The ACX Bridges of DeFi Babylon

By Feax21 | Publish0x Writing Contests | 10 Dec 2024

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The Bridges of DeFi Babylon

Since the Prehistoric days of the human civilisation, a bridge has been always a remarkable engineering achievement of the human intelligence to span gaps and connect lands by overcoming physical obstacles such as seas, rivers or canyons, creating pathways where they don't exist and developing financial connectivity through trade and social progress.

And on the Blockchain digital world, due to fragmentation of the blockchain networks, a DeFi Bridge has a similar meaning spanning the weaknesses and difficulties of the popular Decentralised Finance platforms such as their limited interoperability and liquidity. In fact, a DeFi Bridge is actually a software protocol that facilitates the movement of cryptoassets between different blockchain networks acting as a liquidity connector and enabling interoperability between DeFi platforms that operate as an alternative solution to the centralised burdens and KYC liabilities of the commercialised and succumbed to the establishment Centralised Finance (CEX) Institutions.

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As a result, a DeFi Bridge allows users to transfer assets seamlessly from one blockchain to another taking advantage of their unique features such as anonymity of the transaction using an onchain non-custodial wallet, low fees, short waiting time for the execution of a transaction or better liquidity across different DeFi platforms.

Someone can understand the utility of a blockchain DeFi bridge through a very simple example. Let's say a user called Feax21 wants to make use of a lending and borrowing DeFi platform that allows him to lend out his cryptofunds in return for earning interest on it without passing the burdens of the KYC verifications of the CEX platforms. Yet, if Feax21 was lending his spare Ethereum funds on the Ethereum MainNet, he could earn approximately 0.5% according to the current profit rates. However, if he was able to lend out the same asset i.e. Ethereum on the BNB Chain he could earn up to 3% interest rate which is x6 times the profits of the Ethereum MainNet! That means that Feax21 has to move first his assets from the Ethereum MainNet to the BNB Chain by using a DeFi Bridge and then deposit his BNB Chain Wrapped Ethereum funds on the lending platform.

The Layer 2 Solutions of the Ethereum Network

In an attempt to overcome the "Blockchain Trillema" of Layer 1 blockchains, Layer 2 blockchain solutions were developed as a secondary blockchain infrastructure capable to interact with the corresponding base blockchain but not be restricted by its scaling limitations. Apart from the notable and pioneering Lighting Network as a Layer-2 solution for the Bitcoin Blockchain several Layer-2 solutions of the popular Ethereum MainNet have also emerged such as the Polygon, the OPtimism, the ARBITRUM, the Base, the xDAI Chain, the Aleph Zero or the ZkSync Era.

The advantages of Blockchain Layer-2 services include everything every blockchain enthusiast including Satoshi Nakamoto, could ever dream for everyday cryptomicropayments i.e. speed of transaction, low transaction fees, scalability, cross-chain atomic swaps and anonymity. The question of the need
Unfortunately, Layer-2 services only serve a specific Blockchain Network, i.e. a separate Layer-2 service for Bitcoin, another for Ethereum etc and until today they only handle a tiny fraction of the on-chain transactions through mostly unfriendly user interfaces. Yet, the most significant problem, is the risk of emerging powerful hubs on the network risking it's security as well as risking the re-introduction of centralisation to the system bringing the Blockchain Trilemma again into jeopardy.

Yet, the question or the need that arises is if there is a software protocol that allows the seamless transfer of funds from a Base Network to and from its Layer-2s.

The ACX Platform

And this is where the Across Platform comes to fill in the gap as a DeFi Bridge enabling the transfer of funds exclusively from and to the Ethereum MainNet and its Layer-2 Protocols but also between them. As a result, it allows users to transfer their assets seamlessly within the Ethereum Network taking advantage of its unique features such as uninterrupted interoperability powered by intents which is a unified interface for cross chain trade execution systems using the standardised ERC-7683 protocol developed by Uniswap and Across Protocol. Moreover, the user can enjoy all the relevant advantages of the Decentralised Finance such as significantly low fees, short execution time, and anonymity of the transaction without passing the burdens of the KYC verification using an onchain non-custodial wallet.

Someone can understand the utility of a blockchain DeFi bridge on the Ethereum MainNet such as the ACX Platform through a very simple example. Let's say a user called Feax21 wants to make use of a lending and borrowing DeFi platform that allows him to lend out his cryptofunds in return for earning interest on it without passing the burdens of the KYC verifications of the CEX platforms. Yet, if Feax21 was lending his spare Ethereum funds on the Ethereum MainNet, he could earn approximately 0.5% according to the current profit rates. However, if he was able to lend out the same asset i.e. Ethereum on a Layer-2 Ethereum Network let's say on Polygon Network he could earn up to 3% interest rate which is x6 times the profits of the Ethereum MainNet! That means that Feax21 has to move first his assets from the Ethereum MainNet to the Layer-2 Polygon Network by using the Across Platform and then deposit his Polygon Network Ethereum funds on the lending platform.

My Experience with the ACX Platform

The story actually begun 1 year ago, when Publish0x decided to transition its tipping rewards for both the writers and the tippers on the OPtimism Network. Due to the fact that I was really troubled Publish0x decision, I still remember that I left a relevant comment on the announcement with title "Publish0x Switches to Optimism Network for Tipping!".

Yes, one year ago I had no idea what Optimism Network is and why it is a sustainable solution for tipping in the platform, and for a long time I left my withdrawn profits both in $OP and $ETH idle on my onchain wallet. One year later, after discovering the ACX Platform, I decided to experiment with them and move my idle and possibly useless ETH tokens from the OPtimism Network to Ethereum MainNet considering for the near future to withdraw them into a STAKING Application to make a better use of them.

Bridging Across...

My experiment took place on the December 1st 2024 and the whole Bridging Across process was completely straightforward in comparison with my DeFi attempts of the past. All I had to do was to visit https://app.across.to/bridge and connect my onchain wallet with the platform. My next move was to choose the correct bridge that I wanted to create. In my case, since I decided to move my OPtimism Network idle 0.03074589 ETH tokens worth on Dec 1st $114.16 to the Ethereum MainNet, I selected as the "Send" the max quantity of tokens that were available, FROM the Optimism TO Ethereum MainNet.

The transaction calculation provided me with 0.0276 ETH tokens on the Ethereum MainNet instead of my initial capital of 0.03074589 in an estimated 20 seconds period of time.

However, the transaction was executed in the mere 11+2=13 seconds!, eliminating the long waits for a cross-chain token bridge to be established when using the traditional DeFi Bridges and platforms.

Normally, I should have been completely satisfied with the execution of my experiment if I wasn't hit again so badly from the Gas Fees of the Ethereum MainNet. Although, the "Bridge Fee" for the execution of the movement of funds was on a logical rate of 0.00111 ETH or just $4, the Destination gas fees from my onchain wallet was again much more expensive and it cost me 0.00204 ETH or $7.3413! In total the Net fee was $11.34 or 0.00315 Eth. The reason for the high destination fees is that the user needs to deposit first its funds to the Ethereum MainNet address of the platform to execute the transaction and then receive the funds back and in order to do so he has to pay the nominal Gas Fees paid as usual for every transaction of the Ethereum MainNet.

Taking the OP Way Back

They say that there is no way back from hell and in my case, after a 2nd glance on the ACX platform, I soon regretted the transaction moving my funds from the OPtimism Network to the Ethereum MainNet. Instead of transferring my OPtimism Network ETH to the Ethereum MainNet, a more wise transaction would had been to transfer my Ethereum MainNet ETH funds to the Layer-2 Optimism Network for the only reason that the Across Platform incentivise any fund transfer from the Ethereum MainNet to Layer-2 solutions such as the Optimism Network with rewards! Precisely it provides up to 94% in OP rewards!

For example, in the case of transferring my 0.0250 ETH on the Ethereum MainNet I could get as much as 0.025 ETH on OPtimism Network PLUS 0.00477 OP as a reward! Interestingly, the fees would have been completely ZERO. First of all, whereas the Destination Gas Fee for depositing my onchain funds on the ACX platform were quite significant as it was mentioned before, on this case, they were exactly as ZERO. Yes exactly Zero Destination gas fees! And apart from that, although there was $0.01 i.e. 1 cent of Bridge fee, due to the OP rebate that fee was returned back making the Net Fee of the process completely ZERO!

The ETH-LP Staking Process

Surprises in my exploration didn't finish yet when I decide to explore further the ACX platform and its Staking capabilities. And although my initial plan was to stake my Ethereum funds on the Ethereum MainNet on a Centralised Exchange, I have decided to experiment further with the ACX platform by providing 50% of my Ethereum funds and approximately 0.01 ETh as a liquidity on the ACX platform!

Unfortunately, I still had to pay expensive Gas Fees to deposit my funds back on the Pool and precisely, I had to spend another 0.0349547 ETh costing $13.26 on December 9th 2024, which was the 1/3 of my investment!

The incentive of my decision was to earn a Pool share of 7.98% by staking on the ETH-LP Pool of 24,892.656 ETH and a supplementary profit of 4.81% on ACX rewards and I really hope that my decision won't backfire. Only time will tell!

Final Thoughts

Spanning the mighty Euphrates River, "The Bridges of Babylon", were set against the backdrop of the famous Hanging Gardens of Babylon, one of the 7 wonders of the Ancient Era, symbolizing the prosperity and wealth of the Babylonian society. They meant to connect glamorous royal palaces and bustling trading markets with the humble neighbourhoods of the Mesopotamian nation showcasing their advanced construction techniques and an aesthetic that combined functionality with glory.

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Personally, I am STILL not a huge fan of Decentralised Finance solutions especially on the Ethereum MainNet due to the high subsequent Gas Fees. However, my recent DeFi experiments on the Across Platform provided me enough evidence to admit that on the Babylon of the DeFi platforms and Bridges, the Across Protocol (ACX) stands out as a robust and reliable DeFi bridge on the Ethereum MainNet. As a result, it provides to the Babylonian crypto-users the capability to transfer their assets seamlessly taking advantage of its unique features such as uninterrupted interoperability powered by intents using the standardised ERC-7683 protocol, low transaction fees, brief execution time, better liquidity availability, anonymity of the transaction, exceptional rewards by taking advantage of the OPtimism and Arbitrum Reward Programs but also premium rates of DeFi staking on the in-house DeFi Pools.

I am STILL not a huge supporter of Rolling Stones either, however I believe that their song "Flip the Switch" from their album "Bridges of Babylon" fits perfectly to complete my participation on the #BridgeAcrosswithACX writing contest. i am sure all the rolling Stones supporters would agree with my selection.