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I am newbie at DeFi. I am struggling with understanding what does author of Yellow paper of LayerZero mean in this sentence:

"Currently, to convert between tokens of two chains, a user must leverage either a centralized exchange or a cross-chain decentralized exchange (DEX) (also known as a cross- chain bridge)"

Does he mean that cross-chain DEX are the same as cross-chain bridges OR cross-chain bridges helps to create cross-chain DEX with their functionalities?

2 Answers 2

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In the sentence you provided:

Currently, to convert between tokens of two chains, a user must leverage either a centralized exchange or a cross-chain decentralized exchange (DEX) (also known as a cross- chain bridge)

The author is explaining the current methods for converting tokens between two different blockchain networks.

They mention two options:

  • Centralized exchanges.

  • Cross-chain Decentralized exchanges (DEX), which are also referred to as cross-chain bridges.

The author is not saying that cross-chain DEX and cross-chain bridges are the same thing. Instead, they are stating that cross-chain DEX, or decentralized exchanges that facilitate token swaps across different blockchains, are sometimes referred to as cross-chain bridges because they serve a similar purpose of bridging different chains.

So, in this context, "cross-chain DEX (also known as a cross-chain bridge)" means that they are sometimes called cross-chain bridges due to their function of facilitating token transfers between different blockchains.

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cross-chain bridges helps to create cross-chain DEX with their functionalities?

The author is not suggesting that cross-chain DEX and cross-chain bridges are the same. Typically cross-chain decentralized exchanges (DEX) rely on cross-chain bridges to facilitate the transfer of assets between different blockchains. Cross-chain bridges enable interoperability by allowing tokens to be securely transferred from one blockchain to another, which is essential for cross-chain DEX to operate effectively.

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