Author: Route 2 FI
Compiled by: Peng SUN, Foresight News
Similar to the bridges used to connect two physical locations in the physical world, the cross-chain bridges in the crypto world connect two blockchain ecosystems, facilitating communication between different blockchains through information and asset transfer. In the early days of blockchain, when demand outstripped supply, factors such as the impossible triangle problem of public chains, capital drive, and the "continued revolution" attribute of blockchain made it possible for multiple chains to coexist. It was difficult for a single blockchain to dominate, and the pattern of competition among many chains would continue.
So, in this case, different blockchains have their own advantages in terms of performance, ecology, etc., and users and their economic needs scattered on different networks must be bridged through cross-chain bridges.
At present, there are already countless projects laying out the cross-chain bridge track, trying to seize market share in advance. Among the many projects, 12 projects such as Stargate, Orbiter, Synapse, Bungee, Multichain, Lifi protocol, Rango, LayerZero, Connext, Relay, Hop Protocol and Router protocol are relatively popular. I will select 6 mainstream cross-chain bridges to briefly introduce their basic concepts, innovative features, data indicators, future development and token airdrops, and remind everyone again to pay attention to the risks of cross-chain bridges.
一、Synapse Protocol (SYN)
Synapse is essentially a cross-chain liquidity protocol that allows users to bridge assets between different chains. In order to play the multi-chain narrative well, users are better off being familiar with different cross-chain bridges, and Synapse represents one of the user-friendly bridges. According to DefiLlama data, we note that Synapse currently has a total locked value (TVL) of $204 million, ranking in the top ten in the entire ecosystem.
On Synapse, users can cross chains back and forth between different chains such as Ethereum, Arbitrum, Avalanche, BNB Chain, Optimism and Polygon:
Synapse plans to launch its own blockchain: SynChain. Crypto commentators on Twitter speculate based on price action and Discord interactions that the SynChain announcement will be made around ETHDenver 2023.
Given the L2 narrative and the large number of unique wallets supporting Optimism and Arbitrum, we can infer that Synapse hopes to position itself as the cheapest L2 rollup with a fully diluted valuation (FDV) of approximately $350M.
It’s important to note that the upcoming SynChain may use airdrops to acquire early users - although it’s speculation, there are rumors that there may be a Synapse airdrop for holders.
With Synapse already having approved unilateral staking in November, it would not be surprising if Synapse joins the real yield narrative and eventually starts sharing in protocol profits. Remember to always do your own research on the project.
Finally, let's look at Synapse's data indicators:
Market value: $247 million
Price: $2.3
Fully diluted valuation (FDV): $325 million
Total Value Locked (TVL): $204 million
Connext
Connext is an Ethereum Layer2 interoperability protocol. Formerly known as xPollinate, its main function is to facilitate the transfer of assets across blockchains and Rollups.
Since launching in closed beta in early February, Connext has seen tremendous growth in February, with weekly transaction volume averaging $5.5 million and approximately 5,000 transactions per week.
It is worth noting that Connext relies on AMM to price liquidity on each chain. According to Twitter user pepes, there is excess liquidity on Optimism and Arbitrum, which means that Connext users can get positive slippage when crossing chains. In layman's terms, Connext pays you ETH to cross chains to Optimism and Arbitrum.
Connext is a fast and secure cross-chain bridge, which is ideal for the average crypto enthusiast. It breaks it down through active liquidity, which basically means that Connext's router provides liquidity to users on the target chain, and then the protocol repays it.
Connext effectively lends funds to waiting users, which are then repaid through the protocol - which affects transaction latency. Overall, the Connext product is both innovative and promising.
Finally, let’s look at Connext’s data metrics for February. We can tell that this is a monthly metric:
Total Value Locked (TVL): $18.4 million
Total transaction volume: $17.4 million
Total cross-chain number: 20,221
三、RelayChain（RELAY）
Relay is a cross-chain bridge aggregator, which is mainly used to solve the problems of fragmentation and lack of interoperability between different chains. Its core product is the cross-chain bridge, which aggregates the most effective cross-chain bridges for users; in order to incentivize new users, Relay also sets up a lottery system for users to use the cross-chain bridge every time (up to $5,000 in bonuses). Relay aggregates the liquidity of 5 cross-chain bridges and acts as a price comparison website to find the cheapest, fastest and most liquid cross-chain bridge for users.
Currently, the Relay cross-chain bridge supports 15 blockchains. Relay also has a staking function designed to provide liquidity for the protocol.
Relay is positioned as a long-term project, and its token unlocking model ensures advisors' short- to medium-term support for the project. In simple terms, token unlocking is time-based: 10% unlocked for the first time (30 days), 15% unlocked for the second time (60 days), and 25% unlocked every quarter thereafter. The team has worked with major companies in the Web3 space and was one of the first to support the first DEX on Avalanche.
Finally, let’s take a look at the data indicators of RelayChain:
Total Value Locked (TVL): $77 million
Cross-chain value: $1.03 billion
Total transactions: 50,988
Market value: $4 million
Please note that Relay has a relatively small market cap, so if you decide to buy this token, be very cautious, but it is best not to buy it because the chances of it skyrocketing or plummeting are relatively high.
4. Stargate
Stargate is a cross-chain liquidity protocol based on LayerZero and the first DApp deployed using LayerZero. The main differentiator of Stargate compared to other cross-chain bridges is its implementation, which is said to be the first solution to the famous cross-chain bridge impossible trinity problem first proposed by Vitalik.
While cross-chain bridges are typically forced to give up one element of the impossible triangle (instant transaction confirmation, native assets, and unified liquidity), Stargate does not sacrifice any of these properties.
Stargate also uses an innovative pool balancing algorithm that incentivizes users to deposit in pools with insufficient depth (and withdraw from pools with sufficient depth). This ensures that liquidity remains deep on the chains supported by Stargate, giving users a better cross-chain bridge experience with low slippage and price impact.
Stargate is backed by one of the most well-capitalized teams in the space, LayerZero. In fact, LayerZero is so well-funded that they bought back all of Alameda’s tokens and equity related to Stargate/LayerZero following the FTX incident. This therefore eliminates the risk of forced sales that many Alameda-backed projects face in asset recovery liquidations.
Finally, the Stargate data indicators are as follows:
Market value: $176 million
Fully diluted valuation (FDV): $1.065 billion
Total Value Locked (TVL): $480.1 million
Price-to-earnings ratio (P/E ratio): 490.93x
5. Hop Protocol
Hop Protocol is a scalable universal token cross-chain bridge and DEX between Rollups, allowing users to transfer and send tokens from one Rollup or sidechain to another Rollup or sidechain without waiting for the network's challenge period.
Hop Protocol is able to contribute to a multi-chain future by introducing market makers (or Bonders) to provide liquidity on the target chain in exchange for a small fee. Bonders provide this credit guarantee in the form of hTokens, which are then exchanged for an equivalent value of native tokens in the target chain’s AMM.
hTokens were created to enable Hop Protocol to programmatically create and destroy tokens to enable faster transfers between chains, reduce native exit times for all scaling solutions, and enable Bonders to deploy and utilize capital more efficiently.
To ensure a secure cross-chain experience for users, Hop Protocol ensures on-chain guarantees that users will receive funds even in the rare event that Bonder is offline. The addition of on-chain guarantees ensures that the Hop cross-chain bridge cannot withdraw funds, but there is also a trade-off that if Bonder is offline, the user's cross-chain experience will be slower.
Due to its security model, Hop Protocol is able to compete with trustless bridges, which may have to pay higher interest to attract liquidity than trustless bridges such as Hop Protocol. Given this efficiency, trustless bridges can offer lower fees than centralized bridges.
As of March 1, 2023, the basic data indicators of Hop Protocol are as follows:
Market cap: $13,135,651
Fully Diluted Valuation (FDV): $201,000,502
Total Value Locked (TVL): $79,733,768
6. Multichain (formerly Anyswap)
Multichain is a Web3 routing protocol that uses the SMPC network, supporting nearly 40 chains and more than 1,000 tokens.
Multichain consists of two parts: a cross-chain bridge and a cross-chain routing. The cross-chain bridge works similarly to other cross-chain bridges. When an asset on the source chain needs to be transferred to the target chain, the asset is deposited into the MPC smart contract on the source chain, and the target chain casts the encapsulated asset. In turn, the encapsulated asset needs to be deposited into the smart contract and destroyed in exchange for the asset on the source chain. On the other hand, the cross-chain routing ensures that any asset can be transferred between multiple chains, whether it is a native asset or an encapsulated asset created with the Multichain cross-chain bridge.
The Multichain token is MULTI, which can be locked in exchange for veMULTI NFTs. Holding NFTs gives you governance rights over the protocol and the ability to initiate proposals and vote. In addition to governance rights, NFTs can also generate income.
As mentioned above, there are countless cross-chain bridges in the crypto market, but perhaps the most important question is “Which cross-chain bridge to choose in what situation?” This depends on which chain you want to cross your assets to.
Personally, I often use Multichain because it supports many chains and I don't have to think about many issues. But I'm not sure if it is the best because sometimes it takes longer than other bridges to cross the chain. I used Connext once and was very satisfied with its UI/UX and cross-chain speed.
I also like to use the tool “Find My Bridge”. You just need to enter the source chain and the target chain, and “Find My Bridge” will search 55 cross-chain bridges to find the cheapest way.
Other than that, just try different cross-chain bridges and you will find the one you like best. Remember to always go to their official Twitter or CoinGecko app. Don’t search on Google because you may end up on a phishing site.
7. Risks of Cross-Chain Bridges
The following risks of using cross-chain bridges come from the Ethereum official website, which has explained it perfectly enough without the need for additional wording.
Cross-chain bridges are in the early stages of development. It is likely that the best cross-chain bridge design has not yet emerged. There are risks in interacting with any type of cross-chain bridge:
Smart contract risk — the risk of losing user funds due to code vulnerabilities
Technical risks — software glitches, code vulnerabilities, human error, spam and malicious attacks may disrupt user operations
Furthermore, since trusted cross-chain bridges add trust assumptions, they carry additional risks, such as:
Censorship risk — in theory, a cross-chain bridge operator could prevent users from using the cross-chain bridge to transfer assets
Custody risk — cross-chain bridge operators can collude to steal users’ funds
User funds will be at risk if:
Smart contracts have vulnerabilities
User makes mistakes
The underlying blockchain was attacked by hackers
Cross-chain bridge operators attempt to commit malicious acts on a trusted bridge
Cross-chain bridge hacked
Don’t think that there are no hackers in cross-chain bridges. BNB cross-chain bridge, Wormhole and Harmony cross-chain bridge have all had some major hackers, which can be checked on the rekt website.
