Why Bridge Token Value Accrual Is a Myth

Bridge tokens are governance-only. Protocols like Across and Stargate issue tokens that control treasury funds and parameter votes, but they do not require token staking or burning for core operations. This creates a fundamental disconnect between protocol usage and token demand.

Liquidity is the real product. The value of a bridge is its liquidity depth and speed, not its middleware. Liquidity providers earn fees in the bridged asset (e.g., USDC), not the bridge's native token. The protocol's fee capture is often a tiny tax on this flow, creating minimal buy pressure.

Fees trend to marginal cost. Bridge operations are computationally cheap, and competition from LayerZero, Circle's CCTP, and canonical bridges drives fees toward zero. Without a protocol-enforced fee switch (like Uniswap's), value leaks to LPs and integrators.

Evidence: The TVL-to-Market-Cap ratio for major bridge tokens is consistently poor. Stargate's STG has a fully diluted valuation often 5-10x its treasury-controlled liquidity, indicating the market prices speculation, not fee revenue.

Bridges are message routers. Their primary function is data attestation, a service that protocols like LayerZero and Wormhole provide. This core utility is a low-margin commodity, not a sustainable value accrual mechanism.

Real yield leaks to LPs. Bridges like Across and Stargate rely on external liquidity pools. The majority of user fees pay these third-party LPs for capital, not the bridge protocol for its software.

Token utility is artificial. Protocol tokens often gatekeep governance or fee discounts, creating circular demand. This is a tax on utility, not a capture of the underlying economic activity generated by the bridge.

Evidence: Across Protocol's fee distribution shows over 85% of relay fees go to liquidity providers. The protocol's treasury captures a single-digit percentage, demonstrating the severe value leakage.

Governance is a commodity. The core function of a bridge—securely moving assets—is a solved problem. Protocols like Across, Stargate, and Wormhole compete on security and cost, not governance features. Users choose the cheapest, fastest route, not the token they hold.

Fee capture is impossible. Bridges cannot enforce a toll on a public good. If LayerZero charges a fee, users route through Socket or LI.FI. This is identical to the MEV searcher dynamic—value flows to the most efficient executor, not the protocol.

Token utility is circular. The only use for a bridge token is voting on treasury emissions, which subsidize usage to inflate TVL. This creates a ponzinomic feedback loop that collapses when incentives stop, as seen with early DeFi 1.0 yield farms.

Evidence: Look at Across (ACX). Despite dominating volume with its optimistic model, its token trades at a fraction of its fully diluted valuation. The market prices execution, not governance.

Bridge tokens are governance coupons. Protocols like Across and Stargate route fees directly to liquidity providers and relayers, leaving the native token with only protocol parameter votes. This creates a fee/value disconnect where cash flow bypasses the token holder.

Speculation drives price, not utility. The primary use case for a token like STG or AXL is governance, a low-frequency activity. Price action correlates with speculative narratives and cross-chain volume hype, not direct revenue share.

Validators and LPs are the real beneficiaries. In canonical bridges like Polygon PoS or optimistic rollup bridges, the sequencer/validator set captures MEV and transaction fees. For liquidity bridges, LP yields from fees and incentives are the tangible accrual.

Evidence: Analyze any major bridge's tokenomics. LayerZero's ZRO airdrop speculation dominated its narrative, not a sustainable fee model. Wormhole's W faces the same structural challenge of separating governance from cash flows.