Bridge Users (Hop Protocol)

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Hop is an App allowing You to transfer 5 important tokens (ETH, USDC, USDT, DAI and MATIC) between Ethereum and 4 Layer 2 rollups (Polygon, Gnosis, Arbitrum and Optimism) .
But, What is a rollup and why is it important? I hear you say. Well, a rollup is a Layer 2 solution and provides an execution environment that can process transactions similar to Layer 1, but at the fraction of the cost (in case of Ethereum). Rollups increase the Ethereum throughput by moving computation and data-storage off-chain, while keeping some data per transaction on-chain. Rollups are connected to their Layer 1 with a Native Bridge built into the implementation of the rollup. Regardless of which bridging consensus model a rollup uses, moving tokens from a rollup to Layer1 is slow (the speed for such a transaction is known as the rollups ‘exit time’).

The Hop protocol allows you to lock up Layer1 tokens (eg. ETH) and mint 'h' tokens ('h'ETH) on Layer 2 of chain A. 'h' tokens can be swapped in a pool for the 'canonical' Layer 2 tokens of chain A OR they can be burnt and re-minted on another Layer 2 rollup (chain B). On chain B the 'h' tokens can be burnt to receive Layer 1 tokens, or swapped for 'canonical' Layer 2 tokens on chain B.
Note that Layer 1 (Ethereum) is common for all the rollups. Rollups operate as independent chains from each other and the Layer 1 (Ethereum).
This is all under the hood of the Hop app, which allows users to bridge between the Ethereum and the 4 rollups with single call to the bridge contract.

Today, I'm examining the Hop protocol using Flipside's tables. First, we are interested in the usage of the network, how many unique users used Hop to bridge to Layer 2s using Hop? Flipside currently has data for Ethereum and Polygon so we can only answer a narrower question: How many unique users have transferred from ETH (Layer 1) to Layer 2s on other chains and how many users transferred from Polygon to other Layer 2s?

Here is the general unique user count for the two chains since Hop went live (July 2021).

Note: WBTC transfers were apparently tested and the Hop Bridge has WBTC transfer functionality (9 transactions from ETH with several months apart, for a few bucks each), but it does not appear in the app at the time of writing.

Interesting. Around twice as many unique users bridging through Polygon. ETHs expensive transaction fees are hampering widespread adoption and this shows even in Hop Bridge traffic.

Let's analyse the traffic for the two chains overall and in the past two months:

Key Findings:

The ETH bridge transfers ~6x the volume of the Polygon bridge, active user and usage numbers are comparable; the difference is due to much larger bridged transaction sizes from ETH
The Polygon bridge saw much higher (3-4x of ETH) user numbers in the initial 6 months of the protocol; recently the ETH bridge has a higher proportion of new users (60%) vs ~ 40% of the Polygon bridge
On average mostly WETH (67%) and USDC (25%) is bridged from ETH. Polygon is less ETH heavy: WETH(46%), USDC(35%), with the rest about equally split between MATIC, DAI and USDC (~6% each)
Major events resulted in peaks volume peaks on both chain's bridges
- Russia-Ukraine war Feb 24
- Luna crash May 8-12
- Optimism governance token airdrop Jun 1

Calculating statistics separately for the whole duration and the last two months shows that the outsized difference in unique users is largely an effect of previous trends: in the last two months the number of users were nearly the same (around 20k users).
This is reflected in the overall tx count as well: 102k vs 241k overall for ETH & Polygon, of which 29k vs 32.5k were sent in the last 2 months.
The overall bridged volume from ETH was ~1B USD, around 3x the overall volume from the Polygon Hop bridge. This difference grew even larger recently; in the last 2 months 189 M USD was bridged through the ETH Hop bridge and only 38 M USD through Polygon, around a 5x difference.
The average transaction on ETH overall is 9.7k USD, about 8x of Polygon (1.3k USD). The ETH bridge transaction size shrank to 6.5k USD by the last 2 months, less than 6x of Polygon, which shrank less (1166 USD)
The average tx count per user was 1.71 overall for ETH and 1.45 in the past 2 months, and 1.92 overall for Polygon and 1.52 in the past 2 months. While on average users initiated a slightly higher number of transactions initially, the average usage/user converged to a similar value.
The mean tx size per user figure confirms one's intuition about these two chains. This average is 0.16 USD for ETH, overall, which doubled to 0.33 for the past 2 months, while it's 0.01 USD for Polygon overall and was 0.05 over the past 2 months.

ETH is a chain of fewer and increasingly larger bridge transfers on average, while Polygon supports cross-chains transfers of a much smaller (1/6th) size. This is characteristic of the chains, after ~1 year in operation, in the last 2 months user and usage numbers were similar.

Now let's colour the picture by taking a look at user and usage growth over time on these chains compared with active users.

Polygon experienced a much higher number (3-4x of ETH) of both daily users and daily active users until January 20 2022. This period accounts for difference in total unique user numbers we saw in the overall stats. After January 20 the user numbers are much more comparable, though Polygon's are generally still higher (< 2x of ETH), with the exception of May 30-31 and May 13-24 to a lesser degree.

The percentage of new users among daily users is similar and correlated until January for bridge users on the two chains. Peak interest among new users occurred between September 9 and October 29 (over 80% of daily users were new on both chains). This decreased ~60% for ETH and 30-50% for Polygon by the end of January, indicating that the Hop bridge on Polygon is somewhat further developed with it's user adoption.

Usage of the bridges for L2 transfers, or the daily transaction count per active user is generally stable and similar for ETH and Polygon. ETH Hop bridge users fluctuate around 1.12 transactions per user per day, whereas Polygon users exceeded this by ~0-20% between November 15 and May 1.

Volume composition

We'll examine composition of the value of the bridged assets over time.
Here is the weekly average composition of the transferred assets (no peaks, but it will be easier to follow the trend):

Overview

Bridged volume is dominated by USDC and (since its introduction to the bridgeable assets in November) WETH (ETH is transferred in its ERC20 token form) on both chains. The composition of the transferred remained approximately stable between November and May for ETH and Polygon:

Dec 29-31
- Polygon Introduces Critical Update
Jan 15
- Dogecoin Payments Go Live On Tesla
- Tether Froze 160M USDT on ETH
Feb 8-9
- Sequoia Leads Polygon’s $450M Funding Round

These proportions of bridged assets to L2s hold, but on the Polygon bridge WETH's proportion is increasing throughout the period slightly and even more so in the most recent week (80% high so far on the week starting at June 20).
The recent trend is opposite for the Hop bridge on ETH: since May the proportion of bridged WETH is decreasing from a 70% high to a 40% recent weekly low (week from June 13).

Volume Peaks

Next, we will look at the daily volume of assets bridged to L2s on Hop for each chain and try to identify days of peak activity and find out what might have caused them.

Some of the events produced peaks in the transactions originating from both chains:

General fear events around Jan 20 as BTC breaks down below 40k
The breakout of the Russia-Ukraine war
Several bullish events related Ethereum, Polygon and DeFi around Mar 17
The Luna-UST de-peg/crash crashes the market by 20% in a day
Optimism governance token goes live -> Larger traffic through the bridges is to be expected

A few hours into 6/23 the ETH bridge started experiencing an extreme surge in traffic.

flipside

flipside

Volume composition

Overview

Volume Peaks