Hey Edge readers,
This week, we're peeling back the layers of one of the most important developments in the DeFi space: cross-chain bridges, with a spotlight on the Across protocol. As DeFi users, we all know the importance of understanding the innovations that we’re investing in.
Here's what we're covering this week:
1. DeFi bridging unpacked 📖
Understand how bridges work.
2. The Across advantage 🌉
Overview of Across and yield opportunities.
3. Market movements 📉
The impact of Grayscale outflows on Bitcoin and more.
Stay sharp. 🫡
- The Exponential team
How DeFi bridging works
Learn about bridging in DeFi, including how it works, the associated risks and advantages, and the top bridging protocols in the space.
exponential.fi/blog/how-defi-bridging-works
The Across advantage
Cross-chain bridges are critical for asset transfers between blockchains, particularly as DeFi expands beyond a single network. They not only enable the flow of assets but also unlock the potential for broader market participation.
Intro to Across
Across has emerged as a significant player in the bridging space, providing a mix of speed and cost-efficiency. It achieves this with its unified liquidity pool design and network of bots (relayers). Historically, bridges have required liquidity on each chain it connects to with isolated pools for each chain. This fragments liquidity across several chains, resulting in higher bridging costs for users.
Across solved this issue by employing a single liquidity pool on Ethereum, where it is most secure, instead of relying on local pools on each rollup or Layer 2 (L2) chain. The protocol relies on relayers to rebalance between chains using the canonical L2 bridges. These relayers risk their own funds to bridge assets and compete with each other on speed to fill user transfers. To get reimbursed (from the liquidity pool), relayers submit proofs of their transactions to UMA’s optimistic oracle, which only requires a single honest watcher to detect fraud. The use of canonical L2 bridges also eliminates the need for external validators. This approach limits exposure from some of the security risks seen in other bridge protocols.
Impressive growth
With a rising market share and competitive fees, Across has positioned itself as a popular service for DeFi users.
- Total bridged volume: Across has facilitated >$4.6 billion in total volume to-date. Over the last month, Across generated the fifth most bridging volume, only behind one other third-party bridge, Stargate.
- Growing community of users: Over 337,000 users are using Across for cross-chain transfers.
- Number of transfers: Across has processed over 2.3 million transfers since inception.
- Total value locked (TVL): Secured over $100 million in TVL, indicating growing confidence among liquidity providers.
Earning yield on Across
Users seeking passive income can consider Across’ liquidity pools, which offer some of the best yields in the DeFi ecosystem. The protocol's design, which concentrates liquidity in a single pool on Ethereum and uses relayers for transactions, leads to greater efficiency and reduced gas fees.
As Ethereum continues to evolve into a more L2-centric roadmap, Across is set to further cement its position as a leading bridge service in the DeFi ecosystem. The protocol's innovative model, which emphasizes security and efficiency, aligns well with the growing demand for reliable cross-chain transfers.
How can you earn from Across' success? You can now invest in Across liquidity pools on Exponential and earn 7-15% yields on ETH, BTC or USD.
In the news
- Bitcoin prices fell this week as Grayscale’s GBTC see over $1B daily outflows - Read
- Uma unveils latest MEV breakthrough to help lending protocols bolster revenue - Read
- The race for EVM-compatibility on Bitcoin network heats up - Read
- Etherfi continues to climb higher on demand for EigenLayer restaking - Read
Podcast
Curvance: Enabling yield in an omnichain world
Catch @0xMai on the latest episode of #DegenResponsibly discussing Curvance’s approach to building a novel cross-chain money market.
exponential.fi/degen-responsibly/e545dea8-5d68-4e16-a8ec-8cf77aff95c3
