Rapture #203: Bridges

Rapture #203: Bridges

I have been spending a lot of my time thinking about bridges in crypto. Bridges are the names of the entities that allow users to port over their assets from one blockchain to another. These entities attract significant amounts of TVL because they are necessary for users wanting to access the multi-chain world. Portal token bridge, Avalanche bridge, Ronin Bridge, Polygon Bridge, Synapse, and Connext are all names for some of the leading bridges.

According to research conducted by The Block, as of March 22nd more than $37.5 billion worth of assets were locked on bridges. In fact, the top 6 bridges all command TVLs of more than $1 billion.

Let's dive into some statistics surrounding bridges.

Asset ranking

The top assets held in bridges are USDC, WETH, USDT, WBTC, and DAI. More than $5 billion worth of USDC is locked on bridges, while just under $4.8 billion worth of WETH is locked on bridges.

Approximately $2 billion worth of USDT, WBTC, and DAI are also locked on bridges.

Unsurprisingly, stablecoins and the two majors are the most locked assets. This fact makes sense considering these are the most popular assets in general users own.

Bridge market share

The top bridges by market share are Polygon Bridge, Avalanche Bridge, Arbitrum Bridge, Fantom Bridge, and Rainbow bridge. Around $5.5 billion worth of assets are locked on the Polygon bridge, which means that single bridge controls nearly 28.7% of the entire bridge market. The Avalanche bridge has a TVL of $4.6 billion, which gives it a market share of 23.9%. The Arbitrum bridge commands $3.6 billion in TVL, giving it an 18.8% market share.

All of the top bridges are the L2/sidechain sponsored bridge.

Networks with the most bridges connected to it

Unsurprisingly, Ethereum has the most bridges connected to it at 68. BSC has 42 bridges connected to it, Polygon has 31 bridges, Avalanche has 21 bridges, and Fantom has 20 bridges.

Security concerns

For holding such large amounts of assets, bridges are woefully under audited. Only 54% of all bridges have at least one audit. Yikes!

Furthermore, three of the top five bridges have not been audited, including Polygon Bridge and Ronin Bridge. Both Arbitrum Bridge and Rainbow Bridge (which is Near's bridge) have also not been audited.

Of course, just because a bridge gets an audit does not necessarily means it is safe. For example, Portal Token Bridge (previously Wormhole) was audited and was still exploited.

Future of bridges

Already, bridge aggregators are coming to market that enable users to get access to the cheapest bridge possible at the time. While I think this idea makes sense, DEX aggregators so far have not been able to dominate the DEX market, as large brand names like Uniswap continue to dominate.

Furthermore, I think these bridges will begin offering financial services natively for their users. For example, Synapse already enables users to earn part of the fee users pay to move asset cross chains through providing liquidity to the bridge itself.

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