The communication between blockchains has been problematic – they don’t understand each other’s protocols and can’t communicate effectively. As a result, users have difficulty moving their assets across different blockchains, resulting in a communication bottleneck. In order to solve this problem Wormhole is developed. In a nutshell Wormhole allows users to seamlessly transfer tokens between Terra, Ethereum, Solana, Polygon and Binance Chain. It works like magic, especially for those who have been struggling to move their tokens from one blockchain to another.
How does Wormhole work?
In reality, Wormhole is not yet another blockchain; instead, it is a protocol that relies on existing blockchains to allow tokens to be easily transferred from one blockchain to another. Tokens such as ERC20 tokens, NFT tokens and even Oracle price feeds can be transferred between various blockchains.
To facilitate transfers, Wormhole employs a leader-less, all-guardian architecture. The Wormhole guardians observe token transfers from one network to another and sign them. When 2/3 plus majority of all guardians sign the transaction, the transfer is successful.
When a user initiates the transfer of tokens from one blockchain to another, the transaction is first routed through the Wormhole smart contract. Messages are acknowledged and signed by the guardians of Wormhole’s peer-to-peer network monitoring this smart contract. The message is forwarded to the destination blockchain or off-chain program when the majority of the guardians sign the message.
The Terra Bridge is the first generation of cross-chain asset transfer bridge developed by Terra Blockchain. In the same way as the wormhole bridge, this bridge also allows token transfers between Terra and Ethereum, Terra and BSC, and Terra and Harmony. However, due to limitations on the architecture, the expansion of the bridge to other protocols is not carried out any longer. Instead, users are encouraged to use Wormhole instead.
Wormhole vs Terra Bridge Transaction Fees
Lets us look at the average fee per transaction for all bridge transactions outgoing from Terra blockchain to various destinations supported by Shuttle Bridge and Wormhole. The following chart shows the weekly average fees of transactions.
The following chart shows average transaction fee in UST for all outgoing transactions from Terra blockchain using Wormhole. The transaction fee is highest for Ethereum bound transactions, followed by Solana bound transactions.
So how are the transaction fees on Shuttle Bridge for various outbound transactions from Terra blockchain? Again fees of Ethereum bound transactions are highest on Shuttle bridge too!