Hey folks, if you’ve been following me for awhile, you’ll know that I’m a big fan of Across Protocol, the protocol I personally trust the most to bridge assets from Ethereum mainnet to Ethereum’s L2s. Recently this past month, Across officially announced its V3, which so far has been an undisputed success:
Feb 22 - Across V3 launch
— Across (@AcrossProtocol) February 27, 2024
Feb 24 - Across Bridge ATH daily volume
Across V3's intents-based bridging is working. Our bridge just hit its ATH of $48M in daily volume, and V3 only just launched 😎https://t.co/N2Vwp2O4p5 pic.twitter.com/mgw7EO20DL
As I’ll break down in today’s article, I’ll dissect why Across’ V3 Intents-based model is attractive, and as an $ACX holder myself, why I’m so excited for Across’ future. Let’s go ahead and dive in shall we?
First, how does Across work?
Once a user submits a bridging order, the Across user signs what’s known as an “intent,” or basically an attestation that they’re willing to bridge X amount of $ETH and to receive at least Y amount of $ETH on the receiving side. Through 3rd parties known as as “relayers,” the relayers race to try to fill the user’s order with their own money on the receiving side as quickly as possible, the first one to fill the order getting the user’s fees.
For example if Player 1 is trying to send 0.1 $ETH from Ethereum mainnet to to Arbitrum, they would sign an intent confirmation that would look something like this:
The fastest relayer that is able to fill this order on Arbitrum sends the $ETH to Player 1, from their own personal wallet. From Player 1’s perspective, they just experienced a seamless 1–5 minute transaction (or even faster if they’re going L2-to-L2) and an immediate confirmation of funds on the receiving end.
On the relayer’s backend however, it’s a bit of a different process — Player 1’s initial deposit is escrowed into smart contracts, which isn’t released until the protocol can verify that it was that specific relayer that was able to fill the order on the other side.
This process of intents by nature makes Across extremely efficient in a few different ways…
No need for a wrapped or receipt tokens — Since bridging on Across consists of orders and transfers between the the relayer and the user, there’s technically no need for any new receipt or wrapped tokens to be generated. Once again referring to the earlier example, $ETH sent to Player 1 is technically sent from the relayer, not the protocol.
No protocol liquidity required — Because it’s the relayers fulfilling the transactions, there’s also technically no need for Across to hold any large amounts of liquidity to support these transactions. In other words, the efficiency of these transactions are dependent upon the relayers and the relayers’ own liquidity, not the protocol itself.
Increased security — With no huge stores of liquidity waiting to be deployed from the protocol to support high volumes of transactions, there’s also inherently less vulnerability for depositors to lose lots of money — a pain point for why most bridges that have gotten hacked in the past. (As with any smart contract in DeFi, there’s always risk of an exploit, however on Across it’s really limited to the funds that are being temporarily held in escrow for the relayers).
In addition to less vulnerability due to low liquidity, Across continues to be secured by their brother (or sister) protocol, UMA protocol. I’ve written about UMA several times in the past, but if there’s anything ever up for dispute (whether it be for a protocol verification or change), $UMA stakers are incentivized to vote, and more importantly to vote correctly in order to effectively resolve the dispute. Just like Across’ volumes, as its value continues to be increasingly recognized, UMA’s total value secured has also continued to make a meteoric run so far in 2024:
Insane speeds — Across’ speeds are determinant by how fast relayers can fill your order, and obviously since they are all incentivized to be the fastest, this allows for natural market forces to deliver crazy-fast fills on orders. How fast is fast? If you take a look at their transactions page, you’ll see that the majority of these orders were literally filled in a few seconds:
Lower costs: As anyone that’s sent funds directly from one wallet to another, you’ll know that gas fees can be quite costly, especially on mainnet. Across is able to drastically reduce their fees when verifying and releasing escrowed funds to relayers though mass batching. Similar to how L2 sequencers can rollup different transactions to mainnet, Across uses the same concept on their backend to drive down their costs as well. This batch processing has become so optimized that the majority of fee is from gas — pennies on the dollar:
Not cheap enough? As you’ll notice in the graphic above, since the beginning of last December, users have continued to be able to get even more returns on top of these cheap fees as Across has been essentially giving out $OP rebates of up to 95% when bridging to the Optimism L2:
$ACX Price impact
With how cheap and efficient it is to use Across, there’s been a lot of speculation on the price of $ACX, Across’ native token, and what it might do when a real fee switch is turned on for its holders.
How significant could a fee switch be? Cumulatively since 2021, Across has generated roughly $3 million dollars worth of fees. This may sound like a big number, but it’s really peanuts considering that Across saw that much in volume in the last 24 hours alone:
Even if Across were to institute just a 5bps fee (by comparison Stargate, Layerzero’s flagship protocol charges a 6bps fee), this could potentially lead to some significant gains in token price, just as we’ve seen what the fee switch did for $UNI holders:
What’s coming next
Apart from a potential fee switch, Across has several things in the works that will help bolster even more utilization of Across’ infrastructure. Some of these include:
Across Plus: Similar to CoWSwap’s “Cow Hooks,” users will be able to sign intents for consecutive series of actions. In other words, right now with you can only bridge asset X on one chain for the same asset on another, but with Across Plus, users will be able to carry out multiple transactions such as swaps through one single signed confirmation. Currently two integrations that are already live include onthis.xyz and teleordinal.xyz.
More bridges to more chains: With all the different L2s that are popping up, it’s inevitable that more chains will be added, and really it’s only matter of time:
The ones that are not yet instituted on Across’ platform (yet) that have been teased in the picture above include Near, Mantle, BSC, Manta, Avalanche, Linea, and Scroll.
Conclusion
Over the past year, Across has already proven that across-chain intents is perhaps the safest, fastest, and cheapest way for users to bridge their assets from one chain to the next, so I wouldn’t be surprised if V3 really becomes the standard for all bridges to start using instead of conventional bridges which continue to be exploited and hacked.
Haven’t used Across yet? Consider supporting this blog and using my referral link which will allow me to earn some extra $ACX on your transactions. Or better yet, generate your own and refer your friends and family so that they can experience really, the “bridge that Ethereum deserves.”
And as always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: This is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!