Hey folks, with all the different exciting Layer2’s popping up, today we’re going to do a bit of a deep dive analysis of different LayerZero bridges — namely Stargate Finance — and the considerations one should take whether you’re choosing to add assets to a liquidity pool or transfer them cross chain.
If you’re unfamiliar with LayerZero, I’ve written about them a couple of times , but in a nutshell, LayerZero facilitates cross-chain transfers through different endpoints which are located on each chain involved in the token transfer:
The sending chain (in this case Chain A) will communicate directly with the receiving chain (Chain B) to ensure that there is enough liquidity on the opposite side to complete the transfer. If there is not enough liquidity on the receiving side, the transfer will not be performed. In other words, using LayerZero tech, both Stargate and Altitude need liquidity on both sides of the transaction in order for the transaction to be completed.
And apart from liquidity, like most other protocols with underlying LayerZero tech, both Altitude and Stargate utilize LayerZero’s benefits which include: high security (including Guaranteed Finality, or in other words a guarantee that the transaction will go through if there’s enough liquidity on the other side), extremely fast transactions, and no impermanent loss when utilizing their single-sided liquidity pools.
OK enough about how they’re similar, how do they differ?
Liquidity vs. APR
Perhaps the biggest (no pun intended) difference between Altitude and Stargate is their difference in size. According to DefiLlama, Altitude has a TVL of barely $200k and Stargate has a TVL of more than $350 million:
Having greater liquidity allows users to transact greater volumes across different chains, because as I mentioned before, if there’s not enough liquidity on the other side then transactions won’t go through. But conversely for liquidity pool farmers, it means that on protocols like Stargate there’s most likely lower rewards. Let’s take a look at $USDC:
At time of writing, the highest APY you could earn by staking $USDC on Stargate is currently 6.88% APY on Base:
By comparison, the largest APR (not APY) available for $USDC on Altitude is staking $USDC on Mantle, sitting currently at 231.98%:
In fact, the lowest earning $USDC pool (with also the highest TVL) earns 21.38% APR on Avalanche, which is a rate more than 3x’s what you would earn on the Base pool on Stargate.
Isolated Chain Paths
If you looked closely at both of the screenshots from Altitude and Stargate, you would have also noticed that for Stargate there are single-sided liquidity pools for each designated network. Altitude on the other hand has specific LPs for not only designated networks, but for designated specific paths on designated networks well. Take $USDC on Arbitrum for instance — 6 distinct pools for 6 distinct paths, each with it’s own APR:
By siloing each individual LP, Altitude adds an additional level of safety as risk is mitigated and contained to one LP and not all.
Protocol Fees
Both Altitude and Stargate have rebalancing fees that incentivize liquidity to move either in one way or the other, yet the protocol fees (which are taken out of each cross chain transaction) is what really differs. Here’s a break down of how protocol fees are divvied up on each protocol…
According to their , on Stargate each transfer incurs a 0.06% (6bps) fee divided up accordingly
- Protocol Treasury:
- veSTG Holders:
- Liquidity Providers:
On Altitude, a 0.05% (5bps) fee is incurred — 100% of which goes to $ALTD stakers. Decentralization working at its finest, this means that all of the profits from the protocol don’t go to VCs or to the protocol team, and instead they all go back to the protocol stakers themselves.
And to clarify, 0.01% of real yield also goes back to liquidity providers on Stargate, but this probably accounts for the lower APRs. Alternatively on Altitude, liquidity providers earn returns in $ALTD.
Tokenomics
Speaking of $ALTD, the significant differences in how fees are distributed are also correlated to each how each $ALTD and $STG were distributed at launch. According to tokeninsight, $STG has a 1 billion max token supply with a little over 30% given to the community:
$ALTD on the other hand has a max token supply of only 100 million, 62.5% of which were allocated to the community at launch:
A final piece on tokenomics — there’s still a significant amount of dilution left in $STG with roughly 7% of circulating supply (14.36 million $STG) is being emitted every month — 7.18 million $STG being dropped to investors and 7.18 million $STG being dropped for the team:
Additionally as you can see from the graphic above, this emission is also meaning that those 14.36 million tokens will be emitted every single month until the spring of 2025. Altitude also has a linear unlock schedule for their 25% total allocation over an 18-month period, albeit at a much lower rate, equating roughly to 1.38 million $ALTD emitted every month.
Compared to liquidity on Stargate, Altitude has only a tiny fraction of the size. However with better tokenomics, more fees going back to the community, and higher APRs, I imagine that Altitude will begin to see a lot more TVL once this bull market really gets into gear. Stargate with more than a 1000x’s the value in TVL can allow you to move more 100’s of thousands of dollars worth of assets at a time, but I can’t imagine that the average retailer is going to be moving that kind of volume.
And as always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. If you want to get access to all my draft links or get an idea about what’s next on my docket before I publish, find me on Friend.tech, where I share all that information in my chatroom. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!
