The state of cross-chain: Why Across wins on aggregators and what that means for the future
Tldr; While Across has fierce competition in the cross-chain space, it consistently outpaces other bridges in aggregator volume share. There are good reasons to believe that aggregators will abstract bridges away under the hood in the future, which should benefit Across.
Key takeaways:
- Across leads ahead of most other bridges in aggregator volume share as it offers users significant speed, price, and security benefits.
- Product awareness and airdrop farming may explain why Across is not “winning” in overall market volume.
- Aggregators could thrive in a multi-chain world, which is likely to impact Across usage.
Cross-chain interoperability is one of crypto’s biggest challenges, but the multi-chain future is already here as we enter the second half of 2023.
Bridges like Across are helping users move across the ecosystem every day. It’s easy to see this from a quick glance on-chain — we also know it because our team has spent countless hours studying data for deep insights into every cross-chain bridge.
We’ve built advanced data machinery that give us a comprehensive view of Across’ market position beyond metrics like TVL and overall volume. While it took some digging, our findings prove what we have suspected for some time: that Across has the best tech in the bridge space.
We recently pulled together some of our findings to present this report on the state of the cross-chain landscape. It’s part of a series of valuable insights we’ll be sharing in the coming weeks.
For this piece, we uncovered several trends in cross-chain activity in Q2 2023. Ultimately, our research led us to two conclusions: Across wins on aggregators, and bridging is likely to be aggregator-driven in the future.
Why use Across?
As the multi-chain ecosystem has grown, many bridges have come to market. This raises an important question: why use Across?
Because relayers and LPs take on risk on behalf of users, it’s extremely fast. Across also optimizes for capital-efficiency and security, leveraging UMA’s optimistic oracle.
How aggregators help cross-chain users
When users want to move their assets across chains today, they have to make a decision on how to get there. They may default to a canonical bridge, especially if they happen to be moving millions of dollars. Alternatively, they could have a preferred option that they’ve been using for a while.
Savvy users want to get the best deal at the fastest speed, so they go to an aggregator. Bridge aggregators work much the same way as DEX aggregators, integrating multiple solutions and identifying the best route for users to execute their transaction. In the cross-chain space, Socket and LI.FI account for the bulk of aggregator market share today, representing about 80% and 20% of all volume respectively.
Because Across offers significant speed and price benefits, it makes up a sizable portion of bridge aggregator volume share. In Q2 2023, Across accounted for an average of 29.7% of all aggregator volume, peaking at over 50% in early June. Across’ volume share continues to steadily rise, and almost always ranks among the top two solutions for aggregators.
This tells us that when regular users need to bridge their assets based on price, time, and security, they opt for Across.
Why isn’t Across “winning” in overall market share?
While Across is a top solution for aggregator users, overall bridge volumes paint a slightly different picture. Stargate, which trails close behind Across in aggregator usage, is by far the most used bridge on the market today. Stargate held roughly 22.4% of total bridging market volume at the start of Q2 2023 and rounded off the quarter with over 80% thanks to Multichain’s shutdown.
Across, meanwhile, averaged 7.8% of all volume in Q2 2023.
Besides Multichain’s woes, other factors may explain Stargate’s rise. Crypto power users often speculate on token launches, farming for airdrops with low-value transactions. If a bridge is rumored to launch a token, people will use it on multiple wallets to win eligibility.
Brand loyalty also impacts crypto projects, even if capital is often mercenary. Uniswap memorably lost market share when Sushi conducted a Vampire attack in DeFi summer, but that was short-lived. Arguably the biggest reason Uniswap became the top DEX was the market’s loyalty to the brand.
In the cross-chain ecosystem today, canonical bridges comprise a significant portion of the total volume, yet they account for a small number of bridge transactions. This is because they are popular with whales. This trend is likely to change in the future, as more people enter the crypto ecosystem and liquidity becomes more distributed.
In summary, factors like brand loyalty and speculative farming may be impacting overall market volume and Across’ market share today.
Why aggregators have room for growth
In Q2 2023, aggregators accounted for about 12.3% of bridge volume share. Additionally, aggregator volume share peaked below 20% across the quarter. Of all the aggregators on the market, the vast majority of activity happened on Socket (Bungee) and LI.FI (Jumper).
Today, crypto power users use bridges when they need to move assets, and they may go through an aggregator if they’re set on scoping out the best deal. But in a world where 1 billion people use crypto daily, bridges are unlikely to be so user-facing.
Many products that integrate bridges already integrate aggregators to provide users with the optimal solution. We expect this trend to continue in the future, with aggregators serving users with the best solution for their needs. In a scalable multi-chain world, it’s likely that bridges will eventually be abstracted as user experience becomes a key focus.
We also know from looking at crypto and other global markets that the most capital efficient products will win over users. This is why aggregators like Uber, Airbnb, Skyscanner, and Hotels.com often succeed after finding a niche in a market.
LI.FI’s Arjun Chand explored this topic in depth in a June 2023 piece titled “Crypto Aggregation Theory (ft. Bridges),” using Ben Thompson’s Aggregation Theory to argue that bridge aggregators “could be the key to an interop future.” In his piece, he says:
“The end game for bridge aggregators can be found in the roots of Web2, where Ben Thompson wrote about Aggregation Theory long ago, describing how teams at Uber, Airbnb, and Netflix disrupted incumbents by leveraging the Internet for network effects, cheap distribution, and, well, aggregation. The same thing could happen for bridges.”
In conclusion, once crypto is ready for mass adoption, the masses won’t even know what bridge they’re using. They’ll be moving their assets through an aggregator that offers them the best user experience and price instead.
The multi-chain era is here
Crypto has entered the multi-chain era.
Users need bridges to move across networks, and demand for robust cross-chain solutions will continue to grow as adoption does. Now, it’s up to the market to find the best product.
Our research strengthens our belief that Across wins on tech. Recent market activity also shows that users have taken note of this. While aggregators occupy a small position in the market today, they frequently use Across to serve their users.
As aggregation and abstraction become more commonplace on the path to mass crypto adoption, Across is well positioned to benefit.
Credits:
- Crypto Aggregation Theory (ft. Bridges) (@arjunnchand/Arjun Chand at LI.FI)
- Aggregation Theory (@benthompson/Ben Thompson at Stratechery)
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.
