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. However, the success of a cross-chain bridge cannot be solely measured by its total value locked.
Instead, a combination of number of transactions, the value of assets transferred and users retained would together be a better measure to gauge the success of a cross-chain bridge.
Why Not Total Value Locked?
Total Value Locked (TVL) as a metric of success was commonly used to gauge the relative success or adoption of a DeFi protocol. It worked for the segment as DeFi protocols are dependent on available liquidity to function and a higher TVL value can be construed as high confidence in the protocol.
However, measuring the success of a cross-chain bridge solely on the basis of the number of its TVL or even total transactions and the volume of assets bridged can be misleading. These metrics do not provide a complete picture of a bridge’s effectiveness or success in retaining users.
One opinion is that the rate of users retained is a more accurate metric to gauge the success of a cross-chain bridge. 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 returning is a better metric to gauge the success of a cross-chain bridge. Firstly, it provides an indication of the user experience. A bridge that is easy to use and provides a seamless experience of assets and data bridging is more likely to attract returning users. Conversely, a bridge that is difficult to use or unreliable is less likely to attract returning users.
Secondly, returning users also provides an indication of the level of comfort that users have in the bridge used. Users’ trust remains only so long as the bridge has not faced any major security incidents. However the majority of users using bridges do so without fully understanding the trade-offs accepted in the bridge design. For users of bridges, how fast and seamlessly a bridged transaction is completed is the main thing they care about. In the event of an exploit or an otherwise negative occurrence, it is at this point that users find out about the tradeoffs albeit a little too late.
Finally, the frequency of returning users can also provide insights into the growth potential of the bridge. A high frequency of returning users could indicate that users find the bridge useful and are willing to use it again 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 looked at were Allbridge, Axelar, Celer Networks cBridge, Connext, deBridge, LayerZeros Stargate, Multichain and Synapse Protocol. The Wormhole bridge was also explored but the required data was not available and it was dropped.
For the purpose of this exploration, 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.
|Protocol||Celer cBridge||deBridge||Stargate (LayerZero)||Multichain||Synapse|
|Total Value Bridged ($)||13,615,182,423||99,677,529||4,961,682,765||101,480,000,000||11,448,202,576|
|No. of Days Since Launch||621||472||384||988||584|
|Frequency per Address|
(Total Transactions / Unique Addresses)
|Average Value per Transaction ($)||9,267.94||737.00||9,379.36||19,413.05||1,654.36|
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 Stargate at $9,379.36, Celer at $9,267.94, Synapse at $1,654.36 and deBridge at $737.00.
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.
|No. of Blockchains Connected||46||7||8||88||18|
|No of Tokens Available||160||128||n/a||3,543||n/a|
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’sits possible to assume that the broad token support has potentially contributed to the visibility of Multichain’s bridging service.
Celer 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.
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.
Stargate / LayerZero is one to keep an eye on in future. Current metrics may not be completely accurate with the recent increases in Transaction Volume and is expected to skew returning users data lower for the time being. To get a better idea on the changes to the rate of returning users and impact to average value bridged, having the data stabilize over a quarter would provide more accurate results.
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’s easier to make assumptions of where growth has happened and what effect it has had.