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Ethereum 'Shapella' Live | DLN Gated Launch | Symbiosis Integrates zkSync | NillaConnect x LI.FI & More!
Last Week In The Multi-Chain Ecosystem (10 - 16 April '23)
Welcome to LI.FI’s Cross Chain Insider newsletter. If you want to join this community of cross-chain aficionados learning about bridges, interoperability, and the multi-chain ecosystem, subscribe below.
DLN, a cross-chain exchange that enables high performance cross-chain trading, has been gated launched with 500 addresses whitelisted. You can check to see if you have been whitelisted at: https://dln.trade/.
RelayChain has launched version 3 of its product development with the introduction of Bridge & Swap solution. Relay V3 has integrated LI.FI, Symbiosis, and Squid to connect users to 25 chains, 15 bridges, and 31 exchanges.
Symbiosis, a cross-chain DeFi platform, has integrated zkSync ‘to improve speed and reduce fees of token swaps on its platform.’ Users can now access any-to-any native swaps to and from zkSync via Symbiosis.
Caldera, a tool-kit for deploying customizable, and application-specific Rollups aka Caldera Chains, has partnered with Hyperlane to bring interoperability to its ecosystem. Each Caldera rollup can now communicate with other Caldera rollups and supported L1/L2 blockchains.
NillaConnect, an omni-chain yield aggregator and leverage optimizer, has integrated LI.FI’s widget to offer cross-chain swaps inside its dApp. With the integration, NillaConnect users can now bridge and swap their assets across 15+ EVM-compatible chains and Layer-2s in just a few clicks.
Multi-Chain Ecosystem Updates
Ethereum’s Shanghai hard fork, also referred to as “Shapella,” has been finalized, enabling withdrawals for users who have “staked” their ETH to secure and validate transactions on the blockchain.
The status of ETH withdrawals can be tracked on Nansen’s public dashboard.
Saga, the flagship, security-conscious, crypto-first Android device from Solana Mobile is now available. Saga is now available for customers who pre-ordered and can be used to access 16 dApps spanning NFTs, DAOs, staking, including Audius, Jupiter Exchange, Ledger, and more.
The Uniswap mobile wallet is now available as an iOS app as it passed the Apple’s App Store review. The mobile wallet currently supports swaps and NFTs on Ethereum, Polygon, Arbitrum, and Optimism.
The EOS Network Foundation (ENF) has announced the beta launch of the EOS EVM mainnet beta, enabling interoperability between EOS and EVM chains. The launch coincides with a recent announcement of a $20M fund for growth of EOS ecosystem projects and introduces a burn mechanism that will see 100% profits from ENF’s RPC nodes burned.
Within just three weeks of its launch, the TVL on zkSync Era has zoomed past $120M with SyncSwap commanding >50% of the value.
Measuring the Success of Cross-Chain Bridges
Cross-chain bridges have become an essential aspect of the blockchain ecosystem. As the number of available blockchains continues to increase, cross-chain bridges are increasingly used to transfer assets and data between chains as users move around to explore the different ecosystems.
TVL as a metric has been widely used to gauge the success or adoption of DeFi protocols, as they rely on available liquidity to function. However, when it comes to cross-chain bridges, TVL, total transactions, and the volume of assets bridged don't paint the full picture of a bridge's effectiveness or ability to retain users.
A more comprehensive measure should consider different factors such as the number of transactions, the value of assets transferred, and user retention.
Today, we seek to evaluate the ‘success’ in terms of adoption of some of the most popular bridges in the ecosystem using metrics we believe are more important for bridges than TVL.
Let’s dive in!
Why Not Total Value Locked?
Total Value Locked (TVL) has been a widely used metric for assessing the relative success or adoption of DeFi protocols. This approach works well for the DeFi segment because these protocols rely on available liquidity to function, and a higher TVL value often indicates greater confidence in the protocol.
However, when evaluating the success of a cross-chain bridge, relying solely on TVL, or even total transactions, or the volume of assets bridged can lead to an incomplete and potentially misleading assessment. These metrics may not fully capture a bridge's effectiveness or its ability to retain users over time.
One opinion is that a more accurate metric for determining the success of a cross-chain bridge is the user retention rate. This metric measures the average number of transactions made by a user and provides an idea of the number of times on average a user returns after their initial use. The higher the returning user frequency, it's safe to say that the bridge has been more successful at user retention.
Understanding the Value Of Returning Users
There are several reasons why the rate of users retained is a better metric to gauge the success of a cross-chain bridge:
1) Serves as an indicator of the user experience – Bridges that offer an easy-to-use interface and seamless asset and data transfer are more likely to attract and retain users, while those that are difficult to use or unreliable may struggle to maintain user engagement.
2) Reflects the level of trust and comfort users have in a particular bridge – Returning users provides an indication of the level of comfort that users have in the bridge used. User trust depends on the bridge's ability to maintain security without major incidents. However, many users engage with bridges without fully understanding the inherent trade-offs in the bridge design. For these users, the speed and ease of completing a bridged transaction are of primary importance. Should an exploit or negative event occur, users may only then become aware of the trade-offs involved, often at a high cost.
3) Offers insights into a bridge’s growth potential – Analyzing the frequency of returning users can offer valuable insights into a bridge's growth potential. A high frequency of returning users implies that the bridge is perceived as useful and that users are willing to engage with it in the future. A potential outcome that can be derived is that this could lead to an increase in the adoption of the bridge and its potential to attract new users to the platform.
How Do Current Bridges Compare?
To get an idea how the results would look for existing cross-chain bridges, data was collected from their official analytics sections (where available) and then extrapolated to arrive at insights into how these bridges were performing.
The bridges analyzed were Allbridge, Axelar, Celer Network’s cBridge, Connext, deBridge, LayerZero’s Stargate, Multichain, and Synapse Protocol. Wormhole was also explored but the required data was not available and it was dropped.
For the purpose of this analysis, the bridges with incomplete information needed to make this comparison were also dropped. If you’d like to view the complete information, you can do so here.
Based on the table above, we can make the assumption on the frequency of transactions that each Unique Address makes by dividing it with the Total Transactions of the bridge. This provides the following result with Multichain achieving a return frequency of 6.05 per Unique Address, followed by Synapse at 5.41, Celer at 3.79, Stargate at 2.34 and deBridge at 1.97.
The average value transacted also provides additional insight with Multichain continuing to lead in this area with an average of $19,413.05, followed by Celer at $9,267.94, Synapse at $1,654.36 and deBridge at $737.
Now that the return frequency of the bridges are clearer, let’s explore what are the possible reasons behind their individual performance. This gives a clearer understanding of how the bridges have achieved what they have thus far.
1) Multichain has the largest amount of connected blockchains and tokens for bridging, however the majority of volume is still between the top blockchains as shown in the table below. It's however reasonable to believe that users who use the bridge for transferring between lesser-known blockchains might also use it for the more popular routes; often large token support bases are attributed to increased volume, there is however no evidence to support this but it's possible to assume that the broad token support has potentially contributed to the visibility of Multichain’s bridging service.
2) Celer’s cBridge with its connected with 46 blockchains and has observed a reasonable amount of recurring users as well as an average bridge transaction value. Recently, Celer was incorporated into the Bridges part of Metamask's dApp collection which could be the explanation for its recent growth in transaction volume. Nevertheless, the full effect has not been completely realized yet as the transfer value has not grown proportionally with the growth in the number of transactions.
3) Synapse is especially noteworthy due to its extensive total transactions and unique addresses, surpassing even those of Multichain. However, its average value per bridge transaction is lower than both Multichain and Celer. This may be because of its integration with projects such as DeFi Kingdoms, which has brought a large number of users and transactions but lower overall value. Synapse also has an active community on Twitter which in part also contributed to its increased visibility.
To sum up, returning user frequency is a more accurate way to determine the success of a cross-chain bridge rather than TVL. By combining it with other metrics, it offers a better view of how the bridges have been embraced. A high returning user frequency is likely an indication that the bridges have become essential infrastructure, and it'sits easier to make assumptions of where growth has happened and what effect it has had.
It would be interesting to come back to this analysis in six months and view how the metrics have changed over time.
~ by @insomniac_ac
1) Revisiting Bridges: Everything is a bridge in the modular future by @0xJim
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