Uniswap Labs and cross-chain interoperability supplier Throughout Protocol have proposed a brand new Ethereum token customary for cross-chain intents to handle liquidity fragmentation challenges.
The brand new customary is beneath Ethereum Request for Remark 7683 (ERC-7683) and goals to determine a unified framework for specifying cross-chain actions in intents-based techniques. Intents are automated blockchain interactions based mostly on the person’s desired final result, excluding the necessity for particular information.
For instance, intents can automate a cross-chain token swap by means of an optimum route with out requiring extra effort from the person, like realizing probably the most environment friendly bridges and exchanges.
ERC-7683
The ERC-7683 customary is designed round a standard cross-chain intents circulate whereas permitting for flexibility in implementation particulars. This circulate begins with the swapper signing an off-chain message, adopted by his order being disseminated to a filler on the origin chain. The order is then crammed within the vacation spot chain.
Notably, Uniswap Labs highlighted that they are going to implement this customary on the cross-chain model of UniswapX, however the ERC-7683 customary is already accessible for any decentralized software to implement.
Furthermore, the usual permits customization of varied points, comparable to worth decision strategies, success constraints, and settlement procedures. The proposal has been submitted to the CAKE Working Group for dialogue and overview.
Intent-based techniques have emerged as a number one answer for end-user cross-chain interplay, simplifying the complexity and time constraints related to conventional bridges.
Nevertheless, these techniques face challenges in accessing ample liquidity and sustaining energetic filler networks throughout chains, points which will intensify because the variety of distinct chains grows.
Liquidity fragmentation problem
Ethereum’s layer 2 blockchains handle the scalability points that the trade has struggled with for years. But, they current a brand new problem: the fragmentation of funds flowing into completely different smaller ecosystems.
Moreover, this problem goes to the technical stage, as every layer 2 blockchain processes and orders transactions in blocks in a centralized method, in accordance with CoinShares analyst Max Shannon.
Shannon defined that every blockchain retains its personal ledger and set of good contracts, leading to a fragmented world state of transactions that negatively impacts liquidity effectivity. He added:
“Addressing fragmentation guarantees shared liquidity, fuel effectivity, bridge-less bridging, seamless app upgrades, and simpler L2 bootstrapping and improvement.”
