Boosting web3 growth with cross-chain user & asset flow - Kamil Gorski

hi everybody a pleasure to uh give this talk to you today uh my name is Kamel gurski I'm the C and cander at token guard and today we're going to discuss how um cross-chain traffic actually boosts web free ecosystems and dap especially defi protocols and we're going to uh discuss it on an example of real live data coming from multiple protocols and we're going to compare um some of the web ecosystems in terms of crushing traffic coming to these ecosystems but before we start I would like to uh just uh have a one uh important question so how many of you here are Builders like web free builders okay are there any onchain applications protocols cool wonderful great okay so I smart introduction about uh myself so um my name is camel I started coding pretty early around being around 9 years old uh I did a lot of uh code creation uh but most importantly I think exploits writing uh uh buffer overthrow exploits in CN assembler for very old Apache servers and breaking into um some random stuff in here in Poland at the time and then um in 2018 I decided to to um get into blockchain and I'm working in this industry since 200 18 we started with doing manual and automated smart contract audits for web free deps and protocols afterwards we founded token guard as a automated solution for security um measurement however uh because of the 2022 crypto crash we decided to Pivot and what we're doing now is basically analysis of wallets activity and influence of this wallet's activity on uh dab and protocol revenue and conversion and I think that discussing cross chain is very important for this matter so let's get started so first of all how many of you has ever used a bridge ah awesome awesome was it an easy experience kind yeah as as usual in web free right so basically what bridging is and we need to remind ourselves what it actually is so let's let's assume that we have two separate web free networks uh first of them Network a let's assume it's ethereum the second Network it can be anything it can be evm based Network it can be wasm based Network it doesn't really matter so in order for these two separate networks to be able to communicate with each other you need to have a thirdparty solution that will basically connect uh two different states of networks um uh because these networks they cannot communicate with each other out of of the box so basically when you're sending out assuming let's say 100 if to a network B you need to firstly send it out to a Smart contract deployed on a network a and then uh you assume that this amount of 100 if is going to show up on network b in a separate smart contract deployer but what happens behind is that um this 100 if has to somehow be transferred or at least abstractly communicated to the network B that this transfer was actually sent out and there are two ways to achieve this which we're going to discuss in a second uh however getting back to the bridging mechanism um when you sent out this 100 if um these tokens are firstly locked up in the network a in this case ethereum um for further Redemption and they show up in the smart contract deployed on the network B and you can redeem them there as a usually wrapped eer and of course you can reverse the whole transaction and once you reverse it uh the you can um you basically uh burn those um wrapped e tokens on network B and you can unlock uh these tokens on network a and use them further so when it comes to types of cross Chain Solutions there are I think tens of these because this is also fresh and bleeding edge that basically each of the solutions that is being created right now is something completely new and different but I think that we can we can um um structure all these projects into two most important groups so the first group uh is going to be centralized Bridges and cross Chain Solutions so basically products that do not have any public blockchain uh that allows you to preview all the transactions and all the magic that is happening behind those two smart contracts that we have just discussed and a wonderful example of such a product is Wormhole and because of the fact that you don't have a side chain that needs to manage all these transactions this brings you much uh lower complexity uh but also lower security the fact is that it usually doesn't require any token or coin because you don't have any blockchain attached to it and uh what we see on the market right now is that most of these centralized Solutions are basically moving towards the decentralized side um that's because of you know the nature of how it all works in wree right so a great example of a centralized product is Axel where you have um a side chain that basically allows you to preview all the um cross-chain transactions that are happening uh Bes behind those two smart contracts that we have uh just given an as an example but because of the fact that it's a separate blockchain you have much higher complexity but at the same time you have higher security and usually you have a token or coin because of course you need to incentivize node operators uh to operate the nodes so it's uh usually the easiest ways to you know produce money out of fer right so this is how um decentralized uh Crush Chain Solutions work here are some differences uh by courtesy of goodness uh you c. if and as you can see in case of Axel you have around 75 note operators that manage the whole network you can preview all the transactions uh in the blockchain XLR blockchain Explorer so basically when a transaction goes through smart contract a you can preview it show up in the Axel Network and then uh move to the network B in case of Wormhole uh you basically have a uh kind of Guardian model uh we as token guard we also operate as a guardian of of one cross chain um solution uh for a blockchain network and this basically means that a team of um 10 to 20 different companies is managing this uh cross-chain product this bridge uh by governing a multi-c wallet where everybody agrees on the state of um of this cross stream bridge and this these are the the most important differences other than uh there is no uh no token and coin uh to to shill for Wormhole currently so when you get to their telegram group you can see like hundreds of messages uh of people asking where token or where binance right so before we move further uh what I would like to underline is that if you have a web fre ecosystem and you manage a web free ecosystem as a product manager growth manager ecosystem lead whatever you want to have a thriving defi uh segment still in web free um defy produces around 90% of the volume overall volume that happens in web free even though that defi has around the same number of users as gaming segment defi produces 90% uh gaming segment produces around 6 to 7% of the volume that's because usually you don't transfer $1 million to a gaming protocol to buy nfts armors whatever there is in the this protocol right so in order to to have a high tvl that will support the demand for your um underlying coin you need to have a thriving defi segment but in order to achieve that you firstly need to have stable coins there is no way for web free ecosystem to basically build a thriving defi segment without stable coins and you need to remember that integrating Circle or tier it's not cheap this is not for free basically you need to outreach to these companies you you need to uh they need to integrate your web free ecosystem and uh doing that is a big hardle for for your um web free ecosystem budget so important thing is that with uh cross change Solutions and we're going talk to talk that in a second with cross Solutions you get an instant stable coin integration because these stable coins are going to show up on your network as W usdc or W usdt and that is very important thing to remember and why are stable coins uh important for defi growth um I guess everybody understand this more or less uh because of the volatility of uh Native coins usually if you have like a small web free network it's going to be pretty volatile compared to usdc or usdt so if you want anybody to invest in defi protocols inside this web free ecosystem you need to give them an alternative solution to your volatile coin because they do not want to lose money on the speculative nature of your asset so um do you have any questions maybe about what I just said okay so let's move on so uh what we're uh going to look at today as an example of cross chain traffic that is coming to Moonbeam and uh why are we discussing Moonbeam I believe that uh it's a great example because uh that was a network coming from a poad do ecosystem that once was pretty pretty big it had um evm uh virtual virtual machine it had very low gas uh costs uh compared to etherium it gained a lot of momentum but somehow at some point it lost its momentum but currently um it's basically this is true for most of the web free ecosystems so um I wouldn't be uh very sad about it but nevertheless Moonbeam has fre cross Chain Solutions like third party cross Chain Solutions because there is also uh cross chain messaging coming from padot but that's that's a different thing so it has three cross chain Bridges Wormhole layer zero and aelor uh with Wormhole being the most popular it Al it also has a defi segment of around 20 uh operative protocols with the most important ones mentioned here moonwell is a uh defi Landing protocol uh that is basically designed with multi or being cross chain in mind because it's available on Moonbeam and base so we're going to take a look at Stellas swap which is a totally native to Moonbeam product so it doesn't uh it doesn't operate on any other blockchain it's only available on Moonbeam and usually has mostly poka do related assets and tokens some nice men so uh let's start with um analyzing the data that we can take a look at when it comes to uh incoming traffic through Wormhole to Moonbeam and then Stella swap so Stella swap currently has around six to 7 million of tvl which is pretty small compared to let's say GMX or any bigger protocol but what is really surprising if you take a look at tell us sw's data like this is the screen from our token guard application we operate as a public good tool free for everyone so you can take a look at this uh on our website uh below the screenshot you got a source yeah so what is really surprising if you take um the last three months of wallet uh interactions with this protocol and sort it uh by the volume of uh of this interaction so basically the third column here you can see that the top wallet has generated a volume of deposits of 15 million uh dollar and you're going to notice that 50% of the stop value users are basically using Wormhole these interactions on the right they show uh all the other deps that are being used by this wallet um on moonbean network and as you can see 50% of these are using Wormhole and of course if you download the Cs F you're going to Summit all La you will see that this number of course it's kind of volatile but it's it moves around 50% of the top uh 30% of wallets um another really interesting insight and that Insight is basically true for all defi protocols almost all defi protocols in web free space is that around 5% of users are responsible for 80% of the volume of each of those dii protocols so this kind of you know brings the question whether it actually makes sense to invest in for example kol's uh marketing campaigns or uh affiliate marketing campaigns that are targeted at regular users on Twitter or uh in other uh social media channels because if you have only a small group of very wealthy users that are generating most of your Revenue why not focus on these users and acquiring most of more of these users rather than focusing on small users that invest $100 or $10 uh in your protocol and also an important note interactions on the screen that we're discussing are based only on externally owned accounts triggered transactions what this means is that many cross Chain Solutions uh allow dab Builders to use their SDK to connect um seamlessly so that when the user triggers a transaction at Stella swap he may not even know that he's using Wormhole behind it this is how for example lifi works and it's wonderful product which is basically I think a unicorn already but in this case we're talking about direct interactions of wallets with Wormhole which means that all these wallets that have this Wormhole icon here are basically manually sending the money to Moonbeam Network and then investing it in the Stellas swwa protocol it's not um under the hood usage of Wormhole it's a direct usage of Wormhole by these wallets so this is just the beginning and it's really cool uh information for Stella Swap and I think that Stella swap should like really be happy about uh Moonbeam investing into Wormhole integration so let's get a little bit deeper uh how it looks from the um USD deposits volume perspective so as you can see around 70% of USD uh deposits is coming from Wormhole users mostly from users who only use Wormhole and stalos up of course there are some exceptions to this uh but most of these uh USD volume uh is coming from from these users regarding most popular tokens 45% of deposits to Sola swap are cross chain tokens and this is data for last 3 months uh pretty real time data and of course these are not only um Wormhole tokens because you can see I think seventh or sixth is Axel usdc uh so there are also other wrapped um wrapped uh tokens coming from different from other uh Bridges but nevertheless the cross chain transactions and cross chain uh exchange of assets is something that basically drive this protocol because if it weren't for Crossing tokens we could safely assume that those 45% of deposits probably wouldn't happen probably because we cannot we cannot compare it so what about Moonbeam itself like how how how Wormhole actually influences the the moon beam Network so what you have here um is a list of top Moonbeam only projects so basically projects that do not exist on any other network uh there is bmax which is a perpet all Dex a pretty small protocol but very fast growing uh you can see the growth index 83 super and 90% of top wallets is using Wormhole beam swap 40% of top wallets is using Wormhole and of course Wormhole where 100% of wallets is using Wormhole uh there is also Ute which is a gaming product um in this in this case the percentage of you of Wormhole users is much smaller I think it was around 20 uh 20% there is stop and solar flare which doesn't have uh really uh much much influence in here but this is of course all kind of estimates that I'm showing so let's let's uh let's take a look at detailed data So within the last three months Moonbeam had around 120,000 uh active users so users that did some kind of interaction of the network a transfer or interaction with a D um 72,000 of these users uh had no dep activity which means that they means they only use transfers or some kind of governance extrinsics uh needed for the da voting at Moon network uh then there is 41,000 users that didn't use Wormhole or Stellas Swap and there is only 1,000 so basically 1% of users that used Wormhole and Stella Swap and this 1% with this same time frame uh has generated around 75 to 80% of USD uh transfer volume on the Moonbeam Network so I think it pretty much uh sums up and confirms the fees that in case of smaller web fre EOS system which are kind of exotic uh to ethereum users or to evm users uh having a cross chain solution integrated into this uh exotic Network as a mustad because without it you you you you wouldn't even open your network to to the external assets and external users and of course uh important thing here is that Stellas swap has a pretty big Shure in this volume but Wormhole has around 60% which means that uh Wormhole itself and apps that people use through Wormhole generate most of this um important for one beam traffic of course we could calculate the fees that are being generated to the ecosystem by all of this traffic but usually these fees they do not uh access more than tens of dollars so it doesn't really uh make much sense so yeah as I already mentioned mud is a very very Alterna native coin right now uh it had I think around two billions of dollars of Market cap at some point right now its market cap today is around $140 million but it tvl is basically $40 million so it's uh much it's up to 15 times lower than optimism uh much much lower than arbitrum and basically not comparable to b a smart chain why do we mention these three other chains because we're going to take a look at uh how the traffic for these free chains basically looks uh for Wormhole as well so knowing that uh Moonbeam tvl is 14 million we could expect that uh the traffic of uh users uh transferring their assets through Wormhole to all of these four networks uh will be kind of similar but it's basically not so if you take a look at the data of uh how many users generate traffic for wormhole on these four separate networks you will see that 30% of new wallets of new acquired wallets uh are coming basically from Moonbeam so Wormhole and of course Wormhole supports many more chains than this but it would basically be very hard to read here so basically Moonbeam generates around 40% of new acquired wallets for for wormholes uh for Wormhole and uh 50% of interactions uh within the last 3 months compared to these four or um chains yes it is yes yes these are all new acquired wallets that are uh starting to use uh Wormhole product so we don't uh differentiate here whether it's usdc whether it's a different asset we basically measure the number of new wallets that are um starting to to use Wormhole at this specific Network so we we mentioned those smart contracts A and B so these are all smart contracts A and B on those networks and we measure how many new wallets interact with these smart contracts for the last three months doesn't matter the the type of asset and when it comes to tvl it's also kind of surprising because as we already said moon beam currently has around 4 million of do it had Sorry by the end of June around $4 million of tvl and Wormhole itself generated 7 million of those 40 which is a lot very very a lot right so uh this again confirms the Theses that uh having a cross change solution uh on well-known cross Solution on an exotic web ecosystem such as Moonbeam is extremely important so uh to Summit who wi the first um what we I think can safely assume of course because we don't have all the data coming from all the netw from all the aggregated data wouldn't make much sense what we want to see here is uh what we want to get here is get an Insight web fre ecosystem that is emerging to help it grow so who wins in such a case when smaller network using cross Chain Solutions such as Wormhole or Axel so basically the smaller Network it gets an inflow of new active users it gets a new source of liquidity and tvl and most importantly it gets a instant stable coin integration which I of integrating T and ser what the bigger Network gets is access to new exotic assets that wouldn't basically available for users uh on this network without the cross chain solution or for this users because of these exotic assets and again um assets being deployed on the bigger network is a higher user risk because probably these assets are going to be more volatile than the bigger Network itself uh and you can basically see that on the one beams price chart but um it would be kind of surprising if everybody uh uh was winning it's like who loses here do you have an answer maybe who loses in for in in case of uh using cross Chain Solutions like where where is the money moving from from whom to to Bridges um m not really not really like think about who can who who was the first to give you a possibility to move money between blockchains perfect yes that is that is the the exact answer so uh centralized exchanges are the Biggest Loser uh when you have cross Chain Solutions available on the market and that's because centralized exchanges were the first to actually allow you to uh quickly move money between different networks so you could exchange uh coin a to Fiat money or to stable coin and then exchange it to coin B and move it on the network B within a matter of few minutes but the fact is that using centralized exchanges is basically extremely expensive if you're going to uh transfer uh money from ethereum to pad do you're going to pay around four 5% uh of fees um based on depending on the central exchange that you're using so this is more or less true for Kraken of course you can use uh gate.io or you can use okx or um UK Max C uh but the fact is that we have already seen that big investors whales digital asset funds they are transferring uh more than $1 million at once for example so uh you can either um minimize the risk of losing that money and then you're going toay pay uh a lot of uh a lot uh in fees uh for centralized exchanges you can um minimize the the the fee but then you have a higher risk of losing money for example at Max C uh our company personally we had a situation with Kraken wallet at padot where we lost almost 1 million zotes and basically Kraken retrieved those money for us and it was their fault because they didn't integrate pad do extrinsics properly and our developers basically were talking with their developers to retrieve the money so this is what you get when you when you pay like four or 5% of fees but if you pay 1 2% of fees at Max C uh you may be up in that situation so then uh most of these users are going to uh use cross Chain Solutions such as Wormhole uh AEL layer zero because basically they are cheap and they are safe thank you very much um I'm not sure if you have any questions but I know that we're out of time so do you have any questions maybe oh really yes okay okay okay so I I I made a mistake thank no really thank you thank you for mentioning that uh so basically yeah yeah they're probably going to move to the decentralized model because of that and they they had a TG okay okay okay so so thanks for for mentioning that yeah so moving to the decentralized model prob thanks okay cool thank you very much