Introduction

In a multichain world, the need for cross-chain bridging has become ever-present. Stargate Finance is one of the most used bridges today, having bridged well over $15b in volume since its inception. It uses Layer Zero’s messaging to enable cross-chain swaps and deposit liquidity on different blockchains.

This report presents the findings of the comprehensive on-chain analysis to map out most of Stargate's flows, using Nansen data and labels. We focus on two high-level metrics:

• USD volumes
• Daily Active Users or DAUs

To answer questions such as:

• ‘Which chains saw the most inflows in 2023?’
• ‘Which chains have the most consistent levels of DAUs over time?’

We have created a dashboard that visualizes flows and DAUs patterns (see here) on Stargate and makes it easier for traders to identify potential narratives. Of course, this report only covers Stargate and there are many bridges in operation today, so this is merely a glimpse into some of the ongoing cross-chain bridging dynamics.

Why this analysis?

To track where money flows cross-chain, accurately, and based on exhaustive on-chain data, which has not been done so far. This report and accompanying dashboard can serve traders, farmers, as well as narrative chasers.

For a live view of the most important metrics, check out our Dashboard.

Our Approach

We looked at Stargate volumes and mapped out the key smart contracts’ functions we’d need to capture cross-chain. From here, we tracked all outflows from their respective source chains to the respective destination chains across 9 chains available on Nansen Query. We covered the following chains: Ethereum, Arbitrum, Optimism, Avalanche, BNB Chain, Polygon, Fantom, Base, and Linea. From the outflows, we can infer the inflows of each chain by tracking the destination chain of the outflows and summing those across any timeframe.

Data Discovery and Limitations

There are two main limitations in the analysis, chain coverage and pricing data. Stargate supports many chains and we were able to cover 9 out of the 11 chains. Thus, we are only missing data for Kava and the Metis network. This explains the occurrences where inflows/outflows do not match, as outflows don't account for these two chains.

Our second limitation has to do with pricing data. To obtain USD volumes, daily prices were used for the given tokens being transferred between chains. Given intraday volatility, this may result in USD flows not being 100% accurate.

Again, this analysis only looks at Stargate flows and it does not cover any other protocol built on or using Layer Zero’s messaging layer.

USD Volumes

Given that Stargate facilitates cross-chain flows, the main metric to track is bridging volumes. Note that LayerZero’s messaging layer functions differently than other cross-chain solutions. For Stargate’s implementation, this is not a traditional bridge but rather a liquidity pool protocol where users can "withdraw" tokens across chains or "swap" these tokens from one chain to another. For further information about Stargate, one can head to their user documentation. Below are the daily outflows in USD, grouped by the chains where the outflow originates, since Stargate’s inception in March 2022.

Outflows

The average daily volume in 2023 was approximately $23.69m (cumulative across all chains). Looking closely at the chart, 2023 saw rapid variations in volumes, notably into April 2023. Flows were range-bound well below $50m in daily volumes for the majority of 2022 and into 2023. Flows began to increase rapidly starting in March 2023, where daily flows consistently remained above $50m. Volumes peaked in July 2023, with a general trend of declining (out)flows starting from around mid-2023 onwards. On November 25th, 2023, daily volumes touched $16.66m. At the historical peak of volumes on July 11th, Stargate facilitated over $99m in daily volume. Compared to this July peak, there was a decrease of approximately $82.42m in daily volumes, representing an 83.19% decrease.

Netflows

After volumes (or absolute values of outflows), we dive deeper into the direction of these flows. This is important to map underlying trends in where liquidity is flowing and presumably, users and new opportunities. Below, we aggregate the net flows from the nine chains in scope at a monthly granularity. For positive netflows, the bar will be above the x-axis, and for negative net flows, the bar will be below. In the chart below, negative net flows mean liquidity is leaving that chain to one of the chains with positive net flows and vice versa.

In the last 6 months, a majority of flows went to Arbitrum (first netflow recipient), Ethereum, and Optimism. These flows predominantly came from Avalanche, BSC, Fantom, and Polygon.

The table below presents a breakdown of inflows, outflows, and netflows, dynamically over any timeframe. Below we choose to look at the last 3 months, sorted by positive netflows.

You can toggle with the date range to update the table’s results to your desired timeframe.

Daily Active Users

After volumes, we looked at daily active users (DAUs) across all chains supported on Stargate, to measure usage. Although imperfect, we defined DAUs as any unique address that successfully initiates a transaction via Stargate. There was no additional filtering done, so the results will include contracts, EOAs, and everything in between.

Similar to volumes, DAUs also peaked in July 2023. In the last 3 months, September 2023 through November 2023, the average DAU count was approximately 40,186 daily active addresses across all chains. For reference, the average DAU count for Stargate was 51,940 for all of 2023, indicating a slowdown in DAUs in recent months, despite the price recovery of the crypto market.

In a different view, we show the DAUs broken down by chain of origin normalized to percentages. This allows us to see higher-level trends in where the users initiate transactions across the chains that Stargate supports.

The chart reveals a lot about Stargate users over the past ~2 years, but these are some of the key takeaways:

• Arbitrum has had the leading share of DAUs, between 25% and 62% over time, and nearly accounts for 30% of DAUs currently.
• Optimism has gathered the second highest share of DAUs historically, between 12% and 42%, and 18% as of the latest.
• Polygon has had the third highest share of DAUs historically between 8% and 29%, and 15% as we write.