Liquidity-Pool Cross-Chain Bridges

• Liquidity-pool-based cross-chain bridges are decentralized protocols that use on-chain AMMs and native asset pools to facilitate efficient asset transfers between distinct blockchains.
• These mechanisms employ advanced invariant functions, lock-swap protocols, and mint–exchange–burn models to ensure fair exchange rates, atomicity, and robust MEV resistance.
• They integrate incentive structures, on-chain verification, and security protocols that mitigate sandwich attacks while maintaining liquidity and operational integrity.

Liquidity-pool-based cross-chain bridges are decentralized mechanisms that facilitate asset transfers and swaps between distinct blockchains by leveraging on-chain Automated Market Makers (AMMs) and cross-chain messaging. Unlike classic lock-and-mint bridges, which rely on issuing wrapped tokens on target chains, these protocols maintain native asset pools on each chain and utilize standardized invariant functions to ensure fair exchange rates, price stability, and efficient liquidity provisioning. Prominent models in recent literature include lock-swap protocols, mint–exchange–burn (MEB) pools, direct value-equivalence invariants, and complex incentive overlays, each offering distinct mechanisms for price assurance, atomicity, and MEV resistance.

1. Fundamental Architecture and Pool Invariants

Most liquidity-pool-based cross-chain bridge designs deploy two or more native asset pools, typically governed by a constant-product AMM invariant (e.g., $x \cdot y = k$). Users and liquidity providers interact with chain-specific pool contracts to deposit, swap, or redeem tokens. In classic models, swaps on Chain A update local pool reserves and broadcast a message to a relayer, which then triggers the corresponding action (e.g., redemption) on Chain B (Zhang et al., 2023). This eliminates reliance on intermediary wrapped assets and achieves direct asset composability.

Advanced pools, such as those proposed in the Singularity Protocol, further abstract the invariant by using value-equivalence log curves to remove bi-state dependencies and intermediates. Specifically, swap validity is enforced by coordinating additive changes in log pool value across chains: $$I'(x_0+\Delta x) - I'(x_0) = J'(y_0) - J'(y_0-\Delta y)$$ where $I'$ and $J'$ denote log-weighted value functions on Chain A and Chain B, respectively (Vohra, 30 May 2025).

2. Cross-Chain Swap and Message Protocols

End-to-end asset movement is orchestrated by four canonical subprotocols: Commit (locking/escrowing assets, emitting events), Verify (authenticating messages), Consensus (electing relayer), and Execute (finalizing swaps or redemptions on the destination chain) (Li et al., 19 Nov 2025). Relayers—permissioned or permissionless—monitor source chain events, validate authenticity (via light-client or quorum signatures), and issue corresponding transactions on destination chains.

Bridge-integrated AMM swaps on the destination chain rely on contract calls with pricing paths and slippage tolerances embedded in transaction calldata, typically routed through local DEX aggregators (e.g., UniswapV3SwapTo). This enables composability but imposes security and information leakage trade-offs.

Protocols such as lock-swap enhance atomicity and price guarantees by introducing virtual reserve snapshots and lock tables: every cross-chain swap consists of a sequence of lock operations, each of which guarantees the swap price at lock time and permits later commit or cancel (Aanes et al., 2023). This mechanism ensures that traders are never exposed to adverse price movement between lock and execution, replicating "all-or-nothing" semantics without strict atomic swap constraints.

3. Incentive Structures, Minting, and Governance

Liquidity provisioning is incentivized via token emissions and staking rewards. The Graviton model introduces dual reward flows: liquidity providers accrue time-weighted rewards proportional to their staked pool position, and gateway operators receive proportional rewards for facilitating cross-chain liquidity (Pupyshev et al., 2020). Governance is enforced by on-chain voting modules (e.g., GIP proposals, timelocks), permitting parameter adjustment (fee rates, reward allocations), support for new assets, and protocol upgrades.

In the Interpool MEB design, twin tranches of native collateral either back minted synthetic tokens or fuel pool trading. Minting is strictly collateralized by pool assets, and burning synthetic tokens instantly releases corresponding collateral (Videira, 13 Sep 2024). Transaction ordering is globally optimized (by "boosters") to maximize aggregate fees and mitigate sandwich attacks by forging protocol-specific hashes over ordered batches.

4. Security, MEV Mitigation, and Attack Surfaces

The cross-chain transparency that enables composable swaps also exposes novel vulnerabilities, particularly to sandwich attacks. Protocols emitting rich event logs on the source chain inadvertently reveal swap details prior to execution on the destination chain, allowing adversaries to precisely front-run and back-run legitimate cross-chain swaps, extracting significant MEV—an empirical analysis identifies over \$5.27M profit from sandwich attacks within two months on Symbiosis protocol (Li et al., 19 Nov 2025).

Defensive approaches vary:

• Lock-swap semantics enforce price protection by virtual reserve isolation, compelling subsequent swaps to respect locked price slopes; instant front-running is suppressed as pool pricing quotes the minimum across all outstanding virtual locks (Aanes et al., 2023).
• In Interpool, mempool ordering is globally optimized, embedding protocol-specific hashes to mitigate MEV. Listrack protocol verifies alien-chain transfers without oracles, enabling atomic swaps both inside and outside the pool (Videira, 13 Sep 2024).
• Suggested mitigations against cross-chain sandwich attacks include encrypting event payloads on the source chain, permissioned relayer channels, and generating swap calldata only on the destination chain via on-chain route recomputation (Li et al., 19 Nov 2025).

Classical AMM-related threats persist, including logic flaws, miscalculated price formulas, unchecked balances, and pool insolvency. Rigorous on-chain invariants, slippage bounds, multi-party signatures, re-entrancy protections, and economic safety funds are advocated, though tension remains between security and user experience (Zhang et al., 2023).

5. Verification Mechanisms and Operational Models

Verification styles are taxonomy-driven (Zhang et al., 2023):

• External Verification: Threshold-signer MPC or multisig relayers sign execution calls.
• Optimistic Verification: Watchers monitor events and challenge malicious actions during a delay window.
• Local Verification: HTLC or atomic-swap patterns enforce cross-chain correctness.
• Native Verification: Light-client protocols validate headers directly on chain.

Communication is predominantly relayer-based, with protocol-specific security assumptions about finality and message delivery. Multi-party incentives and watcher bond staking are employed to deter misreporters and compensate for potential collusion or relay failures.

6. Advanced Protocol Designs and Comparative Models

Recent proposals extend classical AMM cross-chain swap designs with several enhancements:

• Singularity Protocol removes intermediate tokens and double-sided dependency, reducing gas cost and bridging risks. Its log-invariant ensures atomicity via a single cross-chain message, minimizing attack surface and computational overhead (Vohra, 30 May 2025).
• Graviton overlays cross-chain gateway abstractions (centralized or MPC/oracle) with pool-based liquidity and time-weighted reward governance, providing flexibility in operational models and economic incentives (Pupyshev et al., 2020).
• Interpool integrates direct mint–exchange–burn mechanisms, collateral-backed synthetic issuance, global transaction ordering, and trustless atomic swap finalization with SPV proof validation against forged block hashes, achieving full interoperability without reliance on traditional oracles or third-party witnesses (Videira, 13 Sep 2024).

7. Open Questions and Future Directions

Prevailing research identifies several open challenges:

• Formal verification: Developing domain-specific verifiers to simultaneously prove constant-product invariants and multi-chain soundness (Zhang et al., 2023).
• Decentralization of relayers: Expanding permissioned MPC or multisig architectures to fully permissionless watcher networks while preserving finality and fraud resistance.
• Global invariants for multi-chain pools: Formalizing mechanisms and proofs for maintaining $k$ across $N$ pools.
• MEV resistance: Deploying commit-reveal or private order-flow strategies to eliminate pre-execution information leaks.
• Economic safety bounds and insurance pools: Quantitative risk modeling for flash-loan, oracle, and pool manipulation.
• On-chain monitoring: Building real-time dashboards for detecting pool imbalance and attack patterns, with automated protocol pausing.

Research continues into dynamic fee curves, multi-asset pools, and relay incentive structures at scale. A plausible implication is that future protocols will require modular, upgradeable designs blending liquidity-pool efficiency with rigorous economic, operational, and security guarantees.