Overview of Cross-Chain Bridges: A Look at the Features and Progress of 6 Mainstream Cross-Chain Bridges

Author: Route 2 FI

Compiled by: Peng SUN, Foresight News

Similar to bridges in the physical world that connect two physical locations, cross-chain bridges in the crypto world connect two blockchain ecosystems, facilitating communication between different blockchains through the transfer of information and assets. In the early days of blockchain, where demand exceeded supply, factors such as the impossible triangle problem of public chains, capital-driven dynamics, and the "continuing revolution" nature of blockchain made the coexistence of multiple chains possible, making it difficult for any single blockchain to dominate; the competition among many will continue.

In this context, different blockchains have their own strengths in terms of performance and ecosystems, and users with economic needs scattered across different networks must bridge through cross-chain bridges.

Currently, countless projects are laying out the cross-chain bridge track, trying to seize market share in advance. Among many projects, 12 notable ones include Stargate, Orbiter, Synapse, Bungee, Multichain, Lifi protocol, Rango, LayerZero, Connext, Relay, Hop Protocol, and Router protocol. I will briefly introduce 6 mainstream cross-chain bridges, covering their basic concepts, innovative features, data metrics, future developments, and token airdrops, while reminding everyone to be aware of the risks associated with cross-chain bridges.

1. Synapse Protocol (SYN)

Synapse is essentially a cross-chain liquidity protocol that allows users to bridge assets across different chains. To fully engage with the multi-chain narrative, users should be familiar with various cross-chain bridges, and Synapse represents one of the user-friendly options. According to DefiLlama data, we note that Synapse currently has a total locked value (TVL) of $204 million, ranking in the top ten across the ecosystem.

On Synapse, users can cross-chain 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 that the announcement for SynChain will be made around ETHDenver 2023 based on price trends and interactions on Discord.

Given the narrative around L2 and the significant unique wallet support for Optimism and Arbitrum, we can infer that Synapse aims to position itself as the cheapest L2 rollup with a fully diluted valuation (FDV) of approximately $350 million.

It is worth noting that the upcoming SynChain may acquire early users through an airdrop—though speculative, there are rumors of a potential Synapse airdrop targeting holders.

As Synapse approved unilateral staking in November, it would not be surprising if Synapse joins the narrative of real yields and eventually starts sharing protocol profits. Remember to conduct your own research on this project.

Finally, let's take a look at Synapse's data metrics:

• Market Cap: $247 million
• Price: $2.30
• Fully Diluted Valuation (FDV): $325 million
• Total Locked Value (TVL): $204 million

2. Connext

Connext is an Ethereum Layer 2 interoperability protocol. Previously known as xPollinate, its main function is to facilitate the transfer of assets across blockchains and Rollups.

Since launching its closed beta in early February, Connext has seen tremendous growth, averaging $5.5 million in weekly trading volume and approximately 5,000 transactions per week in February.

Notably, Connext relies on AMM to price liquidity on each chain. According to Twitter user pepes, there is an oversupply of liquidity on Optimism and Arbitrum, meaning Connext users can benefit from positive slippage when bridging. In simpler terms, Connext pays you ETH to bridge to Optimism and Arbitrum.

Connext is a fast and secure cross-chain bridge, which is very ideal for regular crypto enthusiasts. It breaks down through active liquidity, essentially meaning that Connext's routers provide liquidity to users on the target chain, which is then repaid by the protocol.

Connext effectively lends funds to waiting users and is repaid through the protocol—this impacts transaction latency. Overall, Connext's product is both innovative and promising.

Finally, let's look at Connext's data metrics for February, which can be considered monthly metrics:

• Total Locked Value (TVL): $18.4 million
• Total Trading Volume: $17.4 million
• Total Cross-Chain Transactions: 20,221

3. RelayChain (RELAY)

Relay is a cross-chain bridge aggregator primarily aimed at solving the fragmentation and lack of interoperability between different chains. Its core product is a cross-chain bridge that aggregates the most efficient cross-chain bridges for users; to incentivize new users, Relay has set up a lottery system for users each time they use the cross-chain bridge (with a maximum prize of $5,000). Relay aggregates liquidity from 5 different cross-chain bridges, acting as a price comparison site to help users find the cheapest, fastest, and most liquid cross-chain bridges.

Currently, the Relay cross-chain bridge supports 15 blockchains. Relay also features staking functionality aimed at providing liquidity for the protocol.

Relay is positioned as a long-term project, and its token unlock model ensures that advisors support the project in the medium to short term. Simply put, the token unlock is time-based: the first unlock is 10% (30 days), the second is 15% (60 days), and thereafter 25% is unlocked each quarter. The team has collaborated with major companies in the Web3 space and was one of the first teams to support the first DEX on Avalanche.

Finally, let's take a look at RelayChain's data metrics:

• Total Locked Value (TVL): $77 million
• Cross-Chain Value: $1.03 billion
• Total Transactions: 50,988
• Market Cap: $4 million

Please note that Relay's market cap is relatively small, so if you decide to purchase this token, be very cautious, and it may be best not to buy, as the chances of significant price fluctuations are high.

4. Stargate

Stargate is a cross-chain liquidity protocol based on LayerZero and is the first DApp deployed using LayerZero. Compared to other cross-chain bridges, Stargate's main differentiating factor lies in its implementation, reportedly the first solution to address the well-known cross-chain bridge impossible triangle problem first proposed by Vitalik.

While cross-chain bridges are typically forced to sacrifice one element of the impossible triangle (instant transaction confirmation, native assets, and unified liquidity), Stargate does not sacrifice any of these attributes.

Stargate also employs an innovative liquidity pool balancing algorithm that incentivizes users to deposit into underfunded pools (withdrawing from well-funded pools). This ensures that liquidity remains deep on the chains supported by Stargate, providing users with a better cross-chain bridge experience through low slippage and price impact.

Stargate is supported by one of the most well-capitalized teams in the field, LayerZero. In fact, LayerZero is very well-funded; they repurchased all tokens and equity related to Stargate/LayerZero held by Alameda after the FTX incident. Thus, this eliminates the risk of forced liquidation faced by many Alameda-supported projects during asset recovery.

Finally, Stargate's data metrics are as follows:

• Market Cap: $176 million
• Fully Diluted Valuation (FDV): $1.065 billion
• Total Locked Value (TVL): $480.1 million
• Price-to-Earnings Ratio (P/E ratio): 490.93x

5. Hop Protocol

Hop Protocol is a scalable cross-chain bridge and DEX for universal tokens between Rollups, allowing users to transfer and send tokens from one Rollup or sidechain to another without waiting for the network's challenge period.

Hop Protocol contributes to the 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 equivalent native tokens in the AMM on the target chain.

The creation of hTokens allows Hop Protocol to programmatically create and destroy tokens for faster transfers between different chains, reducing the native exit time for all scaling solutions and enabling Bonders to deploy and utilize capital more effectively.

To ensure a secure cross-chain experience for users, Hop Protocol guarantees that users will receive funds even in the rare case that a Bonder goes offline. The increased on-chain guarantees ensure that the Hop cross-chain bridge cannot withdraw funds, but it must also balance the trade-off that if a Bonder goes offline, the user's cross-chain experience will slow down.

Due to its security model, Hop Protocol can compete with trustless bridges, as other cross-chain bridges may require higher interest rates to attract liquidity compared to trustless bridges like Hop Protocol. Given this efficiency, trustless bridges can offer lower fees than centralized cross-chain bridges.

As of March 1, 2023, the foundational data metrics for Hop Protocol are as follows:

• Market Cap: $13,135,651
• Fully Diluted Valuation (FDV): $201,000,502
• Total Locked Value (TVL): $79,733,768

6. Multichain (formerly Anyswap)

Multichain is a Web3 routing protocol that uses an SMPC network, supporting nearly 40 chains and over 1,000 tokens.

Multichain consists of two parts: cross-chain bridges and cross-chain routing. The cross-chain bridge operates similarly to other cross-chain bridges. When assets on the source chain need to be bridged to the target chain, the assets are deposited into an MPC smart contract on the source chain, and the target chain mints wrapped assets. Conversely, wrapped assets need to be deposited into a smart contract for destruction in exchange for assets on the source chain. On the other hand, cross-chain routing ensures that any asset can be transferred between multiple chains, whether native assets or wrapped assets created using the Multichain cross-chain bridge.

The Multichain token is MULTI, which can be locked in exchange for veMULTI NFTs. Holding the NFT grants governance rights over the protocol, allowing for proposal initiation and voting. In addition to governance rights, the NFT can also earn rewards.

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 bridge your assets to.

Personally, I often use Multichain because it supports many chains, and I don't have to think about many issues. However, I'm not sure if it's the best option, as sometimes the bridging time it requires is longer than other bridges. I once used Connext, and its UI/UX and bridging speed were quite satisfactory.

I also like to use the tool "Find My Bridge". You just need to input the source chain and target chain, and "Find My Bridge" will retrieve 55 cross-chain bridges to find the cheapest option.

Besides that, just trying out different cross-chain bridges will help you find your favorite one. Remember to always access their applications through their official Twitter or CoinGecko. Do not search on Google, as you may end up on phishing sites.

7. Risks of Cross-Chain Bridges

The following risks associated with using cross-chain bridges come from the Ethereum official website, which has explained them perfectly without the need for additional embellishments.

Cross-chain bridges are still in the early stages of development. The best designs for cross-chain bridges have likely not yet emerged. There are risks associated with interacting with any type of cross-chain bridge:

• Smart Contract Risk --- The risk of code vulnerabilities leading to the loss of user funds.
• Technical Risk --- Software failures, code vulnerabilities, human errors, spam, and malicious attacks may interfere with user operations.

Additionally, trusted cross-chain bridges introduce extra risks due to increased trust assumptions, such as:

• Censorship Risk --- Theoretically, cross-chain bridge operators can prevent users from transferring assets using the bridge.
• Custodial Risk --- Cross-chain bridge operators can conspire to steal users' funds.

User funds will be at risk if any of the following situations occur:

• There are vulnerabilities in the smart contract.
• Users make mistakes.
• The underlying blockchain suffers a hack.
• Cross-chain bridge operators attempt malicious actions on trusted bridges.
• The cross-chain bridge is hacked.

Do not assume that cross-chain bridges are immune to hackers; the BNB cross-chain bridge, Wormhole, and Harmony cross-chain bridge have all experienced significant hacks, which can be viewed on the rekt website.