February Cross-Chain Bridge Recap

In February, cross-chain bridges continued to play a pivotal role in enabling capital to move across blockchains. As we’ve discussed in our previous recaps, these capital movements can reveal important insights into developing trends in both Layer 1 (L1) and Layer 2 (L2) ecosystems. Often, the total value locked (TVL) in bridges is correlated with price movements in their underlying assets, but the extent of this correlation depends on the percentage of volatile assets to stablecoins locked in each bridge. In addition, the composition of assets in bridges is often similar to the composition of assets in DeFi protocols, which represent a common motivation for users to bridge their existing assets from one chain to another. 

For example, in our latest recap of the L1 landscape, we saw that the market cap for Canto increased by 2.2% in February, yet its TVL rose by 36.9%, far outpacing the hypothetical gains that would have been achieved through the price appreciation of the CANTO token alone. Taking a closer look at the Gravity Bridge, which primarily serves as the main bridge provider for the Canto ecosystem, reveals that a majority of the assets bridged to Canto in February consisted of stablecoins.