The Protocol: Meme Coins (and Pepe’s Best Friend) Swarm Coinbase Layer 2 Chain

It’s not something we have historically written a lot about – bridging yields. But a new report from the crypto investment firm Exponential.fi included a chart on these yields, and it caught our eye because they’ve been rising fast recently, pushing above 15%. Co-founder Mehdi Lebbar attributes the rising yields to higher demand from users, in part a reflection of the trend toward greater interoperability between blockchains, along with the proliferation of layer-2 and layer-3 networks. “As the DeFi ecosystem extends across networks, third-party bridging protocols like Across and Synapse are reaping higher fees,” the report reads. These yields are paid out to liquidity providers who supply the bridges with cryptocurrencies, according to Lebbar: “The bridge allows transfers of bitcoins across chains, and people pay commissions on that. Commissions are reversed by the bridge/protocol to liquidity providers.” Asked if the higher yields might reflect increased risk, Lebbar said: “The increased yield would reflect ‘protocol risk’ if we were in a mature, highly efficient market, but that’s not the case for bridging.”

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