Key Takeaways

• Despite all the bridging activity in 2021, 81.4% of all assets among the Early Bridgers segment (wallets scoped out for moving lots of liquidity very early on across 3 or more bridges) are back on Ethereum Mainnet. This can signal that much of the layer-1 narrative has concentrated back to Ethereum, where whales are most comfortable with their assets.
• Early Bridgers are mainly risk-off as stable-coins make up 75.1% of their portfolio holdings. USDC is the top stable-coin representing 60.52% followed by USDT at 10.90% and lastly DAI at 3.66%.
• 72.3% of funds among Early Bridgers are simply sitting in their wallets and not being deployed in any protocols to earn yield. This may indicate that early bridgers may be discounting smart contract risk in an even more adversarial environment.
• Of the TVL deployed into protocols, 63.6% ($22.35m) is deposited into Aave as depositors seemingly prioritizing safety over chasing higher yields on less battle-tested platforms. Again, this may indicate that notable farmers may be discounting smart contract risk.
• Besides majors like BTC and ETH, some interesting tokens owned by Early Bridgers are GMX, GNS, and MATIC.
• The early bridgers were analyzed in this report to give an on-chain perspective of ‘risk-on’ behavior. The segment highlights the top players in a more speculative environment in 2021. Revisiting this core group of early wallets who have historically had a larger risk appetite, noted by bridging large sums of money very early on to uncharted ecosystems can give us insights on the on-chain behavior and trends of potential yield opportunities and any red flags of specific narratives.

Introduction

2021 was touted as the year of alternative L1s and “Ethereum Killers”. With the exorbitant gas fees on Ethereum, many users flocked to various L1s and L2s in search of cheaper transaction costs, ecosystem incentives, and of course higher yields. Given how Early Bridgers are often experimental and quick to new opportunities, this report will investigate what these users are currently doing on-chain in this tumultuous market.

Methodology

To come up with a list of early bridger wallets, we needed to first identify the ‘high signal bridges’. This was primarily decided through a combination of bridge volume, TVL, and the number of dApps on the chain. The 5 bridges chosen are as follows:

1. Avalanche Bridge
2. Arbitrum Bridge
3. Optimism Bridge
4. Metis Bridge
5. Rainbow Aurora Bridge

A wallet will be considered as an Early Bridger if they fulfill these 2 requirements:

• Used 3 or more of the above bridges
• Bridged over $100k or more on each bridge and was within the initial 500 wallets to deposit

Below is a list of 15 active wallet addresses that qualified based on the above parameters.

The Avalanche and Arbitrum bridges were by far the top used bridges with the highest volume amongst the Early Bridgers. $11.9m was bridged over to Arbitrum and $9.89m was bridged over to Avalanche. Metis and Optimism bridge saw similar volumes at $4.29m and $3.92m respectively. The rainbow Aurora bridge came in last at $2.88m.

Aggregate Chain Allocation

Despite all the bridging activity in 2021, Ethereum remains the chain of choice during market turmoil by a large majority as 81.4% of assets among the Early Bridgers are now back on Mainnet. BNB Chain comes in second at 6.21%, Polygon at 5.29%, and lastly Avalanche at 3.58%. This suggests that alternative EVM-compatible L1s and L2s have largely failed in capturing sustainable market share. With the collapse in DeFi yields and overall on-chain activity, this doesn’t come off as too surprising. Given how ETH gas fees have remained very affordable and most battle-tested protocols are on Ethereum, there is very little reason to venture out especially when security is being prioritized.

Aggregate Token and Protocol Allocation

Taking a look at token allocation, a majority of wallets are risk-off and holding stable-coins. At the time of writing, stable-coins make up 75.1% of the token allocation for all 15 wallets. USDC is the top stable-coin of choice, representing 60.52% followed by USDT at 10.90% and lastly DAI at 3.66%.

In addition, by looking at protocol allocation, we can determine that 72.3% of funds are simply sitting in the wallets and not being deployed in any protocols to earn yield. In fact, 6 out of the 15 wallets have >95% of their portfolio only in their wallet. With DeFi yields plummeting, it is evident the early bridgers segment is being prudent to have idle funds in a wallet as the yields offered are often not high enough to compensate for the smart contract risk. For context, blue-chip protocols like Aave, Compound, and Curve are offering sub 1% yields on stable-coins like USDC, BUSD, DAI, and USDT.

Early Bridger On-Chain Wallet Deep-dives

• 0xbdfa4f4492dd7b7cf211209c4791af8d52bf5c50(🤓 First Mover Staking)

This wallet needs no introduction as they’re ranked first on both Debank and DegenScore. They continue to be a DeFi power user even in an environment of low yields, smart contract risk, and plummeting asset prices. While a majority of assets (57.1%) are on Ethereum, 22.7% are on Arbitrum and 14.74% are on Avalanche. A majority of the portfolio is also made up of blue-chip assets like WBTC, ETH, and stable-coins.

With how spread out the assets are across chains and protocols, it appears the user’s primary goal is to reduce idiosyncratic risk and avoid a single point of failure. This is evident as the wallet will supply stable-coins into protocols like Sturdy Finance and Venus that offers a marginally higher yield than Aave but arguably has much higher smart contract risk. The user is clearly protocol and chain agnostic with a preference for the Ethereum and layer-2 space, alongside the greater EVM ecosystem.

The primary protocols used are Gearbox, GMX, Convex Finance, Euler FInance, and Aave.

• 0x66b870ddf78c975af5cd8edc6de25eca81791de1(🤓 Oapital: 0x66b)

This wallet has a portfolio value of $22.4m and is in 99% stables with USDC being the dominant choice. A little over half of the USDC is supplied on Aave earning 0.84% while the remaining sits inside the wallet.

• 0x93e5204e7033483985bcc94e48283f3359b2be69 ("peeeter" on OpenSea)

Interestingly, this wallet has 81% of its value; $665k of ETH staked in Bend DAO earning 7% yield. Given how Lido is offering 8.5% APR on staked ETH, it’s unsure why the user would opt for a much higher smart contract risk coupled with the lower yield on their large ETH position.

• 0x85591bfabb18be044fa98d72f7093469c588483c ("nbvvvv" on OpenSea)

95.1% of the total assets are simply held inside the wallet and the token allocation is split between tokens like USDC, ETH, WBTC, and USDT.

On 10 Nov 2022, this wallet swapped $4m of USDT to $3.99m USDC via 1inch presumably on fears of USDT de-pegging

• 0xf8fa2e5f52ad3c3c49ffa1f3f4e6f3ccefa4011e (Medium Uniswap V3 LP)

The user decided to pull its USDT liquidity from Uniswap and converted it entirely to USDC through CowSwap on 11 Nov 2022. The wallet currently holds $2.61m of USDC and no other material positions

• 0x2ef3d49f6cb7a04e4164902748c09bbd3ffa786f (Heavy Dex Trader)

This wallet holds 73% of his portfolio in GNS (Gains Network) and has been TWAPing his buys since 31 Oct 2022. There has also been some minor selling happening since 15 Nov 2022. With FTX blowing up, decentralized perpetual exchanges are catching on as a new narrative. Similar to GMX, a large portion of the fees generated from traders on Gains Network are redirected to stakers as real yield.

• 0x500bea59133e20dc63b7e88913b30348494b84ba (Medium Uniswap V3 LP)

This wallet has 98% of its assets on the Fantom ecosystem; specifically in Geist Finance. It is currently supplying $1.88m of ETH, $208k BTC, and is borrowing $1.27m USDC and $114k USDT. The user is essentially getting free leverage as they’re being paid to borrow via token incentives.

Geist Finance

• 0xee8e0fcc8bff03ec5f100d02cb7b3196d78863a7 (5ucms.eth)

This wallet is currently in 100% stable-coins (primarily USDC) and has opened a short position on ETH by depositing $3.07m USDC into Aave and borrowing $1.35m ETH.

• 0x555187752ef6d73758862b5d364aab362c996d0e (🤓 Airdrop Pro)

The Airdrop Pro wallet has its entire portfolio in a levered long position on Aave. They supplied $17.9m of stETH and borrowed $10.9m ETH.

• 0xf3f5c252e8acd60671f92c7f72cf33661221ef42 (Medium Uniswap V3 LP)

38.5% of the portfolio consists of the MATIC token. The owner originally unstaked its position on 21 May 2022, made a few minor sells on 22 May 2022, and has held the remainder of the tokens.

Other notable positions are $917k of BNB supplied on Venus, $182k of FTM, and $173k of MVI (Metaverse Index).

• 0xcbd6b0dee49eea88a3343ff4e5a2423586b4c1d6(🤓 "BobbyAxelRod" on OpenSea)

This wallet remains very risk-on with ETH making up 48.5% of the entire portfolio and WBTC at 42.6%. Most of the assets are currently sitting idle in the wallet (59.2%) and are not deployed on many protocols. While Ethereum appears to be the chain of choice given its 72.1% allocation, 19.1% was also allocated to Optimism where half of the WBTC position resides.

Farming Opportunities

In order to identify farming opportunities within the list of 15 Early Bridger wallet addresses, we started filtering down the vast list of protocols within each wallet. Low-conviction protocols that represented less than 3% of each wallet’s TVL were removed. We then summed up all the remaining protocol deposits across the 15 wallets and ranked them by TVL and wallet count. The end result is the below table with 15 of the most popular protocols

• As expected, most of the TVL ($22.35m) sits within Aave and depositors are prioritizing safety over chasing high yields
• GMX (Arbitrum) comes in at a far second with 2 wallet counts and $3.72m in TVL
  • A majority of it is in GLP ($2.95m) and the rest is in GMX or esGMX
• Wallet 0xbd labeled as 🤓 First Mover Staking is one of the few wallets that continues to be active in numerous DeFi protocols

Closing Thoughts

From our analysis of looking into the on-chain activity of Early Bridgers, it is evident that most wallets are exhibiting risk-off behavior. In addition to holding a large majority of their assets in stable-coins like USDC and USDT, most wallets are wary of smart contract risk and are not depositing funds into any protocols either.

While 2021 was the year of alternative L1s, 81.4% of all assets among the Early Bridgers segment are now back on Ethereum Mainnet. During market downturns, Ethereum continues to be the undisputed leader for whales to park their funds. To continue monitoring Early Bridgers, we suggest setting up Smart Alerts to be notified whenever they bridge funds to new ecosystems or starts to deploy their stable-coin holdings.