems which further reduces the trading opportunities. While cross-chain bridges, in general, solve this problem by connecting blockchain networks and thus connecting liquidity. ARMswap takes it a step further by rewarding users for contributing to the cross chain liquidity pools.

ARMswap’s Approach to Liquidity

ARMswap lets you enjoy a share of total swap fees along with free ARMSP tokens by adding cross chain liquidity to the liquidity pools. You simply need to connect your wallet to ARMswap, select the desired pair, enter the amount you want to add as cross chain liquidity, and confirm the transaction. Against your contribution on our cross-chain bridge, LP tokens will be minted to your wallet as proof of liquidity provision.

Security Challenges & Risk Mitigation in Cross-Chain Bridges

Cross-chain bridges offer many benefits, but the biggest challenge is they expose data to critical vulnerabilities. Ronin, for instance, lost $600 million+ back in Nov 2021 due to high-profile bridge hacks.

ARMswap’s Approach to Security

Keeping this sensitive issue in view, ARMswap is built on top of Hardware Security Modules (HSMs), which allows you to trade, swap and invest your crypto tokens seamlessly. The goal of this technology is to securely process your transactions and protect your funds from any unauthorized access. ARMswap will soon be implementing Secure Multi-Party Computation (SMPC) that will enable users to experience an even higher level of security.

How ARMswap Stands Out from Other Bridges  

ARMswap stands out in the market by simplifying crypto swapping and focusing on user-convenience. This platform allows cross-chain interoperability by offering access to:

31 Blockchain Networks:

ARMswap supports cross-chain bridging across 30+ blockchain networks - including AirDAO, Conflux, Chiliz, CORE, and Ethereum - with plans to include 20 more EVM blockchains by the end of 2025! This makes ARMswap stand out because our interoperable blockchains are way higher than our competitors. For instance, Chainport supports 29 networks, PancakeSwap supports 9 networks, and Uniswap supports only 11 networks.    

Reduced Fees:  

The complexity of crypto trading between blockchains often leads to high transaction fees. ARMswap eliminates the need to rely on multiple exchanges or services for token transfers. Unlike traditional methods ARMswap streamlines the process into a single, user-friendly solution, reducing transfer fees, stress, hassle, and unnecessary steps.

Cross Chain Swaps on the Go

Our soon-to-be launched mobile app allows you to simply manage your tokens, trade across different platforms, and even stay up to date with all trends, all on the go. You don't need to sit at a heavy computer system to carry out cross-chain transactions when everything is just a click away.

Earn Through Contribution

You can become a part of our MVP program and earn 5,000 – 1,00,000 USD/ARMSP/ARMUP tokens depending on your contributions. The program consists of four different categories each designed for different specialties including marketing, research, ethical hacking, community engagement and bug bounty. So, you can choose your program based on your expertise.

The Future of Cross-Chain Bridges & ARMswap’s Vision

As blockchain adoption grows, cross-chain interoperability will be key to utilizing the full perks of the decentralized finance world. The future of a well-established cross-chain bridging industry lies in highly secure, multi-chain compatible, capital-efficient, cross-chain liquidity solutions that focus on maintaining decentralization while connecting blockchain networks.

ARMswap is at the forefront of this next-gen crypto evolution, bridging blockchains to move assets across. Our focus is on building a scalable, high-performance infrastructure, and to achieve this, we are rewarding individuals to become a part of the crypto ecosystem and earn by simply contributing to liquidity pools.

By driving innovation in cross-chain technology, ARMswap is shaping the future of decentralized finance - where barrier-free blockchain connectivity becomes the norm.