Axelar Network is a proof-of-stake blockchain that serves as an overlay network for other blockchains, allowing secure cross-chain communication. While many bridges aim to achieve similar goals, Axelar has a broader vision for web3 interoperability beyond just bridges.

According to the protocol's creators, developers can use Axelar to create decentralized applications that enable users to interact with any asset or application on any chain with just one click. Cross-chain bridges are expected to be a significant player in 2023 as they contribute to increased interoperability between chains. Axelar is one of the platforms at the forefront of the cross-chain agenda, connecting approximately 30 chains, including Fantom,Avalanche,Ethereum, L2s and Osmosis, to provide secure and decentralized cross-chain communication.

The Axelar team defines the network as a blockchain that connects other blockchains, enabling universal web3 interoperability. The network is secured through proof-of-stake consensus, and messages are routed and translated through permissionless protocols. An analogy for Axelar is that it is like Stripe for web3.

Image Credit: Axelar.Network

To kick off our analysis, we first take a closer look at the general statistics of the two popular bridges on the Axelar network: Squid and Satellite. We investigate the weekly usage rate of these bridges, the number of users utilizing them, and their growth rates over three periods, including the beginning of 2023. Additionally, we analyze the total amount of cryptocurrencies moved through these bridges, the most commonly submitted tokens, and the most popular origin and destination chains. Keep reading to find out more.

Squid

Squid is a bridge that facilitates cross-chain transfers between the Ethereum and Axelar networks. It enables users to transfer ERC-20 tokens from Ethereum to Axelar, and vice versa. Additionally, Squid allows for the creation of wrapped versions of ERC-20 tokens on Axelar, which can then be used on other connected chains in the Axelar ecosystem. Squid aims to provide seamless cross-chain functionality for Ethereum-based applications and users, while also leveraging the benefits of the Axelar network, such as lower fees and faster transaction times. Squid routes all its transactions through axlUSDC/USDC stable swaps pools, and USDC/native token pools. This leveraging minimizes the number of liquidity pools which need to be capitalized to achieve efficient liquidity across every token.

In summary, Squid is a protocol that enables cross-chain liquidity routing and swaps through a single Javascript software development kit (SDK)2.

Satellite

Satellite is another bridge on the Axelar network that provides cross-chain interoperability between different chains, including the Ethereum and Axelar networks. It enables users to transfer assets between connected chains, including Bitcoin and other popular cryptocurrencies. Satellite's unique feature is its ability to support both permissioned and permissionless chains, which makes it a more versatile bridge for interoperability purposes. Satellite aims to provide a secure and efficient cross-chain solution for users and developers, while also fostering greater adoption and innovation in the broader blockchain ecosystem.

Squid vs. Satellite: Comparing Axelar's Cross-Chain Bridges

The main similarity between Squid and Satellite is that they both function as bridges for cross-chain interoperability within the Axelar network. They both allow users to transfer assets between different connected chains, and they both aim to provide a more seamless and efficient cross-chain solution for users and developers.

The main difference between Squid and Satellite lies in the specific chains they support and the functionality they offer. Squid is primarily focused on bridging the Ethereum and Axelar networks, and it enables users to transfer ERC-20 tokens between these networks. Additionally, Squid allows for the creation of wrapped versions of ERC-20 tokens on Axelar for use on other connected chains.

Satellite, on the other hand, supports a broader range of chains, including both permissioned and permissionless chains. It also offers a more diverse set of functionality, such as the ability to transfer Bitcoin and other popular cryptocurrencies between different chains. Overall, Satellite is designed to provide a more versatile and flexible cross-chain solution for users and developers.

In summary, while both Squid and Satellite serve the common goal of facilitating cross-chain interoperability within the Axelar network, their specific focus, supported chains, and functionality differ.

• The FlipSideCrypto website's Axelar dataset was used for this analysis of two tables: axelar.core.ez_satellite and axelar.core.ez_squid.
• All the analysis is based on the data of these two tables.
• The price table of the Ethereum data set (ethereum.core.fact_hourly_token_prices) was used to calculate the volume of input and output of bridges based on USD.
• To be able to use Ethereum price table, some changes were made in the names of Axelar tokens to obtain the normalized volume(USD) of bridge transactions such as converting any form of USDC token such as axlUSDC to USDC.

You can access the different sections of this analysis by clicking on the section names located on the top part of the dashboard just below the dashborad description section.

To begin with, let's take a closer look at how Squid has been utilized as a bridge, including the total volume of token transfers, daily usage trends, and the number of users who have utilized this newly launched bridge.

Squid Key Takeaways

By analyzing the above charts, we can deduce the following findings regarding Squid:

• The number of Squid users has significantly increased from around 400 in late January to roughly 4600 in late March 2023.
• The majority of Squid users (over 80%) have bridged an amount of money less than $100, while the second most frequent range is for users with a volume of more than $1000. In Q1 of 2023, approximately $6.6 million has been bridged using Squid.
• More than 80% of users have used Squid only once, while returning users make up less than 20% of the total user base, and the majority of this group have used Squid twice.
• The volume of money transferred via Squid has experienced a significant increase since the end of January, from under $50,000 to over $1.5 million in mid-March.
• Since mid-March, the number of users bridging to non-EVM destinations has notably surpassed the number of users bridging to EVMs, and this trend has exhibited a multiple growth rate on a weekly basis since then.
• All graphs display Squid's rapid growth in terms of bridge size, user count, and number of bridges.

Let's continue our analysis and take a closer look at how Satellite has been utilized as a bridge, including the total volume of token transfers, daily usage trends, and the number of users who have utilized this newly launched bridge.

Satellite Takeaways

Upon examining the above charts, we can draw the following conclusions about Satellite:

• The largest group of users are those with a bridge volume exceeding 1000 dollars, followed by users with a volume of less than 100 dollars. However, a considerable portion of users fall between the two, with bridge volumes ranging from 100 to 1000 dollars.
• The total value of tokens transferred through Satellite amounts to approximately 220 million dollars.
• As with Squid, the majority of users have only used the bridge once during Q1 2023.
• User activity levels have remained relatively consistent over the three-month period, with no significant changes in the number of users or volume of bridges to EVM and non-EVM blockchains.
• Ethereum and Osmosis received the largest share of token transfers, followed by Kava, which has seen a noticeable increase in token transfer activity in recent days. Stablecoin tokens make up the majority of tokens transferred through this bridge.