Any narrative, in the development stage of Web3, will inevitably fall into the debate of centralization, and [Intention] is also
Although intent-based bridges can currently speed up the cross-chain user experience, they face the risk of becoming centralized solutions due to the lack of solvers.
(Some friends may feel that this sounds a bit like the problem of Rollup sorter centralization. The logic is indeed similar.)
Therefore, not only does it have similar problems as the sorter, but it also has similar solutions: add more solvers to decentralize power as much as possible.
In this article, we will define the intent-based protocol structure and sort out the emerging solutions on the market that can solve the problem of centralization by addressing the pain points of solvers from various angles.
Title Preview
Review Intention
Build Intent
Intent to solve the root causes of solution centralization
Standard Case: Intent Protocol Standard â ERC-7683
Market case: Khalani & Everclear
1. Review the intention
I have mentioned the concept of intent many times before. It can be said that intent is a subversion of how transactions work and truly focuses on the userâs ultimate goal or âintentionâ rather than the specific process of achieving it.
Intent-based design has two main benefits:
(1) User experience: smooth and efficient
Users only need to express their intentions, and the protocol will then solve all other problems behind the user's intentions. Because of the application of instant liquidity, the transaction process does not need to wait for several minutes to complete a transaction like normal on-chain interactions.
In general, intent will further lower the threshold of understanding for users (whether incremental or stock), resulting in a "one-click" feeling that most Web2 applications can give to users.
(2) Professional execution - the protocol builders are usually professional market makers
Demand vertical solvers are better able to facilitate trades for best execution on-chain. Other features such as trade batching and order matching make intent execution more capital efficient.
- For users: avoid common sense errors, waste of resources and difficult to understand on-chain experience
-For applications: complex transaction paths no longer rely on simple, GAS-inefficient contracts
2. Build Intent
Intent-based protocols consist of three main parts:
(1) Intent expression - the user specifies the desired outcome on the application. For example, on the bridge, a user might say they want to exchange 1 ETH on Arbitrum for 1 ETH on Optimism.
(2) Intent Execution â Solvers compete in an auction to determine the most efficient way to execute the userâs intent. The winner (e.g., a relayer in Across) fulfills the request (sending 1 ETH to the Optimism user).
(3) Intent Settlement - Solvers are compensated for their services (e.g., receiving 1 ETH from a user + a small fee on Arbitrum). The Intent Protocol proves that the intent has been met. However, this is only one side of the solution. The bigger picture is that Intent Settlement also helps solvers rebalance capital between chains and assets.
3. Intention to solve the root causes of solution centralization
Solvers are the protocol backbone of intent. They are the entities that actually execute the user intent, such as transferring assets from chain B to chain A.
In an ideal world, problem solving is a competitive environment where solvers strive to achieve their goals at the cheapest price. However, there are certain barriers to entry to becoming a solver:
(1) Staking requirements â Some intent-based protocols have staking designs for solvers
For example, in 1inch Fusion, only the top 10 solvers can participate in the auction. These solvers are whitelisted based on their ranking, which is a metric determined by the staked tokens and the duration of the stake.
These staking requirements exist to discourage malicious behavior, which is a good thing. But the problem is that these stakes can become the biggest barrier to participation, especially for small players who may not have sufficient funds.
(2) Permissioned systems - Many intent-based protocols require subject permission, which means that the system has a subject that can decide who can participate.
For example, in the case of 1inch Fusion, the base threshold is based on âinstance of fundsâ staked, but in other systems such as UniswapX Beta, participation requires being whitelisted by the protocol running the auction.
These systems prioritize execution quality, ensuring that only reliable solvers can participate. This approach helps the protocol provide a smooth and trustworthy user experience, guaranteeing user-oriented execution quality. However, while the centralized permission design has its benefits, it also restricts more external solvers from participating in the bidding.
(3) The cost of complexity - constant updates are required to achieve the latest cross-chain intentions
Furthermore, the number of chains keeps growing, making it difficult for solvers to keep up with the responses between chains that become popular overnight.
Intent-based protocols are a relatively new solution on the market and need to continually cope with developments as new narratives emerge, which requires frequent updates on the solver side, adding another layer of complexity.
(4) High fixed costs - writing complex code, managing custom integrations for each intent-based protocol, maintaining cross-chain asset inventories, handling RPC costs, and maintaining specialized hardware to gain performance advantages
(5) Incentives and lack of order flow - From a rational perspective, solvers are not participating in a system for charity. They need to see a return on investment to justify their participation.
And taking risks should be compensated with higher returns. Otherwise, the expected value may not be attractive enough to justify working hard for a system.
Currently, there are very few applications in the intent ecosystem with enough order flow to make the solver effort worthwhile (considering volume and potential profitability vs. the hassle of integration)
This is why while applications with large order flows (1inch, CoWswap, UniswapX, Across) are well placed to participate in the solver race, other applications have difficulty attracting enough solvers due to their lower order flows.
Therefore, a phenomenon: only a few solvers controlled by top applications can participate in the larger ecosystem
For example, two protocols based on intent: Cowswap for transaction intent and Across for cross-chain intent
Cowswap has 16 independent solvers that compete for user orders. No single solver is the winner, and no single solver is operated by the CoWswap team.
Across has more than 15 solvers (called relayers) actively competing to meet users' cross-chain intentions. Although Risk Labs runs its own solver, research shows that no single solver can dominate the on-chain bidding, and there is enough room for competition between solvers.
Meanwhile, most other intent-based protocols only have solvers, which are either well-capitalized market makers (like Wintermute!) or the protocol teams themselves (who have a vested interest in enforcing the user intent collected on their applications)
There are many reasons for this discrepancy, but it all comes down to not having enough external solvers. This may seem like a small detail, but itâs actually a centralization time bomb.
What is worrying is that the lack of solvers will cause centralization problems. This means a single point of failure, censorship risk, and the possibility of solvers acting maliciously and driving up fees.
This is not the open, permissionless future that Web3 envisions. Now it can be said that installing a fancy user interface on a centralized system is the antithesis of the entire Defi.
Therefore, this solver bottleneck needs to be addressed as soon as possible. Launching more solvers as soon as possible is the key to unlocking the true potential of intent-based systems.
4. Standard Case: Intent Protocol Standard â ERC-7683
Intent-based protocols do not have a clear way to collect user intent and broadcast it to resolvers. This means that each intent-based application creates its own workflow and framework to determine what information the intent should contain and how it should be processed.
Lack of standardization means more work for solution developers to familiarize themselves with how each intent-based protocol works (increasing fragmentation)
Developers providing solutions must spend time and resources to understand each specific system and write custom code to support it
As the number of intent-based protocols in the market continues to grow, this approach is no longer sustainable for solutions. Fragmentation has resulted in each applicationâs network of solvers being isolated from each other, weakening the intent network effect flywheel as we continue to build within our own silos.
To address these issues, Uniswap Labs and Across proposed ERC-7683, a standardized protocol for cross-chain intent. This standard provides several benefits:
(1) Simplified Integration â Solvers only need to master one format to implement the intent of any ERC-7683-compliant protocol. This greatly reduces the barrier to entry for new solvers
(2) A universal network of existing solvers - applications can tap into a pre-existing network of solvers, eliminating the need to build and maintain their own network. This also increases competition between solvers to fulfill intent, potentially reducing costs for users
(3) Many solver-based infrastructure protocols (such as Khalani, Nomial) are designed to be compatible with the ERC-7683 standard
This is a promising long-term sustainable situation that represents a win-win for all stakeholders â intent-based applications like UniswapX will benefit from an increasing number of solvers competing for order flow, while solvers in these infrastructure protocols will immediately gain access to more order flow from day one
This compatibility has several great benefits:
(1) New intent-based protocols can be launched without having to build their own solver network. This is similar to the convenience provided by EigenLayer, which allows projects to rent cryptoeconomic security
(2) Solution providers will have the opportunity to compete for order flow in a larger global market, rather than being limited to smaller local markets where there are insufficient incentives to attract more solution providers
However, ERC-7683 also has some potential drawbacks and limitations that may hinder its overall benefits and adoption:
(1) The possibility of standards competition - The problem with standards is that it is difficult to manage the incentives between all participants in the ecosystem. Unless the chain itself embeds standards at the protocol level, people will question whether it truly becomes a public product that benefits everyone equally.
In the case of ERC-7683, it can be argued that Across and Uniswap would gain more from adopting the standard, both from a marketing perspective and as early adopters of a defined standard.
Similar bridge standards have been proposed in the past, such as the xERC-20 standard associated with the Connext brand or the OFT standard associated with LayerZero Labs, illustrating similar obstacles.
Despite efforts to define standards as credibly neutral, there is still suspicion that some parties are gaining disproportionate benefits. This suspicion often leads to standards competition, which undermines the purpose of establishing unified standards.
The problem with standards is that there will always be multiple
(2) Competition in the solver market may worsen - ERC-7683 needs to ensure a level playing field so that both new and old solvers can compete fairly
If the standard ends up creating a market dynamic where better-capitalized solvers like Wintermute end up winning the majority of order flow, one must question whether there is actually any benefit to doing so
(3) Market limitations - The standard only covers the Ethereum and EVM ecosystems. Intent-based applications are not limited to Ethereum and other EVM ecosystems.
Today, Solanaâs daily and monthly transaction volumes are consistently higher than Ethereum and its L2. Consideration must be given to making this standard compatible across chains and ecosystems, even though this will make coordination more difficult.
(4) The standard only covers cross-chain transfers and limit orders â ERC-7683 is primarily centered around cross-chain intents. This focus may limit its applicability to other forms of intent, and thus may limit its utility for a wider range of use cases in an intent-based protocol ecosystem.
Essentially, the standard caters to the most common cross-chain use case: transferring money. Moreover, it can be used in conjunction with single-chain operations to achieve a variety of intents, rather than the standard itself covering all possible intents.
5. Market case: Khalani & Everclear
-Khalani is: Intention Execution Layer
Most intent-based protocols focus on transactions and cross-chain
To truly become a dominant design architecture, intent-based systems need to go beyond swapping and bridging to support a wider range of operations, including staking, lending, fiat currency access, etc.
One way to support more types of intents is to hire specialized âvendors.â By hiring solvers that specialize in these specific areas, you can ensure that each intent is executed with the highest level of proficiency, resulting in more optimized results.
These specialized solvers must work together, not in isolation. This collaboration will allow intent-based protocols to execute more general intents, combining multiple actions to achieve a wider range of intents.
Khalani proposed a solution that allows solvers to collaborate with each other, where instead of competing against each other in PvP, solvers work together to find the best solution that fits each user's intent. This allows many smaller, specialized solvers to collaborate effectively.
Khalani provides a platform where solvers can combine their resources and expertise to more effectively address specific user intents
Think of it as creating âpools of solversâ similar to stake pools â by pooling resources, participants can achieve more consistent, and potentially higher, results than they could on their own.
The execution of generalized intent is possible with the Khalani solution and will be a huge unlock for the intent-based paradigm. However, each step of this process has potential bottlenecks that can affect the execution of intent:
(1) User error when submitting intents - When an appâs UI is designed to collect specific intents (such as swapping or bridging), the scope for user error is limited because users operate within certain guidelines to submit their intents.
However, designing a UI to collect generalized intents can be more challenging and prone to user error, as users may submit incorrect or incomplete intents, causing intent fulfillment to fail or be incorrect.
(2) Liveness risk - For intentional systems, there is a liveness risk that the solver is unavailable, which may cause the entire system to stall.
Additionally, the solver may not execute tasks correctly or on time, causing the transaction to fail.
(3) Limited solver availability - The number of solvers available for different types of intents in the Khalani infrastructure may be limited. This reduces the likelihood of intent execution and overall efficiency.
(4) Complexity of solver-to-solver coordination - Coordinating multiple solvers can be complex and error-prone because of the multiple moving parts involved, such as the availability of specialized solvers, market conditions, and factors related to the intent itself, such as the chains involved, the size of the capital required, etc.
(5) Execution risk associated with intent - All solver operations are native and executed together on the Khalani chain. This means that all parts of the solver's process on Khalani either succeed in a single operation or fail.
If any part of a single transaction fails, the entire transaction will be rolled back, which may result in a higher rate of intent failures (however, there is no risk of funds being stuck or funds being lost)
(6) Solver collaboration adds latency - Although collaborative discovery occurs off-chain and is almost instant, it may add some latency due to factors such as task dependencies, verification steps, etc.
-Everclear: Intent Settlement Layer
During the intent settlement process, solvers are rewarded on the source chain that generated the user intent. This means that their final funds are scattered across a dozen different chains, and they need to constantly rebalance the funds allocated to each chain.
This is not only painful to manage, but also creates a lot of capital redundancy. In addition, the more chains there are, the thinner the distribution of liquidity to each solver becomes over time.
Currently, there is no shared system to coordinate these capital flows between chains, and each solver is an island, managing liquidity in discrete systems. This is where Everclear aims to step in and solve the rebalancing problem for solvers.
Everclear aims to solve this problem by coordinating global liquidity settlement between chains through a âclearing layerâ, a decentralized network that coordinates the net settlement of capital flows between chains (main value proposition)
Netting is a mechanism for aggregating (or combining) multiple payments between different parties to achieve a reduction in the number of payments. This means that instead of processing each transaction individually, the total amount owed between the parties is calculated and only the difference is paid. This makes the process easier and reduces the number of payments required.
Everclear allows solvers to âsettleâ with each other across chains, drastically reducing the total number of settlements required, minimizing solver costs as well as inventory and overall complexity (for those who know how CowSwap works, netting is essentially the deduplication of demand between solvers within a time period)
6. Summary
Every once in a while, a new idea comes along that dares to shake up the status quo. The intent-based paradigm is one such idea that aims to fundamentally change the way users interact with blockchain.
Itâs still early days, and only time will tell if the intent-based design philosophy will take off. But one thing is clear: With intent, solutions will continue to move vertically to the user end.
