Decentralized finance (DeFi) and cross-chain bridges have seen some of the highest growth in recent months. The crypto market has begun another recovery trend and its effects are reverberating through the entire industry. Cross-chain bridges which allow different blockchains to interact with one another, thereby allowing for trading between two blockchains, are in high demand.
The growth of decentralized finance has further pushed up this demand. Users of various DeFi protocols access multiple blockchains through these cross-chain bridges, contributing to their growth.
Related Reading | U.S. Mega Bank Sets Up Bitcoin Custody Service, With Other Cryptos To Follow
Impressively, the total value locked (TVL) in cross-chain bridges has almost doubled in just the span of a month. September which was brutal did not much slow down the growth of cross-chain bridges. From September 16th to the present day, a little less than a month, the total value locked in cross-chain bridges has grown from $7.79 billion to over $14.70 in TVL.
Top Bridges Draw In Over 50% Of TVL
A report on Dune Analytics lays out the growth of the cross-chain bridges. The top cross-bridges in the space hold most of the TVL. Polygon and Fantom Anyswap Bridge currently hold the highest amount of TVL. Polygon alone commands about one-third of the TVL in the space. Commanding $4.5 billion in TVL. Fantom Anyswap Bridge comes up second place with a little less than Polygon at $4.2 billion.
DeFi total market cap down to $5.76 billion | Source: Market Cap DeFi Dominance on TradingView.com
Cross-chain bridges fill a very important gap in the crypto market. Blockchains are still so early that the space is still mostly focused on competition and outdoing one another that there has been no space for collaboration. With decentralized finance on the rise and so many blockchains on which these DeFi protocols are being built, it has become increasingly important for these blockchains to be able to interact with one another.
ETH Leads Cross-Chain Asset Distribution
WETH or ETH made up a high percentage of the total asset distribution in the $14.70 billion TVL. ETH alone conveyed $6 billion of the total TVL, almost half of the total locked value. USDC, a popular choice among DeFi investors, accounted for $2.4 billion. Followed closely by WBTC (Wrapped BTC), at $2.3 billion. Tether (USDT) ranked 4th with $1.2 billion, and fast-growing MATIC in 5th place with $867 million, not hitting the billion-dollar mark yet.
Related Reading | Why A U.S. Bitcoin ETF Has A 75% Chance Of Being Approved In October
On the transaction fees side, Loopring recorded the lowest transaction fees. Data shows that Loopring only cost users about $0.21 per transaction on average. Significantly less than Ethereum transaction fees which come in at $4.78 per transaction on average.
Arbitrum One, another Layer 2 solution, had an average of $1.99 per transaction. But compared to Etheruem transaction fees, this is still less than half what it would cost to transact on Layer 1. More prove that transactions on Layer 2 solutions remain a much cheaper option for investors, especially when sending small amounts of crypto.
Featured image from Medium, chart from TradingView.com
