Question:

In wake of the issues surrounding FTX, the old adage "not your keys, not your crypto" reinforces itself. Let's see how this played out during the fallout.

Did bridge activity spike over the last 7 days? If so, to what ecosystems?

At a more granular level, track net outflows from FTX onto Ethereum. Did any of these outflows flow across Satellite to another destination chain?

Overview of analysis:

In this investigation, the application of Satellite bridge on FTX net outflows onto Ethereum has been determined.

This analysis contains two major parts named:

• Tracking Satellite bridge activity during FTX crisis
• Track the net flow of FTX accounts onto Ethereum

Methodology:

The data provided by Flipside has been used to handle this analysis.

This following parts used to handle this investigation:

• Satellite bridge:
  • Count of bridges
  • Volume in USD
  • Popular tokens bridged
  • Popular destinations
• FTX net flow onto Ethereum:
  • Usage of these outflows on Satellite
  • The Satellite bridge address on Ethereum→ 0x4f4495243837681061c4743b74b3eedf548d56a5
  • Track outflows into the CEXs

This analysis is done since the start of November 1, 2022 and the crisis of FTX considered since November 7 and it can be seen from the following parts.

About FTX and Alameda research:

FTX (FTX.com) is an institutional-level digital currency derivatives exchange that was established in May 2019 in Hong Kong. This exchange, built with the slogan "by traders and for traders", introduced its brand with the first derivative products of its kind in the cryptocurrency industry. Shortly after its launch, the FTX exchange was ranked among the top five derivatives exchanges in terms of trading volume and received positive reviews. This exchange quickly gained popularity among retail and professional traders of crypto derivatives.

FTX exchange was originally developed by Alameda Research, a trading company founded in 2017.

The issue related to the FTX started a week ago when several researchers began looking deeper into SBF's finances, specifically its trading company Alameda Research, to determine that there was a funding risk due to the overrepresentation of the FTT token on its balance sheet.

The crypto community is braced for the FTX crisis. Up until this point, most of the bearish crypto market was the result of macroeconomic conditions.

Coinbase research noted that two-thirds of the selloff in the market is a direct result of the difficult macroeconomic outlook. As the general market fluctuates from news of inflation and recession, so does the crypto market.

However, the current sale is a direct result of the actions of FTX and Sam Bankman-Fried.

About Axelar and Satellite bridge

Axelar network is a scalable cross-chain communication platform. Blockchain platform builders can use it to seamlessly plug-in their blockchains to all other blockchain ecosystems. Application developers can choose the best blockchain to host their applications and use Axelar’s cross-chain communication protocols to lock, unlock, and transfer assets, as well as communicate with applications on any other chain. By connecting dapps with multiple blockchain ecosystems, the Axelar platform empowers users to interact with all applications across the ecosystem directly from their wallets.

The Axelar network serves as the infrastructure for inter-chain exchanges. Axelar acts as both a bridge and a platform for cross-chain communication between smart contract protocols. Axelar bridging makes it possible to send tokens across different blockchains, while Axelar second feature allows decentralized applications to run on different networks.

Satellite is one of the first ecosystem applications powered by the Axelar Network. Satellite is a decentralized cross-chain asset transfer application, which enables users to transfer assets they hold on a source chain to an address on a different destination chain.

Part 1: Track Satellite activity during FTX crisis

Chain Analysis during FTX crisis

Token Analysis during FTX crisis

Findings:

• The average transfer of volume on Satellite increased after FTX crisis and during the past week .
• The count of bridges and transfer volume after FTX crisis increased as can be seen.
• The highest volume of transfer over the past week occurred on November 9 with over 12.85 million USD.

Part 2: Track net outflows from FTX onto Ethereum and usage of Satellite

Findings:

This part has been used to find out the popular assets bridged via Satellite during the FTX crisis and the outcomes are as below:

• The most popular tokens that bridged via Satellite during FTX crisis is USDC and ETH from the volume in USD point of view.
• The AXL token has dominated the count of transfers via Satellite bridge too.
• The highest volume of bridge for USDC token happened on November 9 with over 12 million USD.
• The ETH token has the highest average bridge volume on Satellite on November 16 with over 42k volume in USD.

Findings:

In this part, the popular chains that used to bridge via Satellite on Axelar have been determined as below:

• The Ethereum and Osmosis network are the most used destination chains for Satellite bridge during FTX crisis by count of bridge.

• The USD volume of bridge via Satellite during FTX crisis reveals the domination of Ethereum network with over 41 million USD bridge volume.

• The average bridge volume in USD for chains via Satellite bridge shown that the Ethereum network has the highest average transfer volume most of the days but Terra-2 has over 25k USD as average transfer volume on November 12.

• The highest bridge volume into the Ethereum via Satellite bridge occurred on November 9 with over 11.34 million USD volume.

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Conclusion:

• All of the metrics shown that the Ethereum chain and USDC token are the most dominated chain and token during FTX crisis for bridge via Satellite.
• The activity of Satellite bridge during FTX crisis increased and from the deep investigation from the Ethereum side it can be seen that over 2.5 million USD of FTX outflows onto the Ethereum have been bridged to other chains.
• Also, the large part of the outflows from FTX onto the Ethereum network have been sent into the CEXs and Binance are the most popular one.

Findings:

First of all lets track the net outflow from the FTX onto the Ethereum since start of November and coincided with the FTX crisis:

• The highest outflow from FTX onto Ethereum happened on November 7 as can be seen with over 18k transfers.
• The net USD outflow from FTX occurred on November 6 with over 233.45 million USD.
• As can be seen, the average transfer volume from FTX or Alameda accounts onto the Ethereum network experienced its highest level on the last days of investigation (November 15 to 17).

Findings:

Now lets see how much of the net outflows from the FTX onto the Ethereum network have been bridged across Satellite bridge to other chains:

• About 2.51 million USD of the net outflows FTX assets bridged via Satellite into the other chains.
• The highest volume of transferring FTX net outflows onto Ethereum via Satellite happened on November 12 with over 574k USD.
• The most popular destination of net outflows from FTX onto the Ethereum are centralized exchanges (CEXs).
• The Binance and Coinbase are the most used CEXs to transferring FTX net outflows during FTX crisis. But the domination of Binance on these outflow volume is undeniable.
• November 7 has the highest transfer volume into the CEXs and dominated by Binance.

Useful links:

• Axelar network
• Satellite bridge
• FTX crisis

Author:

Credited by MZG

Discord handle: m.zamani#0361

Twitter handle: @GargariZamani

Satellite bridge