Liquidity Bridging
Value Transfer, Cross-Asset Settlement
Liquidity Bridging refers to the process of moving value or assets quickly and efficiently between different currencies, tokens, or blockchains to facilitate payments, swaps, or settlements. It enables real-time conversion and transfer of funds across various networks, using digital assets like XRP or stablecoins as neutral bridges. Liquidity bridging eliminates the need for direct currency pairs or deep liquidity in every market, unlocking global payments, DeFi, and interoperability across ecosystems.
Use Case: A business in Europe pays a supplier in Mexico using XRP as a bridge assetÔÇöconverting euros to XRP and then instantly to pesos, settling in seconds without requiring EUR/MXN liquidity on either side.
Key Concepts:
- Currency Conversion ÔÇö Exchanging one currency or token for another, often via a bridge asset.
- Cross-Border Payments ÔÇö Payments that move across countries using bridge assets for efficiency.
- Settlement Finality ÔÇö Ensuring all bridged transfers reach an irreversible, trusted state.
- Liquidity Pool ÔÇö Smart contract reserves that supply bridge assets for swaps and settlement.
Summary: Liquidity bridging transforms global value transfer by enabling seamless swaps and settlements across currencies, networks, and assetsÔÇöpowering fast, affordable payments and DeFi applications worldwide.
| Model | How It Works | Examples |
|---|---|---|
| Single-Asset Bridge | Uses one digital asset (like XRP or USDC) to transfer value between currencies or networks. | XRP ODL, Stellar USDC corridor |
| Automated Market Maker | Uses liquidity pools to provide bridge assets and real-time conversion rates. | Uniswap, Curve, PancakeSwap |
| Multi-Network Protocol | Bridges value across multiple blockchains and asset types for interoperability. | Thorchain, Stargate, Multichain |