Stargate Finance: Unified Liquidity Pools for Seamless Interop on Gelato Raas

This article is part of the Gelato RaaS Interop Series. Read more:

• LayerZero on Gelato RaaS: Omnichain Interop
• Hyperlane Bridge: Rollup Connectivity via Modular Messaging
• Intent-Based Bridging for Seamless UX with Across on Gelato RaaS

• Unified Liquidity Pools: Stargate delivers core assets with instant guaranteed finality and unified liquidity.
• Transaction batching reduces costs: Stargate allows user funds to “take the bus" to share messaging costs
• AI-driven liquidity: The AI Planning Module dynamically redistributes credits across pathways based on volume patterns
• L2 expansion: Support for 50+ chains including Arbitrum, Optimism, Scroll and Ink
• Protocol-owned liquidity ensures sustainability: By generating fees and maintaining liquidity, Stargate reduces dependence on new incentives
• New chains can tap into unified pools: Gelato RaaS chains can access Stargate's unified pools
• Stargate Hydra extends support for USDC, USDT, and WETH to chains without native token support from day one, using a pre-native and compliant issuance standard.
• Bridged USDC Standard unlocks a unified stablecoin standard for new ecosystems
• Massive transaction capacity: Support for $100M+ single transactions with guaranteed execution
• Market dominance: Stargate frontend processes ~$6B monthly volume while protocol handles $2-3B directly
• Home of all OFTs: Serves as the primary interface for major LayerZero OFT assets including USDT0, WBTC, USDE, and PayPal USD

Since its launch in 2022, Stargate has facilitated over $60 billion in cross-chain transfers and maintained a consistently strong TVL above $500 million. With over 3.3 million lifetime users, Stargate has established itself as the foundational unified liquidity layer connecting the Omnichain.

Stargate processes approximately $2-3 billion in direct protocol volume monthly, while its frontend interface handles an additional $3+ billion serving as the primary gateway for major LayerZero Omnichain Fungible Tokens including USDT0, WBTC, USDE, and PayPal USD.

Unlike first-generation bridges that forced users through counterintuitive swaps, token transfers and exposed them to wrapped token risks, Stargate's architecture revolves around unified liquidity pools that connect over 50 chains through LayerZero's messaging protocol. Stargate delivers assets with instant guaranteed finality through these pools so users have a frictionless experience.

Dual-Layer Architecture

Stargate operates as two distinct LayerZero applications built on top of each other:

• Token Messaging Layer: This is where liquidity pools exist and actual token transfers occur
• Credit Messaging Layer: Stargate's own accounting system that ensures every pool knows the state of all other pools in real-time

Every transaction carries two messages: a token message (“Release X tokens to user Y") and a credit message ("Update accounting state - Base now has X less credits").

If you can submit a transaction on the source chain, it will always be executed on the destination chain. This is how Stargate is able to claim (and provide) guaranteed finality. The credit verification happens before transaction submission, thus eliminating race conditions that plagued earlier bridge designs.

The source chain actually has more information about destination chain liquidity than the destination chain has about the source. If a transaction can be quoted and submitted on the source chain, the destination chain is guaranteed to have the liquidity to fulfill it.

With traditional bridges, each chain pair requires its own dedicated liquidity pool. Stargate instead uses a unified liquidity model where a single pool per supported asset (like USDC, USDT, or ETH) exists on each chain in the network. These pools are managed through an off-chain entity that tracks inflows and outflows across chains and dynamically manages credits to adjust their distribution across pathways based on volume patterns and user behavior.

Example of the System in Action

Every pool on Stargate knows the state of every other pool on Stargate.

Suppose Ethereum has $1M USDC connected to Arbitrum and Base. The system could initially allocate 500K credits to Arbitrum and 500K credits to Base. This means users can bridge up to $500K from Arbitrum to Ethereum and up to $500K from Base to Ethereum, with the total credits issued equaling $1M to match the Ethereum pool balance.

If a user on Base wants to bridge $700K to Ethereum, but Base only has 500K credits available, the system initiates a credit transfer where Arbitrum sends a cross-chain message to Base to transfer 200K credits.

After this rebalancing, Arbitrum now has 300K credits allowing bridges up to $300K to Ethereum, while Base now has 700K credits allowing bridges up to $700K to Ethereum.

Importantly, the total credits still equal $1M because no new credits were created. This was purely a 1:1 swap between chains. It’s important to note that this credit transfer process is permissioned to prevent anyone from arbitrarily moving credits between chains. As long as chains are trading credits one-to-one, the system maintains its integrity.

Ethereum doesn't need updating because its pool still contains exactly $1M USDC, and the total outstanding credits (300K + 700K = 1M) still match the pool balance. Ethereum only cares that the sum of all credits never exceeds its actual liquidity, and since the credit transfer was a balanced swap, this invariant is maintained.

In theory, Arbitrum could give all 500K of its credits to Base, resulting in Arbitrum having zero credits and Base having the full $1M limit, as long as the total never exceeds Ethereum's actual pool balance. This innovation prevents race conditions because if two users simultaneously tried to bridge their maximum amounts (300K from Arbitrum plus 700K from Base totaling 1M), Ethereum has exactly enough liquidity to fulfill both transactions, guaranteed. The accounting verification happens on the source chain before transaction submission, which is what enables Stargate's guaranteed finality.

With traditional bridging, each new chain added would require N new pools (where N is the number of existing chains). Stargate's Unified Pool maintains a single pool on each chain, with the protocol's smart contracts controlling the ledger of credits and assets for all tokens on each chain, and each pool connecting to all other pools through the Credit Allocation System. When a user transfers 1,000 USDC from Arbitrum to Optimism:

• The 1,000 USDC is deposited into Stargate's Arbitrum USDC pool, which is part of the global unified USDC pool system
• The Arbitrum pool's credits for Optimism are reduced by 1,000
• The system sends a message to Optimism via LayerZero
• 1,000 USDC is released from the Optimism USDC pool to the recipient

The AIPM serves as an offchain coordinator that optimizes credit distribution across pathways, fee structures for different routes, and rebate incentives to balance liquidity. For example, if a new yield farming opportunity on Arbitrum causes a surge in transfers from Ethereum to Arbitrum, the AIPM would notice this imbalance and could:

• Reallocate credits from less active pathways to the Ethereum → Arbitrum route
• Temporarily increase fees on the high-demand path to generate additional revenue
• Implement rebates for transfers from Arbitrum back to Ethereum to encourage rebalancing

To ensure security, it functions within strict limitations—it can only modify the credit system and cannot access or manipulate user funds directly.

Stargate transactors have flexibility to choose between cost savings and immediate execution based on their specific needs.

Bus Mode: Multiple users share messaging costs by grouping their transfers into a single batch. This economy option reduces costs, with the tradeoff being slightly longer wait times until the bus "fills up" or reaches its maximum wait time.

Taxi Mode: For users prioritizing speed over cost, the traditional one-to-one transaction model remains available. The Bus Mode is particularly efficient for popular routes, where transaction fees can be reduced by as much as 95% compared to traditional single-transaction bridges. This innovation has positioned Stargate as the cost leader among major cross-chain bridges.

Even with the batching mechanism, Stargate maintains competitive speeds with sub-10 second transactions regularly achieved, and sub-7 second execution common on popular routes. This performance continues to improve as LayerZero and individual chain finality mechanisms advance.

Becoming a Hydra chain means joining Stargate's Liquidity-as-a-Service ecosystem. Hydra is able to extend token liquidity (for USDC, USDT, or ETH) to chains that don't have native access to those assets through a lock-and-mint mechanism.

Hydra provides pre-native fully compliant stablecoins that can be directly upgraded with no migration required. This means that when a chain eventually receives native assets (like USDC or USDT), the transition from Hydra-wrapped assets to native assets can happen seamlessly.

Stargate has implemented Circle's Bridged USDC Standard across all Hydra deployments, creating a standardized path for bridged USDC to potentially upgrade to native USDC in the future. This integration provides a pathway for interoperability and compliance for stablecoin implementations on new chains. The USDC contracts deployed through Hydra use the exact same ERC20 specification that Circle deploys, including identical minter, burner, and blacklist roles.

When users bridge from a source chain to a Hydra chain, their assets are locked in Stargate's pools on the source chain, and equivalent Hydra-wrapped tokens are minted on the destination chain. These Hydra assets maintain a 1:1 backing ratio with the locked tokens. This ensures they can be redeemed at any time through any Stargate-supported chain. The OFT standard also allows these Hydra assets to be horizontally composed across all current and future Hydra chains, which reduces fragmentation compared to traditional wrapped assets.

Hydra supports unlimited inbound liquidity transfers, which unlocks massive capital movement without facing traditional bridge constraints. This aims to ensure users can transfer assets in and out without friction.

The Hydra Capital Accumulation Effect

When users bridge to Hydra chains, Stargate retains the underlying collateral in its pools while minting tokens on the destination. This creates a powerful flywheel, as all Hydra deposits increase Stargate's total liquidity permanently (until users bridge out). This accumulated capital can be used to facilitate transfers between non-Hydra chains. Protocol fees ensure Hydra chains are always over-collateralized.

Beyond its protocol functionality, Stargate serves as the primary frontend interface for the broader LayerZero ecosystem. While Stargate's direct protocol handles $2-3 billion in monthly volume, its frontend processes an additional $3+ billion by serving as the gateway for major OFTs.

Major OFT assets accessible through Stargate's interface include:

• USDT0: Tether's omnichain expansion token
• WBTC: Bitcoin representation across multiple chains
• USDE and other Ethena assets: Synthetic dollar and related products
• PayPal USD: Institutional stablecoin with LayerZero integration

OFT volume contributes to LayerZero's dominance in bridge volume rankings, while Stargate benefits from serving as the trusted interface for these major assets. The relationship demonstrates how Stargate functions as both a sophisticated liquidity protocol and a "Stripe for coins" that enables asset issuers to reach multiple chains from day one.

While tokens are locked in Stargate's pools, they become Protocol Locked Liquidity that can be used as credits within Stargate's internal accounting. These locked assets contribute to the protocol's overall liquidity depth without requiring additional liquidity providers. PLL reduces the need for incentives since each bridge transaction naturally increases available liquidity.

Protocol Locked Liquidity allows the protocol to improve at capital efficiency and the ability to support larger transfers with minimal slippage, earning historical incentive rates of 4-8% APR on ETH and stablecoins.

Security and Trust Considerations

Stargate relies on the LayerZero messaging protocol, with its Decentralized Verifier Networks (DVNs) and Executors providing the infrastructure for cross-chain communication. The security model positions Stargate somewhere between fully trustless bridges and centralized solutions. Users must place some trust in both the smart contract implementation and the governance structure of the Stargate DAO. The AI Planning Module (AIPM) adds another trusted component – while it cannot directly access user funds, it has permission to modify the credit system that powers cross-chain transfers, and is initially operated by the Stargate Foundation.

Before any transaction can be processed, Stargate ensures there are sufficient credits allocated on the destination chain for the specific source chain and asset. When a user initiates a transfer, the transaction is immediately confirmed on the source chain only after verifying these credits exist. The system immediately deducts credits on the destination chain and adjusts the accounting accordingly. Since credits represent a claim on actual assets in the destination pool, and these credits were verified before the source transaction was confirmed, the delivery can be guaranteed.

This architecture is why Stargate can confidently promise that if your transaction confirms on the source chain, you will receive your assets on the destination chain. Stargate's unified liquidity model enables deep pools that minimize slippage even for large transfers. While traditional bridges often experience significant price impact on large transfers, Stargate's AI-powered credit allocation system adjusts to demand patterns to maintain competitive rates for transfers of all sizes.

By integrating with Stargate, Gelato RaaS chains can offer users a consistent, intuitive cross-chain experience.

Day-One Liquidity and Connectivity

New chains can access Stargate's unified pools through Hydra, eliminating the cold start period typically required for new ecosystems. This allows users to bridge assets from any supported chain, and does not require that the chain provide native support for the token.

Self-Sustaining Liquidity Model

Every asset bridged through Hydra adds to Protocol Locked Liquidity, creating a flywheel effect where bridging activity strengthens the ecosystem. This reduces the need for emissions and incentives.

Flexible Asset Strategies

For chains with long-term plans to obtain native stablecoins, Hydra offers a powerful growth solution. The compliance with Circle's Bridged USDC Standard can also help chains demonstrate adoption metrics that support the case for native asset deployment.

An example of Stargate's ecosystem bootstrapping capabilities can be seen in the Berachain deployment through Boyco. By serving as the canonical asset issuer for USDC and WETH on Berachain, Stargate's Hydra solution enabled efficient pre-deposit vaults and asset migration. Boyco, a joint effort between Berachain, Royco, Enso, LayerZero, and Stargate, served as a liquidity acquisition marketplace specifically designed to bootstrap Berachain's application layer from block one.

The Cross-Chain Deposit Module (CCDM) at the center of Boyco used Stargate to handle asset movement with guaranteed finality. All tokens on Boyco were LayerZero Omnichain Fungible Tokens (OFTs), ensuring secure message transfer between chains with no slippage. Over $270M in USDC and 93,000 WETH were deposited into Boyco and bridged into Berachain via Stargate Hydra, which demonstrated the solution's ability to facilitate massive capital movement.

With guaranteed finality and rapid settlement, Stargate's Hydra enabled assets to arrive on Berachain with minimal delay, providing day-one liquidity that was crucial for the ecosystem's successful launch.

Stargate launched in 2022, currently maintains a TVL over $500 M, and has established itself as a cornerstone of cross-chain infrastructure. Looking forward, Stargate's focus on transaction batching and expanded chain support leveraging OFTs positions it to maintain its competitive edge. The protocol's emphasis on unified pools and guaranteed finality addresses the security concerns that have plagued many first-generation bridges.

Transaction Volume

Stargate regularly processes some of the largest cross-chain transactions in DeFi, with multiple $100M+ single transactions during major campaigns, and consistent top-3 ranking in monthly bridge volume on DeFi Llama.

Comparison with Intent-Based Bridges

Stargate and intent-based bridges like Across represent two fundamentally different approaches to cross-chain transfers. Stargate uses on-chain liquidity and operates as a liquidity transport protocol leveraging LayerZero for messaging. In contrast, Across users rely on solvers to facilitate their stated goal by the solvers fronting their own liquidity on the destination chain. Stargate employs a burn-and-mint mechanism through the OFT standard and inherits security and decentralization from LayerZero.

Unlike intent-based bridges where solvers must lock capital waiting for settlement, Stargate's liquidity is immediately reusable. As soon as a source transaction is submitted, that capital becomes available to fulfill another destination transaction. This enables Stargate to facilitate significantly more volume with less total liquidity and support massive single transactions ($100M+) that would require individual solvers to hold equivalent amounts.

Gelato has integrated LayerZero technology (which powers Stargate) into its RaaS offerings, which means that Gelato chains can access Stargate's unified liquidity pools.

For Gelato RaaS deployments, Stargate can provide access to cross-chain liquidity with a seamless user experience, and the Hydra BaaS option helps reduce the barriers to entry for new blockchain ecosystems.

Ready to deploy your own chain with built-in Stargate support? Visit raas.gelato.network today to explore your options and join the growing ecosystem of interoperable blockchains.