Are Whales Surfing The Hop Protocol Seas?

The purpose of this article is to discuss whether whales choose Hop to reach L2s? Do they prefer the native bridges? How does Hop compare to Polygon, Optimism, and Arbitrum’s native bridges for the following metrics: unique users, frequency of use, and average amount of assets moved?

What Is Hop Protocol?

Hop is a general token bridge that allows rollups to exchange tokens between each other. Rather than waiting for the networks challenge period, users can send tokens almost immediately from one rollup to another.
Essentially, the bonder fronts the liquidity at the destination chain for a fee, which is paid by the market makers.An AMM swaps the hTokens for their counterparts in native tokens extending credit through Bonders .By using this system, tokens can be seamlessly transferred between networks.

A Hop Protocol allows users to connect different scaling solutions when moving assets, making it easier for them to move assets. With Hop, funds can be transferred in ETH, USDC, MATIC, DAI, and USDT between Mainnet, Polygon, Optimism, Arbitrum, and xDai networks. That means , using Hop Protocol, tokens can be quickly and easily transferred between layer-2s, sidechains, and layer-1 Ethereums.

An application living in a Layer-2 environment is somewhat isolated from other applications. Despite Layer-2 networks having “native bridges,” it is slow and expensive to move tokens between scaling solutions or back to the Ethereum base layer via these bridges. When data passes from the L1 core of an L2 to the L2’s core, it takes time for the withdrawal to be facilitated. Providing this ease of use minimizes friction for users and makes L2 extensions feel as native as Ethereum itself. Ideally, they should be instant. Hop connects Layer-2 networks to Ethereum, resolving both challenges. When funds are withdrawn from one Layer-2, they can be instantly moved back to Ethereum mainnet.


What Is Hop Bridge ?

There is a native token bridge for every Layer-2. Optimism Ether can be obtained by moving Ether (ETH) to Optimism, for example, via the native Optimism bridge.As mentioned earlier, there is only one representation of Ether on Optimism, and withdrawals through the native token bridge are subject to a long withdrawal period.Optimism Ether could be converted to Arbitrum Ether in the application of your choice by withdrawing back to mainnet, waiting for seven days, and converting the mainnet Ether to Arbitrum Ether via the Arbitrum bridge. 
Multi-network Hop bridges are useful here. As part of the Hop Bridge system, Hop has both Optimism and Arbitrum bridges.
Each Hop bridge network issuer issues Hop tokens. For example, Hop would issue the equivalent amount of Hop ETH (hETH) on Optimism if a user wanted to deposit 4 ETH via Hop. Furthermore, hETH can be burned on Optimism by redeeming its underlying asset.
Finally, Hop also supports a variety of rollups and sidechains that support hETH redemption. A hETH rollup on the origin would burn the same amount of hETH as a destination rollup.

Native Bridges(Optimism, Arbitrum And Polygon)

Optimism : Optimism, like other L2 solutions, saw an opportunity to scale Ethereum without compromising security or decentralization. Optimistic Ethereum is an EVM-compatible rollup chain that is simple, fast, and secure. By using optimistic rollups, users are able to interact with any Ethereum application at a fraction of the cost. In an optimistic rollup, transaction data is moved off-chain, bundled, and rolled up.

Arbitrum : Arbitrum is an Ethereum layer 2 scaling solution. The L2 released its mainnet to developers in late May with promises of lower fees and greater transaction capacity.As a consumer, it will act as a separate blockchain that can be switched to using Metamask or Trust Wallet, and it will interact with various DeFi protocols. Uniswap, Etherscan, Chainlink, Sushiswap, Cream Finance, and many others are launching products on Arbitrum L2.The user transfers funds from an Ethereum wallet to Arbitrum L2 using https://bridge.arbitrum.io/.In this case, they can use Uniswap to exchange tokens with gas fees estimated to be 50 times lower than those on the main Ethereum chain when using a DeFi platform like Arbitrum.

Polygon : By connecting different blockchains with the Polygon bridge, users can easily transfer tokens between blockchains with fast and cheap transactions. Furthermore, it enables decentralized applications (DApps) to be build more efficiently in order to enhance the Ethereum ecosystem. You can transfer Polygon Matic tokens between Ethereum ERC20 and Polygon Bridge using the Polygon Bridge.By using a dual consensus architecture (Plasma + Proof-of-Stake (PoS) platform), Polygon bridge provides a scalable, low-cost, and quite flexible scaling solution. We deliberately designed the system so that arbitrary state transitions can be executed on our EVM-enabled sidechains.

More than $500K transactions were considered whale transactions in this article. Let’s see if these Whales are preferred bridges for L2s – Hop or Native.  Our next analysis compares Hop with Native bridges in Polygon, Optimism, and Arbitrum over the following metrics: unique users, frequency of use, and average asset movement.

Does Whales Are Preferred Bridges For L2s – Hop or Native?

Based on our assumption, any transaction over $500K by a user in a single transaction can be considered a Whale. In the graph below, you can see whether these whales are using Hop protocol or not. The majority of whales are using their native bridges. However, only two whales are using Hop protocol for L2s. Among the two Bridges, Bridge Native contributed the most to the total Volume(USD) (99.67%).

From the below graph we can see Whale transactions which are $500K+ on Hop protocol vs Native bridges over a period of time . Here we can see most of the transactions on different blockchains also happened from their native bridges. Native->Optimism contributes the most (54.64%) to the total Transactions. Among the 2 Transfer Categories, Native contributes the most (98.97%) to total transactions

Analyze Hop And Native Bridge Transactions By Transaction Category 

In this section , from the below graphs we can see the Hop and Native bridge number of transactions number of transactions by transaction category for the past 6 months . Here we can see in both cases , the category less than $1K were fall more than 75% out of all other categories. In Hop Protocol we did not see any more than $1 Million+ transactions .

From the below graph we can see over three quarters (79.96%) of total transactions were attributed to transfer categories with less than $1K. In total, 86 transactions are higher than $1 million ($1 million+) and 61.6K are lower than $1K ($61.6K). 

From the below graph we can see over three quarters (76.2%) of total transactions were attributed to transfer categories with less than $1K . In total, 2 transactions are higher than $500K+ (($500K – $1 Million)) and 9,022 are lower than $1000 ( Less Than $1K).

Number Of Transactions Transferred To Different Blockchains

Here from the below graphs we can see the number of transactions transferred to polygon, Arbitrum and Optimism Blockchains for the past 6 months period. Here we can see in all the blockchains the number of transactions transferred to Native protocol are more than the hop protocol .  Among the two mediums, Native->Polygon accounted for 63.28 percent (63%) of the total.

Similarly , from the below graph we can see the number of transactions transferred to Native protocol are more than the hop protocol .  Among the two mediums, Native->Optimism accounted for 69.9 percent (70%) of the total.

From the below graph we can see the number of transactions transferred to Native protocol are more than the hop protocol .  Among the two mediums, Native->Arbitrum accounted for 94% of the total.

Analyze Hop And Native Bridge Token Volume By Transaction Category 

In this section , from the below graphs we can see the Hop and Native bridge Token Volume by transaction category for the past 6 months . More than three quarters of the total volume (78.08%) was contributed by the Top 3(100K – $250K, $10K-$50K and $250K-$500K) Transfer Categories. It was observed on June 1, 2022 that the maximum Volume($) reached 7.99M. 

There was a 49.5% contribution from transfer categories earning $1 Million or more, and a 62.67% contribution from transfer categories earning $500K-$1 Million and $1 Million+. May 30, 2022 and June 13, 2022 had higher volumes than normal for June 2, 2022 and lower volumes than normal for May 30, 2022.

Amount Of Assets(Token Volume ) Moved To Each Blockchains

Here from the below graphs we can see the token volume to other blockchains . Here we can see in all the blockchains the token Volume to Native protocol are more than the hop protocol .  Among the two mediums, Native->Polygon accounted for more than 95% of the total.

Taking a look at this chart, we can see that Native-Arbitrum and Native-Optimism have a combined total of more than 70% and 85%, respectively, of the total total of their respective blockchains. 

Analyze Hop And Native Bridge Unique Users By Transaction Category 

In this section , from the below graphs we can see the Hop and Native bridge Unique users by transaction category for the past 6 months . Over three quarters (76.52%) of users came from Transfer Categories under $1K. 2 users ($500K – $1M) make up the lowest total, while 8,482 users (less than $1K) make up the highest.  A maximum of 1,750 users was observed on June 1, 2022. The number of users was higher than normal on May 31, 2022 and June 1, 2022. 

From the below graph we can get over three quarters (79.8%) of total Users contributed less than $1K in Transfer Categories.The lowest total number of Users ($1 Million+) is 65 and the highest total number is 57.76K (less than $1K). The maximum number of users was 7.17K on June 1, 2022. Users on June 2, 2022 were lower than normal, and on May 31, 2022 and June 11, 2022, they were higher than normal.

Unique Users To Each Blockchain

According to their respective blockchain user statistics, more than 30% of unique users prefer the Hop protocol over the Optimism block chain and the Polygon blockchain over a particular period .  The Medium Native->Optimism is the biggest contributor to the total wallets (69.9%) out of the 2 Medium.

Here from the below graph we can see out of the 2 Medium, Medium Native->Arbitrum contributes the most (94.11%).

Here from the below graph we can see polygon is the most important component of the Medium Native->Polygon (63.16%) wallets.

Whales Preferred Tokens On Hop and Native Protocol

Here in this section we can see the tokens which are preferred by Whales on both Hop and Native Protocols. Among all tokens, USDC contributes the most (65.73%) to the total Volume(USD). A total Volume(usd) of 3.4 million (DAI) is the lowest while a total Volume(usd) of 222.6 million (USDC) is the highest. Volume(usd) is higher than normal on May 30, 2022 and June 13, 2022.

Here from the below graph we can see by Hop Protocol , the only tokens which are preferred by whales are ETH.

Observations

  • From the above analysis, if we ask the question “What are the preferred L2 bridges for Whales – Hop or Native?” It can be seen that most whales use their native bridges.
  • According to whales, their preferred tokens are mostly USDC using Native protocol. When we look at the preferred tokens by whales using Hop protocol over the past month, it’s only ETH.
  • We can compare Hop with Polygon, Optimism, and Arbitrum’s native bridges over the following metrics: unique users, frequency of use, and average assets moved, and we can see native protocol has a higher amount of unique users, transactions, and token transfers.
  • According to the number of transactions by transaction category using Native and Hop protocols, the majority of transactions fall below $1K.
  • By looking at Hop And Native Bridge Token Volume by Transaction Category, we can see the majority of the volumes fall within the 100K – $250K range.
  • According to the Hop and Native bridge unique users by transaction category, the majority are in the (less than $1K) category.

References:  https://cryptotesters.com/blog/hop-bridge

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