MRL vs. Bridge Liquidity Explainer

Moonbeam is integrated with a wide variety of bridges, including Wormhole, Axelar, LayerZero and more. These bridges can be used to route not just assets but also general messages used to call contracts on remote chains. There is no one canonical bridge for assets, rather, it is up to the community to decide which bridges are best for which assets and use cases. As it happens, assets routed through Wormhole gained a lot of traction on Moonbeam, such that you might find the deepest liquidity pools amongst bridged assets on DEXes in Wormhole sourced assets.

MRL leverages Wormhole in conjunction with XCM, and it’s a way to route assets to and from parachains that are connected to Moonbeam that wouldn’t otherwise have a direct connection with a bridge to transfer liquidity.

2-Step Bridge Process to Wormhole

Moonbeam Routed Liquidity is a two-step process that uses Wormhole to bridge the assets first to Moonbeam, and then Moonbeam directs the assets to a Polkadot parachain connected to Moonbeam via XCM. While it seems like several steps, this is really a seamless process to the end user. In reality, assets bridged through MRL really spend no time on Moonbeam at all - assets bridged to Moonbeam through MRL are instantly routed to their final destination. Of course, MRL is bidirectional so you can bridge assets both into and out of Polkadot parachains. Note that on the return trip, you’ll need to have some GLMR on the parachain to pay for the XCM execution.

One of the biggest benefits of MRL is that it enables parachains to more easily gain bridge access, enabling assets to flow to their parachain with ease. Rather than going through lengthy governance processes winning over the support of a bridge provider to complete a full integration with the associated development and testing, parachains can coordinate with Moonbeam to get their parachain integrated into MRL. MRL leverages Moonbeam’s existing Wormhole integration so the onboarding steps for the parachain are quick and easy.

Getting More out of Stablecoins

From the perspective of a bridge, this is a win-win too, because they benefit from increased use of their bridge without the development and integration work to onboard an entirely new chain. Extrapolating this out to the size of the entire Polkadot ecosystem, this is a big unlock because it means that every parachain does not need to be connected to a bridge like Wormhole directly. There are currently 51 active parachains on Polkadot, a large number of which are connected to Moonbeam via XCM, and thus are eligible to integrate MRL as a bridging solution.

As an example, bridging USDC from Ethereum to Moonbeam in Wormhole would be an example of typical bridging. Both Moonbeam and Ethereum are directly connected to the Wormhole protocol, making this a simple interaction. An example of MRL might involve moving USDC from Ethereum to Hydration, which routes the asset through Moonbeam and then immediately to Hydration. You can try this MRL example for yourself directly in the Moonbeam dApp.

To learn more about Moonbeam Routed Liquidity, check out our explainer video: Intro to Moonbeam Routed Liquidity or visit the Moonbeam Docs on MRL.