What is Across Protocol?
If blockchain protocols are cities, then DeFi bridges are the highways that connect them. Across Protocol is a very specific highway that connects Ethereum L2s and rollups. To give more info, rollups are a layer-2 scaling solution built on top of Ethereum.
Using L2 solutions, all computation is done on the secondary layer, and the proof gets posted on the Ethereum main chain. Layer 1 (Ethereum) is relieved from the burden of processing transactions, while L2s do all the hard work. This mechanism results in faster transaction processing speed and lower fees.
L2s come in many flavors, as they take different paths to efficiently scale transactions. In order to make use of them, users have to move their funds to the L2 solution of their choice. Specifically, they have to make a costly transfer on Ethereum before they reach the low-fee promised land of L2s. With several scaling solutions such as Arbitrum, Optimism, and zk-STARK, users are in the tough position of choosing only one scaling solution. Migrating from one L2 to another is a tedious process that requires costly fees. This mechanism results in fragmented liquidity, as each scaling solution has a siloed ecosystem of dapps.
Enter Across Protocol: the ultimate cross-chain bridge for L2s.
To explain Across Protocol, it’s important to mention that every interaction with L2s is done in a non-custodial manner. Users remain in control of their funds, as the rules of the transfer are set via smart contracts. Furthermore, each L2 has specific mechanisms that ensure users are able to withdraw their funds even if the L2 gets compromised. Cross-chain bridges strive to offer similar guarantees by adding safeguards.
Cross-chain bridges have a notorious reputation for being a honeypot for hackers. Some of the biggest DeFi cross-chain bridges get hacked due to the sheer amount of value they attract. So what makes Across Protocol a safe option?
Across Protocol has been built by the engineers at UMA, an optimistic oracle and dispute arbitration system. Based on the team’s expertise in the crypto space, it’s only natural that Across Protocol would inherit the same robustness as UMA.
The protocol uses UMA’s optimistic oracle to confirm that transactions on all the chains are correct. If there is a transaction that is incorrect, it will be disputed and resolved by UMA token holders. The optimistic design means that no matter how many people are participating in the bridge, it only takes one single honest actor to dispute a false claim.
Across Protocol uses third-party relayers that risk their own funds to bridge assets. These relayers take a calculated risk of paying your deposit upfront, before moving your deposit between L2s. You can think of relayers as truck drivers on a highway. They load up the assets, move them between L2s, and get their pledged crypto funds back plus a small transaction fee. Because transactions quickly add up, relayers compete with each other on speed to fill users’ deposit requests.
Using Across Protocol requires no KYC. The user experience is as simple as sending a normal transaction. Coupled with a user-friendly interface, Across Protocol opens up communication between L2s at an unprecedented level.
How does Across Protocol work?
Across protocol is a bridging method that combines an optimistic oracle, bonded relayers, and single-sided liquidity pools to provide decentralized instant transactions from Rollup chains to Ethereum mainnet. In a nutshell, Across is the bridge that connects liquidity between all L2 solutions.
Using Across, users can easily and safely migrate funds from one L2 solution to another, without having to pay the Ethereum fees.
To facilitate the funds' migration, Across uses an insurance flow that relies on relayers to offer liquidity upfront. Basically, relayers are using their own capital to help make the bridging process seamless for the end-user.
In Across protocol, relayers as the so-called middlemen. Their job is to verify that the details of the deposit are correct and then provide the funds on the destination chain. In some way, relayers are like insurers, as they use their own funds to make the transfer.
After the relayer has performed the relay, a proof of that relay and the validity of the original deposit is submitted to the optimistic oracle (OO) and the relayer is reimbursed once this information has been verified by the OO. For their work, relayers get a share of the transfer fees.
The relayer’s reimbursement is taken out of a single liquidity pool on the Ethereum mainnet. Liquidity providers deposit assets into the liquidity pools and they also receive a share of the fees executed on the respective liquidity pool.
Using this mechanism, bridging can take 1–4 minutes depending on the available liquidity. If relayers don’t have enough assets on the destination chain, the transfer will take 2–4 hours.
How to make money on Across Protocol?
If you are looking to make money on Across Protocol, you'll be happy to learn that it's as simple as depositing tokens into a liquidity pool. By offering liquidity, you are helping reimburse the active capital provided by the relayers, and earn a share of the transaction fees in the process.
Here's how you add liquidity to Across Protocol:
Open the Across Protocol app
Navigate to the "Pool" section
Select an asset to add to the pool
Set an amount of liquidity that you would like to provide
Click the "Add Liquidity" button and confirm the transaction
After adding liquidity, you will receive an LP token which represents your share of the pool. This share becomes more valuable over time as it accrues fees generated from transfers.
You can withdraw your funds at any time, provided there is enough liquidity in the pool.
Reward Locking
On top of providing liquidity, Across offers an additional incentive in the form of ACX tokens for locking up the liquidity for a longer period. Keeping rewards locked discourages farm and dump activity, but more importantly, makes the LP and referrer more engaged with the protocol.
In order to qualify for ACX staking you will need to have deposited liquidity into the protocol and have some ACX tokens.
Here's how you stake ACX on Across Protocol:
Open the Across Protocol app
Scroll to the "My pools" and "All pools" sections
Click on the arrow or "Stake" button
Enter the amount to stake and click "Stake"
Approve the transaction
Across gives more ACX rewards the longer you stake. Each individual liquidity pool has a multiplier applied to the pool's base reward APY, based on your age of capital.
Price Prediction for Across Protocol — Can it hit $1000?
Buying and hodling ACX — the native token of Across Protocol — is one way of potentially making money on Across Protocol.
The ACX token has value exclusively as a governance token. Added to the fact that Across is a cross-chain bridge, this makes its value somehow capped compared to a DeFi protocol. The price of ACX will be dependent on the amount of value transferred via its cross-chain bridge.
By looking at its current price, it’s natural to think about the chance of ACX hitting $10 per token. This can happen sooner, or the way in the future, and is determined by a couple of ever-changing factors.
Let’s examine the potential growth of the ACX token by analyzing its tokenomics. ACX’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} ACX tokens being in circulation today, that means a price of {PRICE} per ACX.
How did we come to that calculation? It’s quite easy, the price of a ACX token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each ACX coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of ACX at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for ACX to hit that price.
At a price of $10 per token, that means the current market cap of ACX would equal ${{CIRCULATING_SUPPLY} * 10}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $10.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. ACX's whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} ACX which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of ACX? Taking into account the current price of an ACX token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. ACX coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of an ACX token. Doing the same calculation but with a price of $10 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 10} for the ACX protocol fully diluted market cap.
These are all crucial details to know when calculating if ACX can reach the price of $10 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of ACX depends solely on its growth as a bridge used by tens and hundreds of millions of users. Technically, it is possible for the price of ACX to reach $10 by 2030.
If you’re looking to add some ACX to your portfolio, the most trusted places to get some are Binance and Coinbase.
