Lock & Mint vs Burn & Mint: What I Learned About Cross-Chain Stablecoins

Very recently at LootRush where I work as Senior Software Engineer, I had to implement a bridge tool to help our users to transfer stablecoins to different networks, what we call a bridge and I used to think all bridges worked the same way. You send tokens on one chain, they show up on another. Done. Then, after working with stablecoins across multiple chains and realized the mechanics underneath are very different. Those differences have real consequences for liquidity, risk, and what token you actually end up holding. Here's what I've learned. Canonical Bridges: Lock & Mint This is the oldest model. Most L2 bridges work this way. You deposit USDC into a bridge contract on Ethereum. The contract locks your tokens. On the destination chain (say, Arbitrum), the bridge mints a wrapped version: USDC.e. Ethereum Arbitrum ┌──────────────┐ ┌──────────────┐ │ User sends │ │ Bridge mints│ │ 100 USDC │───────────────► │ 100 USDC.e │ │ │ lock & mint │ │ └──────────────┘ └──────────────┘