Sorting out the revenue opportunities of the four major cross-chain protocols: Hop, Synapse, Across, and StarGate

Bankless

2023-02-03 11:07

Read this article in 9 Minutes

Providing liquidity to the top bridge aggregators will earn you trading fee income in return.

Original title: 《 How to Win the Multi-Chain Future 》

Original author: Lucas Campbell, Bankless

Original translation: BitpushNews

The future is multi-chain. Whether you think it will happen on multiple L1s like Ethereum, Cosmos, and Solana, or a future centered on roll-ups, there are opportunities to make money by driving these cross-chain transactions.

The main way to do this is to provide liquidity to top bridge aggregators - such as Hop, Synapse, and Across, and the rewards you will receive are transaction fee income.

Even better, most cross-chain bridges today have launched tokens with liquidity mining programs, providing all liquidity providers (LPs) with nice additional benefits.

Interested in taking advantage of this opportunity?

This article highlights the yield opportunities of four cross-chain protocols: Hop, Synapse, Across, and StarGate.

Hop Protocol

Networks: Ethereum, Arbitrum, Optimism, Gnosis Chain, Polygon Assets: ETH, USDC, USDT, DAI, MATIC, SNX Yield: 8 - 12% APY

The first major cross-chain bridge is Hop.

Hop Exchange is built on a roll up Token bridge, allowing users to transfer assets across chains between the main Ethereum Layer 2 and sidechains.

The protocol utilizes market makers called Bonders, who earn fees by fueling the liquidity behind these swaps. The bridge currently holds about $66 million in locked value and has facilitated billions of dollars in transfers.

After launching the HOP Token , the protocol implemented a liquidity mining program, issuing 2.2 million HOP per month in ETH, USDC, DAI, and USDT liquidity pools. Token distribution depends on the transaction volume of each bridge, which can be changed through governance.

Interestingly, Hop currently offers a few pools with multi-asset rewards. The first is the SNX bridge, which is incentivized by both HOP and OP, providing LPs with an annualized yield of 28%.

Two other notable pools are the DAI and USDT Gnosis pools, where LPs of these stablecoin pools earn both HOP and GNO in the reward program.

Synapse

Networks: Ethereum, Arbitrum, Optimism, Polygon, BNB Chain, Canto, Avalanche Assets: ETH, USDC, USDT, DAI, BUSD, NOTE Yield: 5 - 22% APY

Synapse (SYN) is a cross-chain messaging protocol.

Synapse Bridge enables users to swap between a range of L1 and L2 assets using AMMs. Unlike Hop Protocol, Synapse extends beyond Ethereum and its included chains and supports swaps between Layer 1s like Canto, Avalanche, and Harmony, as well as prominent Ethereum L2s like Arbitrum and Optimism.

That said, similar to Hop, Synapse also has the SYN Token , which is distributed across most pools through a large number of liquidity mining programs.

As you can see below, there are quite a few opportunities to take advantage of, with the hottest new L1 - Canto - currently offering yields as high as 22%.

Across Protocol

Networks: Ethereum, Arbitrum, Optimism, Gnosis Chain, Polygon Assets: ETH, USDC, USDT, DAI, WBTC Yield: 4.5 - 17% APY

Across Protocol has become a fair player in the cross-chain space, recently transferring over $1.3 billion in total value.

The bridge was built by the team at UMA Protocol and works by providing incentives for LPs to provide short-term loans to users on the other chain, which are repaid after two hours from L1’s liquidity pool.

After launching Token in November, the protocol now offers several liquidity mining opportunities for ACX Token . Across’ liquidity program stands out because it offers multiple rewards to LPs based on how long users have provided liquidity.

Users can reach the maximum APY listed in the chart below by providing liquidity on the protocol for more than 100 days.

Stargate

Networks: Ethereum, Avalanche, BNB Chain, Polygon, Arbitrum, Optimism, Metis Assets: ETH, USDC, USDT, DAI, FRAX, LUSD Yield: 3-10% annualized yield

The last cross-chain bridge we will discuss is Stargate, which is built on Layer 0's omnichain technology.

The protocol currently has $381 million in TVL, and its Token STG has a market cap of $83 million and a FDV of $600 million. Similar to the above cross-chain projects, this protocol uses its native Token to increase the yield of potential LPs.

Most of the pools on the platform include these STG rewards - the Metis USDT pool offers up to 10% APY, and the FRAX Optimism pool offers up to 9.9% APY.

Conclusion

There are many opportunities to earn high yielding APYs in the crypto markets by providing liquidity for cross-chain swaps. People have been building bridges between blockchains for a while, and this guide is your primer to start earning yield.

The recent surge in activity on the Cosmos chain, such as Canto and Ethereum Layer 2, enables LPs to take advantage of these value streams. You can win the multi-chain future by providing pickaxes and shovels (i.e. liquidity) for these value streams. After reading, see which one is right for you?