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Network Topology and Latent Structures in Crosschain Liquidity Flows

In: Mathematical Research for Blockchain Economy

Author

Listed:
  • Uri Lee

    (Imperial College London, Centre for Cryptocurrency Research and Engineering)

  • William J. Knottenbelt

    (Imperial College London, Centre for Cryptocurrency Research and Engineering)

Abstract

The emergence of crosschain liquidity protocols has significantly advanced blockchain interoperability; however, our understanding of the structural patterns governing capital flows across these interconnected networks remains limited. This paper introduces a novel analytical framework that combines network methods and tensor decomposition techniques to characterize the multidimensional dynamics of crosschain liquidity transfers. Utilizing comprehensive datasets of daily crosschain transactions spanning 2021–2025 and across several crosschain protocols such as Wormhole, LayerZero and CCTP, we explore crosschain interoperability from the perspective of crosschain flow or net capital flow between chains. These findings contribute to the theoretical understanding of multi-chain ecosystems and have practical implications for risk assessment and capital efficiency in decentralized finance.

Suggested Citation

  • Uri Lee & William J. Knottenbelt, 2026. "Network Topology and Latent Structures in Crosschain Liquidity Flows," Lecture Notes in Operations Research, in: Stefanos Leonardos & Amir K. Goharshady & William Knottenbelt & Panos Pardalos (ed.), Mathematical Research for Blockchain Economy, pages 285-303, Springer.
    • Handle: RePEc:spr:lnopch:978-3-032-13377-9_14
    DOI: 10.1007/978-3-032-13377-9_14
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