Cross-chain bridging: the bridge trilemma, LayerZero, Stargate and IBC
Thread961 words
Market since$STG−83%since this pieceHow it played out ↓Frames the bridging trilemma of unified liquidity, guaranteed finality and native assets, explains LayerZero's oracle plus relayer design and Stargate's pooled liquidity, and sets IBC alongside as complementary.
Key claims
Stargate processed almost $2bn in 7 days and over $7bn in 30 days
Stargate fee is 0.06%: 0.045% to LPs, 0.015% to treasury
IBC moved over $650m in 30 days and $30bn over the year
cross-chain bridges like #Stargate processed almost $2bn in the past 7d and over $7bn in the past 30d 📊🤯
the top bridge is @StargateFinance with a monthly volume of over $1.5bn 📈🚀
a 🧵 on the future of bridging, @StargateFinance & @LayerZero_Labs 👇
1/ with alternative layer 1 smart contract platforms having gained significant traction in 2021 and layer 2 growth picking up massively during the past months, it has become clear that #DeFi is heading towards a multi-chain future
2/ however, the fragmentation of liquidity across exchanges & networks poses a significant problem to users. Low levels of liquidity adversely impact trade execution & bridges enabling cross-chain asset transfers to have proven to be vulnerable to attacks and pose a security risk
3/ to understand why, let’s take a step back and have a look at the properties of an ideal bridge. What we find is often referred to as the bridging trilemma. Essentially, an ideal bridge must possess the following three properties
4/ 🌀 Unified liquidity
a single pool of liquidity is shared across all chains
5/ 🔒 Instant Guaranteed Finality
provides assurance that once a tx is resolved on the source chain, it will also be resolved on the destination chain without possibility of reversion
6/ 🌐 Native assets
exchange of genuine assets (e.g., $USDC <> $USDC) as opposed to synthetic assets (e.g., $USDC <> $nUSD, $anyUSDC, etc.)
7/ current bridge solutions typically achieve max one or two of these properties, resulting in bridges with finality guarantees through lock/mint mechanisms that don't use native assets & bridges that allow for the exchange of native assets but don't provide finality guarantees
8/ when assets are non-native, additional fees are incurred due to the conversion of synthetic assets. When there is no unified liquidity, bridge pathways may be limited or illiquid. In the absence of guaranteed finality, the user faces the risk of reversion
9/ hence, a new wave of cross-chain liquidity aggregation and bridge routing protocols aims to address this trilemma and finally solve the problem of liquidity fragmentation across networks...
10/ ...similar to how @1inch’s aggregation protocol solved the fragmented #AMM liquidity problem on #Ethereum and other EVM chains, changing the game for non-custodial trading
11/ one of the most promising technologies undoubtedly is
@LayerZero_Labs’ generic cross-chain messaging protocol. #LayerZero is a trust-configurable protocol that provides secure cross- chain communication through ultra-light nodes (ULN) in the form of smart contracts
12/ the ULN deliver the block headers of bridged chains on an as-needed basis in order to maximize efficiency. The @LayerZero_Labs endpoint, which is basically implemented as a smart contract that encompasses the ULN, interacts with both an oracle and a relayer
13/ the #oracle component facilitates the provision and receipt of block headers. dApps can choose from a range of oracles available in a marketplace and configure the oracle component to require agreement from multiple entities
14/ the block headers are published to the destination chains, enabling on-chain verification of the messages. The relayer receives and provides proofs of cross-chain messages, which can be verified through block headers, thereby enabling message completion on destination chains
15/ while relayers can be maintained by any entity, currently it is @LayerZero_Labs themselves that operate a relayer service for dApps to utilize
16/ soon though, an open-source implementation of the relayer will create a marketplace of relayers that #dApps can choose from, thereby further decentralizing the relayer systems, similar to the #oracle component
17/ the system's #security is contingent upon the separation between the oracle and relayer systems and thus the trustlessness of the system is derived from the required level of trust in relayers & oracles
18/ leveraging @LayerZero_Labs' technology for connected smart contracts, developers can create decentralized applications that access functionality from chains @ethereum, @0xPolygon, @optimismFND, @arbitrum & beyond
19/ these multi-chain dApps provide a unified interface for protocols executing on multiple #EVM networks. Through @LayerZero_Labs' message passing mechanism, protocols can hence make their contracts multichain-aware...
20/ ...leading to enhanced interoperability & expanded functionality between previously isolated blockchain ecosystems
21/ a bridge leveraging #LayerZero tech is @StargateFinance
@StargateFinance allows users to for example bridge $ETH over to @avax and/or exchange $ETH for $AVAX (via DEX integration) across chains, while eliminating the need for pre-existing $AVAX to pay for gas fees
22/ when a DEX like $SUSHI for example integrates @StargateFinance, the process involves swapping $ETH to $USDC on #Ethereum, followed by $USDC / $USDC on @avax via #Stargate & finally $USDC to $AVAX on @SushiSwap on #Avalanche, all within a single transaction and user interface
23/ all $SUSHI contract instances can access @StargateFinance's unified deep liquidity across chains. A fee of 0.06% will be charged for this service...
24/ ...with 0.045% allocated to LPs and 0.015% allocated to the treasury, which can be distributed to $STG and $veSTG holders through governance
25/ @StargateFinance has seen a strong increase in adoption recently, likely fueled by users hunting for a possible $ZRO airdrop
for a data-driven look at @StargateFinance & @LayerZero_Labs user adoption, check out this thread 📊🔍
x.com/expctchaos/status/1644429853951934466
26/ another GAME-CHANGER in the bridging space is IBC
in the last 30 days, #IBC has facilitated the flow of > USD 650m across chains like @cosmoshub, @osmosis, @stride_zone or @cronosapp
27/ I have covered #IBC and more specifically #zkIBC in the below thread, so I won't go into the detail here
for more info, check 👇
x.com/expctchaos/status/1641530762305630208
28/ personally I'm very bullish on #IBC that has gained increasing traction over the past months and facilitated $30bn in x-chain transaction volume in the last year
however I don't think that these technologies will compete
stronger together 🤝
x.com/PrimordialAA/status/1468641763703214084
27/ and surely, both #IBC and #LayerZero are definitely GAME-CHANGING for the interoperability space, enabling capabilities that go far beyond simply bridging assets 🌉✨
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Prices as of 23 Oct 2026This explainer walks through how things work without making a call on the token, so price moves since publication are shown as market context.
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Zero has written 6 more pieces on LayerZero and $ZRO and $STG since this one.
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- 15 tokens likely to launch at $1B+ FDV within three monthsBullish call on $ZRO
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