Is the third-party bridge cheaper and more user-friendly compared to the official cross-chain bridge of Ethereum L2?

Author: Pan Zhixiong

After the official mainnet testing of Optimism and Arbitrum was opened to the public, in addition to the rapid increase in the number of application deployments, how to migrate a large amount of assets to the L2 network at a lower cost has also become a topic of concern for many. On the other hand, if users need to quickly transfer assets from L2 to L1, the official bridge cannot achieve this, so they can only rely on other third-party tools.

With the increase in the number of public chains and L2s, the demand for cross-chain assets is also growing rapidly, and various cross-chain bridge tools have become essential tools for users. For the special cross-chain scenarios involving L2, a batch of bridges specifically providing cross-chain services between L1 and L2 has emerged.

Overall, third-party cross-chain bridge tools are faster than the official bridges, especially when users need to withdraw assets from L2 to L1, as they do not have to wait for 7 days. However, users need to incur additional costs, paying a portion of the fees to the "market makers" or "protocols" providing liquidity for cross-chain transactions, which essentially discounts the time value of funds, reducing potential losses from 7 days of idle assets.

Transferring from one L2 to another is very time-consuming and costly

Different cross-chain bridges use different technologies, such as common ones that employ hash time locks, state channels, or some semi-centralized solutions. These asset cross-chain bridges also vary in the assets they support, so we tested the currently available cross-chain bridges (connecting to Optimism or Arbitrum), including Hop Protocol, cBridge, DeGate, RenBridge, and Anyswap, and summarized the advantages and disadvantages of these platforms along with their corresponding cost estimates (based on recent average gas costs).

Due to the significant demand in the Ethereum community for ETH, USDC, and USDT, support for these three types of assets is one of the core indicators for evaluating cross-chain bridges.

Official Cross-Chain Bridges Provided by L2

L2 teams provide an official cross-chain bridge, which offers the most basic functionality, with security being its most important feature. However, due to the mechanism of the scaling technology used by Arbitrum and Optimism, it takes 7 days to withdraw from L2 back to L1.

Arbitrum just updated the UI of the official bridge webpage

• Supported Direction: Ethereum <-> L2 Networks (Arbitrum/Optimism)
• Assets: Currently supports USDC, USDT, and ETH, as well as tokens on the whitelist, with gradual opening in the future
• Advantages: Relatively the safest, no limit on transaction size
• Disadvantages: Withdrawal period requires 7 days
• Cross-Chain Cost: Only the normal transaction fee of the network (about $20 to $30)
• Arbitrum Bridge Link
• Optimism Bridge Link

Hop Protocol

Hop is a cross-chain bridge developed by the team behind the smart contract wallet Authereum. Their solution designs a universal asset bridge and achieves rapid asset migration between Layer 2 networks by introducing "Automated Market Maker" (AMM) components and "Bonder" roles.

When using Hop's solution, assets need to flow through Hop to enter the Layer 2 network, for example, ETH entering Layer 2 through Hop's asset bridge is called Hop ETH (or hETH). hETH and ETH are completely equivalent, at least they can be exchanged through Hop.

However, there is also an "official" version of ETH in the Layer 2 network, which is the version of ETH that more people commonly use. The official version of ETH and hETH should theoretically be completely equivalent, but due to liquidity reasons, there may be some price differences.

Thus, Hop Protocol introduces AMM components and "Bonder" roles. AMM is designed to address short-term price fluctuations between the official version of ETH and hETH, while the "Bonder" role can provide liquidity for users who need to release liquidity in advance and can also earn part of the profits (because they save users the 7-day withdrawal period).

Bonders can observe trading data between different Layer 2 networks and advance the official version of ETH for the network, while arbitrageurs between different Layer 2 networks will continuously rebalance (to earn profits), keeping the AMM price within a reasonable range.

• Supported Direction: Ethereum <-> Arbitrum; Ethereum <-> Optimism; Arbitrum <-> Optimism
• Assets: Currently supports USDC and USDT, not supporting ETH
• Advantages: No 7-day withdrawal period
• Disadvantages: Liquidity of assets in the protocol may limit the scale of cross-chain assets
• Cross-Chain Cost: Network transaction fees (about $30 on L1) + protocol transaction fee (0.04%), plus potential trading slippage
• Link

cBridge

cBridge is a cross-chain bridge tool developed by the Celer team, based on atomic swap technology.

cBridge states that it will soon support more Layer 2 and Layer 1 blockchain cross-chain and cross-layer transfers. Additionally, anyone can join the cBridge network by running a cBridge node to provide cross-chain and cross-layer liquidity and earn corresponding transaction fees.

Celer has just released its 2.0 plan, which can further improve the liquidity of cross-chain assets. For more details, refer to this article: cBridge Announces 2.0 Upgrade Plan, Overview of New Design Trade-offs and Optimizations.

• Supported Direction: Ethereum <-> Arbitrum; Ethereum <-> Optimism; Arbitrum <-> Optimism
• Assets: Currently supports ETH, USDC, and USDT
• Advantages: No 7-day withdrawal period
• Disadvantages: Liquidity of assets in the protocol may limit the scale of cross-chain assets
• Cross-Chain Cost: Network transaction fees (about $30 on L1) + operational fees paid to relay nodes (priced by the nodes themselves)
• Link

DeGate

The Ethereum Layer 2 trading protocol DeGate has deployed a Beta version of the asset bridge on the Arbitrum network, which uses a stablecoin AMM curve to improve capital utilization.

DeGate states that users can achieve cross-layer asset transfers through this asset bridge without waiting for the challenge period of the native bridge. During the Beta version phase, liquidity injection is only open to whitelisted partners.

• Supported Direction: Ethereum <-> Arbitrum
• Assets: Currently supports ETH, USDC, not supporting USDT
• Advantages: No 7-day withdrawal period
• Disadvantages: Liquidity of assets in the protocol may limit the scale of cross-chain assets
• Cross-Chain Cost: Network transaction fees (less than $10 on L1) + protocol transaction fee (temporarily free), plus potential slippage
• Link

RenBridge

RenBridge is a cross-chain bridge developed by Ren Protocol, with a primary focus on cross-chain solutions with other public chains. Currently, the core feature is direct cross-chain support between BTC and L2.

• Supported Direction: BTC <-> Arbitrum
• Assets: Only supports BTC (and other public chain tokens), not supporting ETH, USDC, and USDT
• Advantages: Supports BTC cross-chain
• Disadvantages: Only supports cross-chain between Arbitrum and BTC
• Cross-Chain Cost: Since it does not touch Ethereum L1, it only requires Bitcoin miner fees (~$3) + Arbitrum transaction fees (~$3) + protocol fees (0.15%)
• Link

Anyswap

Anyswap is a universal cross-chain protocol that previously focused on cross-chain technology between public chains and has recently added support for the Arbitrum network.

• Supported Direction: ETH <-> Arbitrum
• Assets: Currently supports USDC, not supporting USDT and ETH
• Advantages: No 7-day withdrawal period
• Disadvantages: Does not support L2 networks other than Arbitrum
• Cross-Chain Cost: Network transaction fees (about $30 on L1) + protocol transaction fee (0.1%)

• Link