Burn-and-Mint Bridge

The fundamental process involves two atomic operations:

• Burn: The user's original tokens are permanently destroyed on the source chain, removing them from circulation.
• Mint: An equivalent amount of wrapped or synthetic tokens are created on the destination chain, backed by the security of the bridge's protocol. This 1:1 peg is maintained by the bridge's smart contract logic, ensuring the total supply across chains remains constant.

Unlike lock-and-mint bridges, this model creates a single canonical supply of the asset across all connected chains. The wrapped token on the destination chain is often the native asset of that chain's bridge deployment (e.g., axlUSDC). This eliminates the fragmentation of liquidity seen with multiple bridged versions of the same asset (e.g., USDC.e, USDC.axl, USDC.grv).

Burn-and-mint bridges are typically governed by a decentralized autonomous organization (DAO) that controls protocol parameters. A key economic feature is the burn fee or mint fee, which is often levied in the bridge's native governance token. This fee is burned or distributed to stakers, creating a sustainable revenue model and aligning incentives for network security and governance participation.

Security relies on a decentralized set of validators or oracles who attest to burn events on the source chain and authorize mints on the destination chain. These validators are often required to stake the bridge's native token, with slashing mechanisms penalizing malicious behavior. The security is therefore decoupled from the underlying chains and is a function of the bridge's own cryptoeconomic design.

Burn-and-Mint: Destroys source asset, mints canonical wrapped asset on destination. Creates unified supply. Example: Axelar.

Lock-and-Mint: Locks source asset in a vault, mints a bridged (often non-canonical) representation on destination. Creates fragmented supply. Example: most early token bridges.

The burn-and-mint model is often seen as more capital efficient and less prone to supply confusion, but places greater trust in the bridge's native security model.

While all burn-and-mint bridges share a core principle, their implementations differ in security models and use cases.

• Validator Security: Bridges like Polygon PoS and Axelar rely on their own validator sets to attest to burns and authorize mints.
• Oracle Security: Protocols like Chainlink CCIP use an external oracle network as the attestation layer.
• Synthetic vs. Wrapped: THORChain uses temporary synthetics for swaps, while others mint permanent wrapped tokens for transfers.

The burn-and-mint model introduces specific considerations for users and developers.

• Pros: Canonical Representation: Creates a single, official bridged token on the destination chain, reducing fragmentation.
• Pros: Programmability: The mint/burn logic can be embedded with complex conditions for cross-chain DeFi.
• Cons: Validator/Oracle Risk: Security is dependent on the external attestation layer's honesty and liveness.
• Cons: Liquidity Fragmentation: If multiple bridges exist for the same asset, each creates its own minted version.

The minting authority on the destination chain represents a profound inflation risk. Unlike lock-and-mint bridges where assets are backed 1:1 in escrow, a malicious or faulty validator set can mint tokens without a corresponding burn event on the source chain. This can lead to:

• Hyperinflation of the bridged asset's supply.
• Loss of peg as the synthetic asset decouples from the original.
• Contagion risk to DeFi protocols built on the assumption of a canonical supply.

The destination chain's bridge contract relies on an oracle or relayer to report burn events from the source chain. This introduces liveness and data integrity risks:

• Liveness Failure: If relayers go offline, the bridge halts; no new assets can be minted.
• Data Corruption: A malicious relayer could submit fraudulent burn proofs.
• Censorship: Validators could selectively censor which burn proofs are submitted for minting. The security model therefore extends beyond the validator set to the health and honesty of this data layer.

Many bridge contracts include upgrade mechanisms controlled by a multisig or DAO. While useful for patching bugs, this creates a persistent admin risk:

• Rug Pull Vector: Malicious or coerced key holders can upgrade the contract to steal all funds.
• Logic Manipulation: Upgrade could change minting/burning rules, freezing funds or altering economics.
• Governance Attacks: If controlled by a token, the bridge can be hijacked via a governance attack. Time-locks and immutable contracts are used to mitigate this, but often at the cost of flexibility.

The tokenomics of the bridge's native token (if any) and validator incentives must be carefully designed to prevent attacks:

• Validator Collusion: If the cost to corrupt the validator set is less than the potential profit from minting unlimited assets, the system is economically insecure.
• Staking Slashing: Ineffective slashing mechanisms may fail to disincentivize malicious behavior.
• Revenue Dependency: If validator rewards depend on bridge volume, low usage can reduce security spending, creating a death spiral. This makes cryptoeconomic security a fundamental design challenge.

The protocol operates on a lock-and-mint principle in reverse. To move an asset, the user sends it to a designated bridge contract on the source chain, where it is permanently destroyed or 'burned'. This burn event is cryptographically proven to a verifier network (like a set of oracles or a light client) on the destination chain, which then authorizes the minting of an equivalent wrapped asset.

This model is often used to create canonical representations of native assets, like wBTC or wETH on other chains. The minted token is the sole official bridged version, controlled by the bridge's governance. This contrasts with liquidity-based bridges that create multiple, non-fungible wrapped assets from different liquidity pools.

Security hinges on the verification layer. Common models include:

• Proof-of-Stake (PoS) Validator Set: A decentralized set of staked nodes attests to burn events.
• Optimistic Verification: Challenges a fraud window after a state claim.
• Light Client / ZK Proofs: Cryptographic verification of the source chain's state. The model does not require locked collateral on the destination chain, altering the economic security design.

Real-world implementations demonstrate the model's versatility:

• Polygon (PoS) Bridge: Burns tokens on Ethereum, mints them on Polygon, using a set of PoS validators for verification.
• Axelar: A generalized cross-chain network that uses a proof-of-stake validator set to enable burn-and-mint transfers for many assets and chains.
• Chainlink CCIP: A service that can be configured for burn-and-mint operations, secured by the decentralized Oracle network.

This mechanism directly impacts tokenomics:

• Supply Synchronization: The total supply across chains is always equal to the native chain's supply minus burned tokens, preventing inflationary bugs.
• Fee Models: Fees are often taken in the native gas token of the destination chain upon minting, or via a separate governance token.
• Redemption: To return, the wrapped asset is burned on the destination chain, and a minting event is proven back to the source chain to unlock the original.

Key differentiators from the traditional lock-and-mint model:

• Capital Efficiency: No liquidity needs to be locked on the destination chain.
• Security Surface: Risk shifts from guarding locked vaults to securing the verification of burn proofs.
• Canonicality: Tends to produce a single canonical wrapped asset, reducing fragmentation. However, it introduces reliance on the correctness and liveness of the external verifier network.

The primary alternative to a burn-and-mint model. In this design, assets are custodied (locked) in a smart contract on the source chain, and a wrapped version is minted on the destination chain. This creates representative tokens (e.g., wBTC, WETH) and introduces custodial risk or trust assumptions in the bridge's multisig or validator set. It is the foundation for most canonical bridges like Polygon PoS Bridge.

The officially endorsed bridge for a specific blockchain or Layer 2 network, often developed by the core protocol team. It establishes the native, authorized path for moving assets to and from that chain. Canonical bridges can use lock-and-mint (e.g., Arbitrum Bridge) or burn-and-mint (e.g., Polygon's native bridge for MATIC) mechanics. They are critical for network security and ecosystem legitimacy.

A bridge model that relies on liquidity pools on both chains instead of minting synthetic assets. Users swap assets via these pools, facilitated by liquidity providers (LPs) who earn fees. This model, used by protocols like Hop Protocol and Across, minimizes trust assumptions and enables fast withdrawals, but requires deep, incentivized liquidity to function efficiently.

The underlying communication protocol that enables cross-chain state verification. It is the core infrastructure that all token bridges rely on. Key implementations include:

• LayerZero: A configurable omnichain interoperability protocol using Ultra Light Nodes (ULNs).
• Wormhole: A generic message-passing protocol secured by a guardian network.
• Chainlink CCIP: A service for secure cross-chain messaging and token transfers. The burn/mint or lock/mint logic is built on top of this layer.

A token issued on a blockchain that represents an asset from another chain, pegged 1:1 to the original. It is the output of a lock-and-mint bridge (e.g., wBTC on Ethereum). In a burn-and-mint system, the native token is burned and a canonical wrapped version is not created; instead, the asset is often represented by the same native token on the destination chain (e.g., MATIC on Polygon zkEVM).

The external attestation layer that secures most bridges by verifying and relaying transaction proofs between chains. This introduces a trust assumption. In a burn-and-mint bridge, this set is responsible for observing the burn proof on the source chain and authorizing the mint on the destination chain. The security of the bridge is directly tied to the cryptoeconomic security and decentralization of this set.