How Does Across Protocol #BridgeForLess?
tl;dr Last week, Across Protocol hosted a hashtag competition via Twitter to spread awareness on our cross-chain bridge’s low fees, and #BridgeForLess was chosen. Across is able to return assets to L1 in a cost-efficient manner due to our Direct to Bridger-style bridge, bundling and aggregating liquidity to reduce LP fees.
After analyzing our charts, something became abundantly clear: our fees are the lowest, but it doesn’t seem like everyone knows that.
And just like that, our hashtag competition was formulated.
We invited all of the Twitter-verse to participate in a hashtag competition for awareness with the following tweet:
Responses came flooding in, with everyone bringing impressively creative ideas to the table.
Our top 10 favorites were then put to a community vote, with #BridgeForLess taking the first spot, followed by #GetAcrossForLess in second and #SaveYourTollsFromTrolls in third.
With all this being said, you may be wondering exactly how our fees are cheaper, and what makes us so confident in using the #BridgeForLess hashtag. Below we will go through the in-depth mechanisms of exactly how our fees are calculated and how they’re cheaper.
There are three fees that are associated with using Across. These are:
- LP fees, which are set by the protocol
- Slow relay fees, which are set by the user
- Instant relay fees, also set by the user
Liquidity provider fees
When a user bridges their tokens from L2 to L1, we are able to provide immediate liquidity to the user on L1, but the liquidity providers must wait for the slow native bridge to move the token from L2 to L1.
Since liquidity providers must wait for up to a week for the funds to arrive, they are in essence creating a one-week loan for bridge users. This is similar to lending protocols such as AAVE and Compound. Because of this, we based our bridge pricing model on their utilization-based interest rate models.
For a more detailed description of our utilization-based pricing, please head over to our docs site.
Slow relay fees
The slow relay fee compensates the relayer for gas spent when bringing data from the deposit to the destination chain.
As a side note, users can set the slow relay fee to 0 if they would like to perform the slow relay transaction on their own, although this is recommended for advanced users.
Instant relay fees
The instant relayer fee compensates the relayer for the cost of capital for the duration of the relay. This is optional and can be set to zero if the depositor is okay with waiting a bit longer for their relay to be finished.
Our full fee example as illustrated on our docs site gives a nice look into how our fees are calculated:
Imagine that Alice would like to transfer 1 ETH from L2 to L1.
The total amount of ETH held in the liquidity provider pools is 250 ETH with 100 ETH currently being utilized. This means that the current utilization is 40%. The utilization if Alice chooses to bridge her 1 ETH would be 40.4%.
Liquidity provider fee: The liquidity provider fee, in this case, would be 0.000939 ETH.
Slow relayer fee: Alice offers a slow relayer fee of 0.001 ETH.
Fast relayer fee: Alice offers a fast relayer fee of 0.01 ETH.
Suppose that a slow relayer chooses to slow relay Alice’s transaction and that a fast relayer chooses to do a fast relay on her transaction. Alice would then receive 0.988061 ETH on L1 as soon as the fast relayer accepted her transaction.
The slow relayer would receive 0.001 ETH after the Optimistic Oracle had settled the transaction.
The fast relayer would receive 0.99806 ETH (0.98806 ETH to make up for immediately processing Alice’s transaction and 0.01 ETH as the fast relayer fee).
Relayers also charge for the gas they use, which is dependent on the demand on the Ethereum network.
There are a few things that affect how much our fees are:
- Fee model parameterization
- Current utilization (pool size and current amount of pool used)
- Current base gas price
We’re consistently able to have significantly low fees compared to others for a few reasons.
1. D2B vs AMM
Across is, as we have coined ourselves, a D2B (Direct to Bridger)-style bridge. Most bridges use an AMM-style bridge, which introduces the potential for slippage. With our D2B bridge, Across does not have these slippage issues — what you see is what you get.
An added benefit of this is that the gas costs of using the bridge are lower.
2. Bundling
By bundling multiple payment transactions into one, there are fewer gas fees, which translates directly to lower fees for our users. Bundling works best when you involve a good amount of transactions — the more it’s used, the lower the gas component of the fee will be.
If it would cost 0.01 ETH to do one relay, it costs less than 0.1 ETH to do 10 relays as a bundle with Across.
Our bridge differs from others as we try to be especially aggressive with our bundling, and by prioritizing that, we pass those savings onto our users.
3. Aggregating Liquidity
In Across V1, we aggregate the LP liquidity on L1. We have one single liquidity provider pool with all the funds, allowing for funds to not be fragmented. As a major part of the fees are the LP fees, reducing this cost allows for us to achieve lower fees for our users.
To sum it all up…
We are looking forward to using our new featured hashtag, #BridgeForLess, when sharing fee-based tweets with our audience. Across prides itself on being the best bridge for low fees due to our D2B bridge style, bundling and aggregating liquidity on L1.
To see our #BridgeForLess hashtag in action, make sure to follow us on Twitter. If you would like to learn more about our cross-chain bridge, take a deep dive into our Medium posts and join our Discord.
