Stargate Finance Review

What is Stargate?

Stargate Finance is a fully composable native asset bridge, making cross-chain liquidity transfer a seamless, single transaction. Transferring liquidity between networks has become something many of us now take for granted, however, it wasn’t too long ago this was a far-off dream. It has allowed users to experience a wealth of dApps, no matter their network origin — encouraging diverse ecosystems, once segregated, to interact with one another. However, passing a native asset from one blockchain to another doesn’t come without its challenges — overcoming this is what we call ‘bridging’.

Stargate Finance Review — Stargate Finance Bridge.

‍

Why Stargate is Better than other Bridges

Stargate, using the underlying LayerZero communication protocol, has achieved the bridging of native assets whilst preserving instant guaranteed finality and unified liquidity, overcoming the bridging trilemma:

Instant Guaranteed Finality: the guarantee of funds on the destination chain when a transaction is successfully committed on the source chain.
Unified Liquidity: the shared access of a single liquidity pool between multiple chains.
Native Assets: the user-desired assets (native or most liquid synthetic) on the destination chain.

Previously, bridge solutions would have to sacrifice one of these factors in their design. Usually favouring to utilise a wrapped token rather than the native asset where the deposited native asset is locked on the source chain, and a wrapped asset is minted on the destination chain. Additionally, bridges of old would need to bootstrap liquidity on each new integrated chain, limiting expansion. Stargate, on the other hand, shares a unified liquidity pool across chains ensuring all sides have sufficient liquidity.

The ability for Stargate’s pool to be in consistent harmony is due to their Delta algorithm, a novel resource balancing algorithm that is the backbone of their solution of the bridging trilemma. This is what puts them ahead of their competition allowing them to integrate into diverse networks whilst scaling more quickly and efficiently.

‍

What Networks is Stargate Available on?

See below for the assets available on each of the Stargate-operated networks:

Ethereum (USDC, USDT, USDD, ETH)
BSC (BUSD, USDT, USDD)
Avalanche (USDC, USDT)
Polygon (USDC, USDT)
Arbitrum (USDC, USDT, ETH)
Optimism (USDC, ETH)
Fantom (USDC)

The protocol token, STG, is available on all of the above networks.

‍

What Yields can I Earn on Stargate?

Stargate Finance offers various ways for users to earn yield, including transaction fees, liquidity provision, and rebalancing fees. For each non-STG transfer, a 0.06% fee is taken, which is distributed to the protocol treasury, veSTG holders, and liquidity providers. Liquidity providers can earn 5-10% APY in the form of STG emissions, while STG tokens can be locked to receive veSTG, the governance token, allowing users to participate in DAO control and earn from transaction fees.

Rebalancing fees are implemented to maintain pool balance across networks, as users deposit and withdraw funds. Users moving balances further from the target are charged fees, which are then used as rewards for those who contribute to pool rebalancing. Additionally, the treasury fee flow may be utilized to incentivize rebalancing depending on the pool's deviation from its target.

Stargate Yields — Stargate Finance Yields.

‍

Is Stargate Finance Safe?

Stargate has had three separate audits from some of the biggest names in the space — Quantstamp, Zelliz, and Zokyo. On top of this, in April they announced the largest-ever bug bounty program, with a top award of $15M on both Stargate and LayerZero. The protocol itself is only controlled by multi-sigs which can be found here. See the end of this article for what these multi-sigs are capable of carrying out.

Furthermore, earlier in the year, a 2-phase mechanism in the Relayer for Stargate was implemented:

Phase 1: The Dome — deflects all attacks from malicious external contracts
Phase 2: Pre-Crime — evaluates all messages from Stargate, running them locally to ensure any message or attack that would disrupt the system and cause off-balance books will be stopped before it reached the live system

On-chain Observations

In the charts below, we have outlined some key observations regarding Stargate Finance's on-chain statistics. These observations include on-chain volume, user activity and protocol revenue:

Huge rush for liquidity in the early weeks of the project — at this point, transaction fees were being routed to LPs along with initial STG emissions
Since then, a steady decline before flatlining near its current level around $250-300M TVL
Mostly steady and unchanging transaction rate and volume throughout the year, declining slightly during capitulation moments (mid-May, mid-June)
Recently, however, transactions have seen a huge uptick from mid-Sep and are still continuing — this has been accompanied by similar-sized spikes in volumes but more sporadically
This may well be due to some speculation surrounding a LayerZero token release in the works — supported by the number of new accounts holding STG

‍

‍

Final Thoughts

Overall, Stargate Finance is one of the best decentralized bridging protocols available to on-chain users across a variety of EVM networks. Their platform has one of the most secure interoperability architectures facilitated by the team behind Layer Zero labs, making them one of the safest options to move value between chains.

The Stargate Finance token $STG is also an incredibly interesting investment opportunity as it accrues all of the value from transactions on the platform. This not only provides token holders with a way to participate in the success of the protocol, but also insulates them against any potential issues that may arise.

As decentralized finance protocols continue to grow in popularity, Stargate Finance is positioning themselves to be a major player in this space. With their experienced team and innovative platform, they are well on their way to becoming a leading protocol in the industry.

For more information on Stargate Finance, be sure to check out their website and follow them on social media.