On September 8, 2021, Dmitriy Berenzon, research partner at 1kxnetwork, an early-stage crypto fund that helps founders bootstrap token networks, published a comprehensive research paper on blockchain bridges. Berenzon’s study highlights the current “multi-chain market structure” and bridges that make countless blockchains compatible.
Researcher: “We are finally in a multi-chain market structure”
Multi-chain or cross-chain technology has been a kind of holy grail in the development of cryptocurrencies for quite some time. People want to transact with other blockchains by using bridges to different ecosystems.
Dmitriy Berenzon published as detailed article on cross-chain technology and bridges, and he believes we have finally reached a turning point. “After years of research and development, we are finally in a multi-chain market structure,” emphasizes Berenzon in his blog post.
Berenzon’s study examines blockchains like Ethereum, Solana, Tezos, Avalanche, Polkadot, Binance Smart Chain, Cosmos and more. The researcher notes that “interoperability drives innovation” as he emphasizes that “bridges are important because they allow users to access new platforms, protocols for interoperability, and developers to collaborate on new product development”.
In addition, Berenzon lists the many advantages of cross-chain interoperability, such as the use of the technology for external validators and associations. Also the use of the technology for light clients and relay protocols in addition to the possibility of accessing liquidity networks.
Berenzon’s report is not just a fluff on fintech, however, and it points out that cross-chain technology and bridges are “an incredibly difficult problem in distributed systems.” He adds that things like finality and rollbacks, NFT transfers and provenance, and stress testing of these blockchain bridges over time need to be addressed.
$ 7.7 billion suspended across 8 bridges to Ethereum
In addition to Berenzon’s insights, statistics from the Dune Analytics dashboard called “Bridge Away” measure the bridge volume tied to the various chains and Ethereum. In terms of the Ethereum Bridge’s relative Total Value Locked (TVL) statistics, the Polygon ERC20 Bridge has approximately $ 2.4 billion in TVL as of September 16, 2021.
Polygon’s bridge represents 32.5% of TVL across eight bridges. Bridges recorded include the Polygon ERC20 Bridge, Arbitrum Bridges, Avalanche Bridge, Solana Wormhole, Fantom Anyswap Bridge, Harmony Bridges, Optimism ERC20 Bridges, and Near Rainbow Bridge.
Across all of these bridges, there has been $ 7.79 billion in TVL in the last 30 days, spread across 42,997 unique addresses. Arbitrum Bridges owns 31.5% of the total TVL and the Avalanche Bridge today has around 21.2%.
Solana Wormhole’s TVL is about 6.7% and Fantom Anyswap Bridge has about 6.6% of the TVL of $ 7.79 billion. Ether and WETH are the largest assets held in TVL at $ 2.9 billion as of September 16. USDC is the second largest asset held in Bridge TVL at $ 1.2 billion. It is followed by Wrapped Bitcoin (WBTC), which holds just over a billion dollars in the total Bridge TVL grand total.
What do you think of the multi-chain or cross-chain bridge technology and the growing TVL of these protocols? Let us know what you think on this matter in the comments below.
Photo credits: Shutterstock, Pixabay, Wiki Commons, Dmitriy Berenzon, Various Blockchain Logos, Dune Analytics,
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