Article reprinted from: Yue Xiaoyu
Recently, after Hyperliquid's airdrop, the wealth effect has ignited the market, and people have begun to pay attention to the star DEXs that may emerge after this cycle.
What will the next generation of DEX look like?
The next generation of DEX must be a product that has significant advantages in user experience and liquidity.
One direction I believe is chain abstraction: DEX + chain abstraction = CEX user experience.
1. Benefits of DEX after integration with chain abstraction.
Chain abstraction allows DEX to provide a CEX-like user experience, reducing the complexity and costs of cross-chain transactions, and increasing liquidity. This is especially appealing for users who need to trade assets across multiple blockchains.
(1) Lower operational barriers: Chain abstraction allows users to use DEX without understanding the underlying chain technology. This means users do not need to manage multiple blockchain accounts or learn how to transfer assets between different chains, making operations simpler.
(2) Enhanced liquidity: By encapsulating underlying cross-chain technologies, DEX can integrate liquidity from multiple blockchains, providing a wider range of trading pairs and higher liquidity. This is particularly beneficial for small transactions, reducing slippage.
2. How does DEX specifically integrate with chain abstraction?
(1) First, to establish unified liquidity, use cross-chain bridging technologies like Polkadot, Cosmos, or Chainlink, which allow assets to flow between different blockchains. This enables DEX to access liquidity from multiple chains and distribute trading orders across different chains for execution.
(2) Through smart contracts, DEX can automatically manage the exchange and liquidity pools of assets across different chains. AMM can cross-chain optimize price discovery and liquidity provision.
(3) Provide a unified user interface, so users can trade without switching wallets or understanding the details of the chains. All cross-chain operations are handled in the background using chain abstraction technology. Ultimately, users only need to express their trading intentions (e.g., 'I want to exchange ETH for BTC'), rather than specifying a particular chain or path. The system automatically finds the best cross-chain path to complete the transaction. By combining these technologies, DEX can not only offer a better user experience but also significantly enhance the overall efficiency of decentralized finance (DeFi). In this way, DEX can come closer to the convenience offered by traditional centralized exchanges (CEX) while maintaining its decentralized essence.
3. User case after the integration of DEX and chain abstraction.
Objective: Bob wants to purchase some USDC on the Polygon network to place bets on the prediction platform Polymarket.
Usage process: Bob enters the trading interface of the chain abstraction DEX, selects 'Exchange ETH for USDC', the system automatically provides the optimal trading path, and Bob just needs to confirm the transaction, paying a fee only once with any token.
Backend Processing: The DEX has automatically processed the following operations in the background.
(1) Extract ETH from the Ethereum network.
(2) Cross-chain ETH to BSC.
(3) Exchange ETH for USDT on BSC.
(4) Bridge USDT to Polygon.
(5) Finally, exchange USDT for USDC on Polygon. The entire process is transparent to Bob; he only needs to confirm the transaction once.
4. Summary
Applications like DEX are suitable for integration with chain abstraction mainly because they involve cross-chain operations and asset management, which require simplification of user experience to enhance convenience and liquidity.
Chain abstraction technology abstracts the details of cross-chain interactions, making these applications more user-friendly, reducing the learning and operational costs for users, while improving the overall efficiency and interoperability of the system.
Waiting for the new products of DEX + chain abstraction to emerge.
Among them, Particle Network, as a leader in the chain abstraction track, is worth noting.
Recently, Particle announced a new type of trading product to be launched on December 3, which will likely integrate chain abstraction solutions. Particle Network has made significant progress in wallet infrastructure, and since it has not yet issued tokens, could Particle Network be the next golden dog?
