While it started with just a single asset, Bitcoin, the crypto ecosystem has come a long way. With over a thousand blockchains and a multitude of assets available, blockchain interoperability is now critical. But most blockchains effectively work in silos. To facilitate interoperability between chains, many interoperability solutions are utilized, including cross-chain bridges.

Cross-chain bridges connect different blockchains together and enable users to send cryptocurrency from one chain to the other to participate in different ecosystems. The user sends the token from the source chain to the bridge, which then ‘wraps’ these tokens and sends them to the destination chain. An example of this would be Bitcoin (BTC) and wrapped Bitcoin (WBTC). 

Cross-chain bridges provide users the opportunity to expand the potential of their assets and participate in yield-generating opportunities across networks. With multiple chains available, users can be a part of the bigger ecosystem and have easy access to assets, participate in DeFi, add liquidity and do much more.

Although cross-chain bridges are useful for interoperability, they have certain limitations and risks. Users need to be wary. Since crypto bridges have multiple touchpoints, they are prone to exploits and hacks. On the contrary, Axelar goes beyond traditional bridging to achieve blockchain interoperability. With Axelar’s General Message Passing capability (GMP), developers and users can reap the benefits of truly cross-chain applications without losing on the intuitive experience. Axelar GMP opens up endless possibilities for seamless interoperability across decentralized exchanges, DeFi, NFTs, games, liquid staking and many other decentralized applications. 

Multiple cross-chain bridges are available in the market, with many L1s also launching native bridges, like the Base bridge. Avalanche has its own cross-chain bridge, which enables users to participate in the Avalanche ecosystem by bridging their Ethereum and Bitcoin assets. Here’s a detailed overview of the AVAX bridge, its usability, limitations and alternatives for cross-chain transfers.

What is the Avalanche (AVAX) bridge?

Avalanche is an open-source consensus protocol designed to achieve high throughput, fast transaction finality and strong security in decentralized networks. Also known as AVAX, the Avalanche consensus protocol uses a Directed Acyclic Graph (DAG) structure, which allows multiple transactions to be processed simultaneously, improving the overall efficiency of the network. The protocol is scalable, robust and decentralized and offers low latency and high throughput.

Avalanche, like most alternative L1s, set up its native crypto bridge to tap into the liquidity on Ethereum. The Avalanche-Ethereum Bridge (AEB) was launched in early 2021 to enable users to bridge their ERC-20 assets into the Avalanche ecosystem. In March 2022, Avalanche replaced the AEB with the Avalanche Bridge (AB) and launched its native wallet Core to bridge, buy, swap and trade crypto.

The new AVAX Bridge enables users to send Ether, ERC-20 tokens and Bitcoin to the Avalanche C-Chain and vice versa. The bridge offers faster finality and lower fees while utilizing Intel SGX Enclave technology, a hardware-based, encrypted environment for enhanced security.

Users can bridge their assets to the Avalanche network using the AVAX Bridge to provide liquidity to decentralized exchanges, stake their assets, participate in DeFi and interact with other dApps. Currently, the AVAX bridge supports crypto assets, including but not limited to ETH, USDT, USDC, WBTC, WETH, LINK, DAI, BAT and 1INCH. Users bridging their assets will get wrapped tokens that are usable on the receiving chain. For example, when a user bridges ETH from Ethereum to Avalanche, they will receive WETH.e assets that are usable in the Avalanche ecosystem.

Once the user wishes to retrieve their original assets, they can be bridged back to their native chain. For example, users bridging WETH.e from Avalanche back to Ethereum will receive ETH. To cover the cost of the transaction fees on the networks and operational costs, the AVAX bridge charges a fee for all transactions on the bridge. 

When moving assets from Bitcoin or Ethereum to Avalanche, the platform charges ~$3 worth of Bitcoin or the ERC-20 asset being transferred, respectively, at the time of writing. However, when users move assets from Avalanche to Ethereum, the fee is decided on the basis of the expected Ethereum transaction fee, and a constant dollar amount is added to the bridge fee to account for price volatility. When moving assets from Avalanche to Bitcoin, the bridge fee is $20 plus the expected Bitcoin transaction fee.

Limitations of the AVAX bridge

While the AVAX bridge is highly useful for users looking to bridge their Ethereum and Bitcoin assets to Avalanche, it poses certain limitations. Firstly, the bridge is limited to just three blockchains, restricting blockchain interoperability in the Avalanche ecosystem. Moreover, the bridge does not support any-to-any connections, thereby limiting its capabilities. Therefore, users that bridged their Ethereum assets to Avalanche cannot bridge to Bitcoin, without first bridging their assets back to the source chain.

This is where Axelar is changing the way applications and users can go cross-chain!

With Axelar, connections are universal, and users can execute cross-chain swaps between any supported chains. Axelar GMP removes the need to bridge your assets to the source chain. Move your assets from Ethereum to Avalanche and then to Polygon without needing to return to Ethereum. Axelar GMP enables an application on one chain to call any function on any other connected chain. Therefore developers can build on the chain they wish to but also leverage the features of other chains with seamless interoperability. With Axelar, you can truly go cross-chain and participate in activities using chain-specific assets with ease.

Transferring assets from Ethereum to Avalanche

Here’s how you can use the AVAX bridge to transfer your assets from Ethereum to Avalanche

  1. Connect with the Core platform with a supported wallet. The platform currently supports major wallets such as Metamask, Core Mobile, Coinbase and Wallet Connect.

  2. Once the wallet is connected, choose the Ethereum chain to set up Ethereum to Avalanche transfers.

  3. Select “Bridge” from the platform Command Center and choose the token you wish to bridge to Avalanche

  4. Before you initiate the transfer, ensure that you have enough assets to cover the estimated fees of the transaction. The bridge will not process any transfers that are less than the current estimated fee amount.

  5. Verify the details and click transfer. Once the transfer is complete, you will receive bridged assets that can be used on the Ethereum chain.

Connecting to AVAX via Axelar network

The AVAX bridge is ideal for transferring tokens from Ethereum and Bitcoin to Avalanche and vice versa, but it still falls short in providing a truly cross-chain experience. Satellite is a decentralized cross-chain application powered by Axelar that enables users to easily bridge tokens across chains. With Satellite, you can do everything the AVAX bridge does and more! 

Satellite currently supports more than 35 chains, including Arbitrum, Avalanche, BNB, Cosmos chains, Ethereum, Fantom, Moonbeam and Polygon. Here’s a list of all chains supported by Satellite. Axelar provides the translation layer that enables a free flow of assets to and fro Axelar-connected networks.

But as we mentioned above, cross-chain bridges have a variety of limitations and are a nascent technology for interoperability. Even though Axelar offers bridging capabilities to users and developers, Axelar GMP takes it to the next level.

Squid is an example of what is possible with Axelar GMP. Squid acts as a liquidity router built on top of Axelar, enabling cross-chain swaps that go native-token to native-token, eliminating reliance on bridges and wrapped assets. Axelar GMP provides secure messaging that makes this possible. Read more about Squid, below. 

Unlike cross-chain bridges, Axelar GMP does more than just wrap assets and send them across chains. It enables developers to build on any Axelar-supported chain and call a function on any other connected chain to utilize the best features of multiple chains. Here “function” includes both smart contracts at the application layer and functions built at the protocol layer. GMP is extremely secure and relies on a permissionless validator set (delegated proof-of-stake). Applications using GMP can securely function across chains without a hitch.

Here’s how Axelar GMP enables developers to seamlessly implement cross-chain transfers:

  1. dApp developer implements the Axelar executable interface in the destination contract;

  2. A call function (or a call function + tokens) from the source chain is initiated;

  3. The call enters the Axelar Gateway from the source chain;

  4. Axelar network confirms the call, subtracts the usage fee (in native source chain tokens), and prepares an outgoing transaction on the destination chain;

  5. The call is approved and emerges from the Axelar Gateway on the destination chain;

  6. The call function executes as if it had been made on the source chain and results accordingly.

Go cross-chain with Squid

Squid, a cross-chain swap and liquidity routing protocol built on Axelar network, exemplifies what's possible with Axelar GMP. Delivering the cross-chain future for both developers and users, Squid allows any token to be swapped between blockchains in just a single click. Therefore, users can participate in multi-chain DeFi, play a game on any chain and buy NFTs from any marketplace without having to download multiple wallets.

Although cross-chain bridges open up a world of possibilities, they also come up short when it comes to cross-chain liquidity, NFTs and using multi-chain DEXs. Moreover, as a bridge grows, more assets are locked up to issue wrapped tokens, making it a lucrative target for exploits.

Squid enables applications to implement fast, secure and seamless cross-chain transfers, benefiting both users and builders. This flawless interoperability is possible due to Axelar's General Message Passing capabilities, which enable smart contract calls across chains. With Axelar GMP, Squid enables one-click transactions between any application and any user using any asset.

The idea behind Squid is simple! It has a smart contract on each chain supported by Axelar. When a contract is called, it uses routing assets and supported DEXs to swap any token pair cross-chain. Axelar GMP handles the logic at each step, so the user has a one-click, interchain experience.

Squid currently supports 25+ chains, with support for more chains on the way. Developers can plug in the Squid SDK to make their applications cross-chain and do much more than just cross-chain swaps. Here is detailed information about Squid’s cross-chain capabilities.

Interoperability at Avalanche with Axelar

While Axelar currently supports 35+ blockchains, Avalanche was one of the first chains integrated into the Axelar ecosystem. Since the integration in 2021, Avalanche users have enjoyed seamless cross-chain connections from Ethereum, Cosmos and many other chains to access assets and applications on other chains.

For developers, Avalanche’s integration with Axelar meant decentralized applications could open the gates to unlimited cross-chain potential.  

While developers can seamlessly go cross-chain with Axelar’s unique capabilities, users can enjoy a variety of use cases to put their assets to use. Axelar GMP enables dApps connected to their network to seamlessly create decentralized trading pairs and liquidity pools and enables users to participate in various activities with their assets across chains.

In addition to more sophisticated connections via GMP, there are a variety of liquidity pools available for assets bridged into Avalanche via Axelar:

It was in March 2022 that Axelar announced its General Message Passing capability at the Avalanche Summit Hackathon which paved the way for groundbreaking interoperability. GMP enables developers building on one chain to call any function on any other connected chain, where function means smart contracts at the application layer and functions built at the protocol layer.

Since its launch, Axelar GMP has powered hundreds of applications to achieve seamless cross-chain transfers across supported chains. The platform currently supports 35+ blockchains, and GMP has now arrived at Cosmos as well! With secure cross-chain communication with GMP, the possibilities are endless, and use cases are abundant.

Interested in using GMP and building with Axelar? Check out our docs on General Message Passing to know more, and reach out to us on Axelar Discord for any questions.