The state of cross-chain: How Across uses capital efficiency to save users money
Tldr; Across optimizes for capital efficiency, which results in lower fees for bridge users. Across consistently offers better prices than its competitors, validating its design choices.
Key takeaways:
- Across routinely charges users lower fees than its competitors thanks to its focus on capital efficiency. It frequently comes in 25–75% cheaper than other bridges.
- Across beats its competitors on prices partly because it uses a single liquidity pool and interest rate model.
- As Across leverages UMA’s optimistic oracle to confirm cross-chain transactions, its gas fee component is significantly lower than competitors.
- Optimal capital efficiency and speed should help Across grow its market share over time.
The cross-chain space is fiercely competitive. There are over 100 bridges for moving assets across the ecosystem today, and all of them serve a similar purpose. That means bridges need to offer users meaningful benefits to gain traction.
It’s why we spend so much time studying data on bridge performance and the decisions users make when they move their assets. Our recent findings show that Across dominates in aggregator volume, and it’s also the world’s fastest bridge.
But when we were building Across, one single measure was top of mind: capital efficiency. In order to better serve our users, we took several crucial design decisions to ensure that Across was the world’s most capital-efficient bridge.
From studying recent cross-chain activity, we can draw a clear conclusion: Across consistently charges lower fees than its competitors, and that’s because it optimizes for capital efficiency.
When we were compiling the data, we found that Across saves users as much as 25–75% on fees versus major competitors. As it’s also the fastest bridge, we see this as a huge win.
To wrap up our series on the state of cross-chain, we look into how Across’ capital-efficient design benefits users, and the long-term impact this is likely to have on the bridge landscape.
How Across’ fees stack up
In Q2 2023, Across had a median fee of $5.25 for Layer 1 >> Layer 2 transfers. That ranks lower than all of its competitors.
Similarly, Across had a median fee of $8.77 for Layer 2 >> Layer 1 transfers, beating all of its competitors.
Across was narrowly beaten by cBridge for Layer 2 >> Layer 2 transactions. While Across charged a median of $0.74 to move assets on Layer 2, cBridge charged $0.58.
These figures point to two clear conclusions:
- Across is the world’s cheapest bridge for moving assets to and from Ethereum.
- Across is one of the cheapest bridges for moving between Layer 2 chains.
Across the whole of Q2 2023, Across had the lowest or second lowest median daily fees on 72 days, or about 79% of the quarter.
How external factors impact bridge fees
It’s important to note that several factors could impact cross-chain bridge fee data.
If a bridge processes a series of abnormally large transfers or uses a route with higher gas fees on any given day, its average fees will appear skewed. Across users pay relayers a percentage of the sum they bridge, which means fees increase as people make larger transfers.
Additionally, if gas fees are denominated in USD, they appear higher when ETH trades higher. This means bridge fees also appear higher when ETH is trading in the green. Across relayers cover gas costs on the destination chain and then charge users, so their fees increase when onchain activity does.
Just as it’s faster to transfer assets from Layer 2 >> Layer 2 than from Layer 1 >> Layer 2, it’s also much cheaper. This means a bridge’s fees could appear skewed if it processed significantly more activity between Layer 2 networks like Arbitrum and Optimism.
When comparing fees for each cross-chain bridge, we looked at the median figures to rule out data spikes and get the clearest picture possible. We also analyzed the figures for each of the different routes supported by bridges rather than bundling Layer 2 >> Layer 2 transfers with Layer 1 >> Layer 2.
Our detailed analysis of the numbers tells us that Across is the cheapest bridge for moving assets across the cross-chain ecosystem.
How Across maintains capital efficiency
In the crypto ecosystem, capital efficiency is key. Protocols need to attract capital and then use it in the most efficient way possible to maintain ongoing adoption. Networks like Across can achieve capital efficiency when they charge users the lowest fees possible while offering LPs the best yields possible.
Across took several design choices to improve its capital efficiency. Unlike most other bridges, Across uses a single liquidity pool on Ethereum mainnet with automated rebalancing between destination chains. This prevents fragmentation and ensures assets can be transferred whenever they’re needed without placing an extra cost on the user.
Across also uses an interest rate model where users effectively borrow from LPs rather than swapping a synthetic token. This prevents slippage and ensures that they do not suffer from arbitrage tax.
Across’ contracts are also optimized to be gas-efficient. Across uses UMA’s optimistic oracle to confirm cross-chain transactions, so unlike other bridge solutions, it doesn’t need to do gas-intensive onchain validation.
Relayers take on the gas burden and charge it back to users, but they are in competition to fill orders, which further drives down user fees.
Across’ fees change depending on an asset’s utilization rate. In rare instances when an asset has a very high utilization rate in the pool (as was the case for WETH and USDC on two days in Q2 2023), the fees increase.
The result is a capital-efficient bridge with more consistent, steady fees for LPs and users.
Why Across’ design choices matter
While cBridge’s median fees came out slightly ahead of Across on Layer 2 >> Layer 2 transactions, we can see that Across’ fees are consistently low across all supported routes.
All of this is to say that Across’ decision to focus on capital efficiency has paid off.
While it’s still early days for cross-chain interoperability, Across is proving its value by offering the most favorable fees to users.
In the crypto and DeFi ecosystem, projects need capital efficiency to succeed. If your product is cool but another team is offering a similar thing at a lower cost (or with better returns), users will eventually flock elsewhere. This trend has played out with AMMs, lending markets, and staking products in the past.
Across used financial engineering to build a bridge architecture that differs from other solutions on the market. The bridge’s design achieves greater capital efficiency, broadly resulting in lower fees and a better user experience.
Across and the future of the cross-chain ecosystem
We’ve established that Across offers better prices than its competitors thanks to its capital-efficient design. And in our previous state of cross-chain deep dive, we explained how Across became the world’s fastest cross-chain bridge.
Because Across offers price and speed benefits, it has found a dedicated user base in the cross-chain ecosystem. This is evidenced clearest by its dominance in aggregator volume, as covered at the beginning of this blog series.
As the cross-chain space grows, we expect to see Across grow its market share as users become aware of its speed and price benefits. As we previously discussed, we believe that aggregators will play a key role in serving the best bridge solutions to the next generation of cross-chain crypto users.
With so much competition in the cross-chain landscape, bridges will increasingly need to offer the best user experience possible to stand out from their competitors. Across is already doing this by offering low fees and high fill speeds (and the numbers prove it), so we’re excited to see what happens next.
The data for this piece was compiled by Across Protocol’s data and research team. It specifically examines Q2 2023. To make as fair a comparison as possible between bridges, the data have been filtered to focus on only tokens and chains supported by Across Protocol. It also excludes canonical bridges as regular users typically favor non-canonical bridges.
