Chainflip’s North Star Metric - An Update
Later last year I wrote a post on how we get to $100m volume days and what that means for Chainflip. It’s now 2025 and it’s time to see how we’re progressing on that front.
The markets we deal in do tens of billions in volume per day. There are many bridges and dexes that comfortably do hundreds of millions in volume per day. We want to be playing in that field, and incrementally we are priming ourselves for such a rise to those levels. Every upgrade, fix, feature, new integration, new LP, and user is a step in that direction. It can and often does quickly snowball, but we need to keep up this sustained and incremental approach to capitalise on any surge in activity.
I aim to explain our recent successes, our tasks over the next 3 months, and the incredibly positive implications that this work is likely to bring. I’m not interested in standing still, and we haven't been.
Recent History
It’s very easy to get distracted by the day to day movements in liquidity, usage, and token price in the Chainflip world and lose sight of the main driver of all activities in the protocol. Everything hinges on our ability to attract swap volume. It’s the only real indicator that we have that shows our effectiveness and attractiveness as a protocol.
Delays with external teams and some setbacks with liquidity provision have triggered intermittent growth in recent months, but we moved closer to our goals nonetheless. That’s not to say there hasn’t been strong growth — our expectations were simply set higher. Here are some stats.
Weekly unique visits to our swapping app have been picking up, specifically with the introduction of Solana, and the Solana TRUMP & MELANIA meme craze. This was an unexpected stress test during the craziness, which all protocols building on Solana faced. Like many protocols, this network congestion caused issues, but we’ve been able to make the protocol more robust as a result of this, and are back online in full force.
Liquidity provision has seen significant growth recently, driven by our successful efforts to onboard more liquidity providers, as well as our LP communities strong effort in helping those that come in onboard within the community LP group. More mid-size active LPs really improve reliability and liquidity, and we want to encourage as many as possible to join in.
Community driven stablecoin liquidity provision bots have made it easier for passive LPs to provide liquidity, all whilst getting the eye-watering yields (up to 50%!), even in this higher yield market of the last few months. These bots have now scaled to cover a meaningful portion of the protocol’s volume today, and we have plans to extend this even further.
DCA swaps transformed our competitive advantage, and thankful most of our existing integrators have now fully integrated this game-changing feature. Our LP set has diversified, and we are seeing lots of reports of happy and profitable LPs that are actively contributing to our capacity to fill swaps at amazing rates. This is essential to attracting as much volume as possible.
So things have gone well over the last 4 months, but we're ready for the next level.
Volume is Everything
We are confident that we can sustainably move up from our daily volume rates in the immediate future. Right now, we’re averaging $5-10 million per day (about 200m a month), but there’s clear evidence that we can soon expect $15-30m per day.
In the next quarter or two, there are two major things we need to do in order to boost that beyond these levels.
Firstly, we need to continue to secure even more high quality and high flow integrations which will drive more users to the protocol. Integrations like THORSwap, Swapkit, Shapeshift, THORWallet, Rango & Squid to name a few have shown the power that a good integrator can offer.
The ones above are just scratching the surface. There are numerous more out there that would benefit greatly from offering Chainflip routes (specifically BTC & SOL) to their users. As our LP base grows and pricing becomes even better on larger and larger swaps, we have the potential to tap into audiences from the likes of Trust Wallet, Ledger, Across, Debridge, OKX Wallet, Bitget wallet, Phantom, Jumper just to name a few. Even just one of the above would help push us to well above $50m worth of volume a day.
Several upgrades in 1.8 are directly targeted at serving the needs of potential integration partners. Improved vault swaps enable integrators to use Chainflip without deposit channels, which has been a major point of feedback we’ve taken on board in recent months. Improved cross-chain messaging and gas estimation also helps aggregators improve the utility of Chainflip in stringing together multiple swaps in a single transaction, opening up Chainflip to a wider set of use cases for major integration partners. These will be released in the coming days and weeks, and from there we expect to see integrators adopting Chainflip into their systems in the weeks and months that follow. More info on 1.8 here.
Secondly, more liquidity is always needed to ensure that we can fill orders reliably, in both directions, and with bigger size. We are going to be introducing some better tools for passive LPs, such a built in automated trading strategies to improve pairwise liquidity provision dramatically, and for active LPs, we are investing a lot of effort into improving the documentation and tooling to make this easier, as well as pursuing other strategies to increase protocol access to capital. This won't be overnight, but this should improve with each month that goes by, with all of this in place in 3 months.
We do those two things, give it a bit of time, and our daily volume goes up a lot.
So what does all of this mean for token holders?
Unlocks Over, Burn Baby Burn
If we do the above successfully, then the token economics and maths change very quickly. With all investor unlocks done, we can look at this from a new angle.
Firstly lets look at our current data, averaging $200m a month in volume, and lets look at our Buy and burn metrics:
It's clear from the above chart that net burn is not far off, and very evident that the most important thing that we can possibly do is focus on our North Star. Get more volume.
As a quick reminder, our swap markets are playing in a space doing billions in volume every day. There are dozens of DEXes and bridges hitting hundreds of millions of volume per day. That is the game we want to play, and so our work focuses on that.
Looking at the current circulating supply of 63m FLIP, factoring in the boost fee split coming in the 1.8 release, we can take our buy burn table and adjust it to see what the immediate effects of more volume have on token supply over the course of a year.
In short, at current prices, if we get even to $50m of inflows per day, we’re looking at the protocol buying and burning half of the entire circulating supply within a year just through fees.
A total lack of token buyers only accelerates the rate of supply side decline. The protocol is programmed to absorb large amounts of tokens until the price naturally rises. Of course, you wouldn't typically expect there to be no buyers for that length of time at this level of performance.
It should be very clear now that low token prices aren’t fun, but they simply can’t last if the protocol performs well. Thus, we focus on that north star metric: volume.
What’s on the Horizon
There’s plenty to look forward to.
This year we are going to be doubling down on the LP app, to better reflect our vision of trade accounts. This will introduce new features (or strategies) for passive LPs, making liquidity provision easier and more engaging. We expect this to radically boost stablecoin liquidity, freeing up our active LPs to go harder on the major pairs.
As for the swapping app itself, there are a host of improvements being launched to give a better offering to our swappers and integrators. Right now we offer limited assets and chains, but with the Cross Chain Messaging improvements enabled, and the right integration partner, we could 10x those chains and assets very quickly, which opens up a whole new avenue and value propositions to push the swapping app.
Integrations remain a key focus, not only as a way of directly attracting volume, but also as partnerships and co-marketing efforts have proven highly effective in the past. A great example was our partnership with Shapeshift. We want to replicate that success with our current and new integrations alike. Each new integration introduces Chainflip to a broader audience, creating more opportunities for growth.
New chains are on the horizon as well, starting with Polkadot’s Asset Hub. Polkadot has selected Chainflip as the go-to protocol for their Asset Hub, and we’ll be launching campaigns and marketing efforts to engage the Polkadot community. As the only real bridge supporting that ecosystem, we could see some decent inflows as a result.
On the marketing side, we’re undertaking a full website revamp to better align with the product on offer and attract more swappers, LPs, and integrators. This is a major priority for the marketing team next month, as it’s crucial to help explain what Chainflip is when people first come across it. Gaining and retaining users in these 3 categories is priority number one, and the current site fails to communicate the key value propositions.
Alongside this, 2025 will be a pivotal year for content. We’re excited to showcase a range of product improvements, including updates to the swapping app and liquidity provision app. One of the first highlights will be the complete overhaul of our swap stats pages, which we can’t wait to unveil.
Lastly, we’ve heard the community’s feedback about the need for greater transparency around the marketing roadmap — what’s working, what isn’t, and what’s planned. We’re committed to improving communication so the community is fully aware of the exciting developments ahead. This post is hopefully a step in that direction.