The bridge uses smart contracts on both chains to process transfers, and a group of validators confirm bridge transactions. When a bridge transfer is initiated, the specified amount of Dai is locked in a smart contract on the Ethereum mainnet, and the same amount of xDai is minted on the xDai chain and sent to the user's wallet on the xDai chain. When xDai is transferred back, xDai is burned, and the corresponding amount of Dai is unlocked in the contract and released to the user's wallet on the Ethereum mainnet.