Networks and bridges: avoiding wrong-chain mistakes

The same coin or token can exist on several blockchains at once. Sending it over the wrong one is among the most common ways beginners lose money. This lesson explains networks, bridges and how to stay on the right side of both.

Separate ledgers

Each blockchain is its own ledger. Bitcoin, Ethereum and every other network keep separate records and cannot see each other.

Ethereum also has layer 2 networks built on top of it, which are cheaper to use. Each of those is a separate ledger too.

One token, many networks

A popular stablecoin may be issued on Ethereum, on several layer 2 networks and on unrelated blockchains. These are different tokens that share a name.

Addresses add to the confusion. Ethereum and many related networks use the same address format, starting with 0x. Your address is the same on all of them. A transfer to the right address on the wrong network will go through. It will arrive on a ledger the recipient may not be watching.

What happens after a wrong-network transfer

To your own self-custody wallet. Your keys control that address on every compatible network. You can usually add the network in your wallet and find the coins there.
To an exchange. The exchange controls the address. If it does not support that network, it may be unable to credit you, or may charge for a manual recovery. Sometimes the coins are lost.
To an incompatible chain. Wallets normally reject an address in the wrong format. If a transfer does go through, recovery is unlikely.

The matching rule

Before every transfer, the sending side and the receiving side must agree on two things: the asset and the network.

On the receiving side, look at which network the deposit address is for.
On the sending side, choose that same network.
If the receiving side does not list that network, do not send.

The cheapest network in the list is only a good choice if the destination supports it.

Bridges

A bridge moves value between networks. Typically it locks your tokens on one chain and issues matching tokens on another. Those are often called wrapped tokens. A wrapped token is a claim on the locked original.

That design creates a large pool of locked funds, which attracts thieves:

In March 2022, $620 million was taken from the Ronin bridge. The FBI attributed the theft to North Korea's Lazarus Group.
In the Wormhole hack the same year, 120,000 wrapped ETH worth $325 million was stolen.
Chainalysis counted 13 bridge hacks and about $2 billion stolen by August 2022.

ethereum.org lists the risks: bugs in the bridge's code, and with some bridges, operators who could freeze or take funds.

Safer habits

Often you do not need a bridge. Many exchanges let you withdraw directly on the network you want.
Prefer a network's own official bridge, reached from its official site.
Send a small test first.
Keep some of the destination network's coin for fees, or your funds will arrive and be stuck.
Do not leave large sums in wrapped tokens for long.