What is Stargate

Stargate Finance is a multi-chain cross-chain bridge protocol based on LayerZero, created by LayerZero Labs in March 2022. It primarily supports cross-chain transfers of stablecoins and its native token STG. Currently, Stargate supports cross-chain asset transfers among eight blockchains: Ethereum, BNB, Avalanche, Polygon, Optimism, Arbitrum, Fantom, and Metis.

LayerZero is a full-chain interoperability protocol built specifically for cross-chain information transfer. At the same time, it serves as a cross-chain communication infrastructure, enabling developers to build fully interoperable cross-chain applications on top of it, such as cross-chain DEXes or multi-chain yield aggregators.

Unified Liquidity Pool

Stargate adopts a 【liquidity swap】 approach for asset cross-chain transfers. Unlike most cross-chain bridges that set up independent liquidity pools for specific networks, Stargate uses a unified liquidity pool to support cross-chain asset transfers.

Stargate’s unified liquidity pool allows all chains to share the same liquidity for each token, meaning each chain can access liquidity on other chains. For example, if there is a USDT pool on Chain A, then USDT transaction requests initiated from Chain B, Chain C, and other chains can borrow liquidity from Chain A’s USDT pool. This design helps maximize capital efficiency during cross-chain transfers.

However, the unified liquidity pool may face transaction failure issues caused by insufficient liquidity depth. When multiple chains share a single pool, the number of users and parallel transactions increases, which can reduce the pool’s liquidity and cause some cross-chain transactions to fail.

Therefore, Stargate introduces a “resource balancing algorithm” to address this issue. Stargate manages the liquidity pools on each chain by dividing them into multiple segments based on different blockchains. For example, 100 USDT on Chain A might be divided into 50 USDT for Chain B and 50 USDT for Chain C. When a cross-chain request is received, the resource balancing algorithm reviews the liquidity in each segment and allocates user-deposited assets to segments with insufficient liquidity to prevent transaction failures caused by liquidity shortages.

Oracle + Relayer

In cross-chain communication, Stargate adopts LayerZero’s 【oracle + relayer】 communication mechanism for cross-chain information transfer.

Stargate’s relayer is a off-chain data storage service provided by LayerZero. Its main function is to read transaction proofs from the source chain and transmit them to the target chain.

Stargate’s oracle is provided by third-party service provider Chainlink, which can transmit block header information to the target chain and assist in verifying the validity of transaction proofs.

Cross-chain information transfer in Stargate requires cross-verification of block header information and transaction proofs. Only when the information provided by both the relayer and the oracle matches can the cross-chain transfer be successfully verified. This mechanism can reduce the likelihood of malicious attacks to some extent, because an attack can only occur if both the oracle and relayer are compromised and collude maliciously. **$STG **$ASTR $HMSTR