ON–117: Bridges (Part 2)
Coverage on Hop Protocol, Rainbow Bridge, and Synapse.
Apr 15, 2022
- Hop is a trustless bridge with support for ETH, Arbitrum, Optimism, Polygon and Gnosis Chain. To move assets between chains in near instant speed, it relies on market makers (“Bonders”) extending credit to users on the destination chain and relaying on-chain proofs through Ethereum as a message hub, to reimburse Bonders for their short-term credit. Although this security model restricts Hop to networks that are anchored to Ethereum, Hop is dominating routes in that zone and nearing $2b in volume.
- The number of large transfers going through Hop has increased significantly over the last weeks, with transfers north of $1m not being a rare occurrence. This is attributable to increasing Bonder liquidity per asset as well as deeper AMMs resulting in less slippage & more active arbitrage.
- Unexpectedly for many, one of Hop’s fastest growing chains has been Gnosis Chain (formerly xDAI). One of Gnosis first actions after the merge was to issue $GNO rewards for Hop LPs. This has brought down fees to bridge into GC and shows how important good bridge support is for emerging ecosystems.
- The Rainbow bridge connects Ethereum to NEAR and Aurora. A highly anticipated L1 ecosystem, NEAR is starting to see a consistent outflow of capital to participate in the growing number of DEXs and lending protocols. Since March 1st, there has been over $1.1b total volume and a net $526m flow from Ethereum to NEAR and Aurora
- With the emergence of lending protocols like Bastion and Burrow, as well as DEXs like Trisolaris and NearPAD, there are countless farming opportunities. Roughly 70% of all bridge volume is in stables (USDC, USDT, and DAI), perhaps due to the sideways market.
- A lot can be gleaned connecting EVM addresses with NEAR names (eg. user.near). For example, the Woo network bridged ~1m USD worth of $WOO from their Ethereum treasury to woodao.near. Burrow protocol also bridged to their Sputnik (NEAR multisig) wallet.
- The total volume bridged on Synapse exceeded $9b following the launch of the DeFi Kingdoms blockchain, within which Synapse was the primary method for users to send their Jewel, xJewel, and AVAX between Harmony and the new blockchain. Synapse saw a sharp increase in usage immediately following the launch of DFK Chain. Over $1b of the $9b was bridged in the last 14 days, with nearly $600m of that volume coming from DFK Chain.
- The total amount of unique transactions facilitated by the Synapse bridge just exceeded 600k. Similar to volume, a lot of this growth came from DFK Chain, over 130k unique transactions just two weeks post launch. Even more interesting, DFK Chain is now the number one chain by transaction count.
