This is a popular science article explaining blockchain knowledge. It takes 5 minutes to read.
One of the few constants in the cryptocurrency industry is the ever-increasing number of blockchains. Whether it’s Ethereum L2, Lisk, or alternative layers, there is a ton of new blockchain supply.
While the diversity of blockchains provides users with many choices, it also brings disadvantages to developers and multi-chain users. The increasing number of blockchains will disperse liquidity and usage and have an adverse impact on user experience.
The story of how cryptocurrencies ended up with so many chains is one of infrastructure iteration and misaligned incentives. Since the introduction of the PoS consensus mechanism, the number of chains in cryptocurrencies has exploded. Compared to Bitcoin's PoW consensus mechanism, PoS greatly reduces the threshold for launching and securing new networks, leading to a surge in new projects in the L1 space. The quest to solve the scalability trilemma has brought us Solana, Cosmos and its appchain, Berachain and its PoL consensus mechanism, Ethereum L2 and fraud proofs, etc.
The concept of modularity is relatively new, having first been proposed by Mustafa Al-Bassam in a 2019 academic paper titled “ LazyLedger: A Distributed Data Availability Ledger with Client-Side Smart Contracts.” In the paper, he outlined a blockchain design in which the functions of network consensus and data availability are separated from transaction settlement and execution.
The benefit of modularity is specialization, both in terms of affordable DA and off-chain execution. Similar to Adam Smith’s hypothesis that the division of labor was the source of economic growth, specialized division of labor promotes scalability by increasing efficiency.
In 2020, Vitalik announced Rollup as Ethereum's main scaling solution - Rollup is a natural extension of the "rise of modularity". Ethereum's ultimate goal is to become a globally coordinated financial layer, and achieving this goal requires scaling. However, given the scalability trilemma, Ethereum has optimized decentralization and security at the expense of scalability. Rollup bundles multiple transactions into a batch and then submits them to the Ethereum mainnet, thereby increasing transaction throughput and reducing costs. This approach minimizes the amount of data processed on-chain, resulting in faster and cheaper transactions. However, as the number of Rollups increases, the complexity of interacting with the Ethereum ecosystem also increases, as additional infrastructure needs to be built to connect Rollups to other parts of the ecosystem.
To surpass Web2, Web3 UX needs to provide a better experience given the switching cost. This is where chain abstraction comes in.
Chain abstraction, as a concept, is more like an end goal than a method to achieve the end goal. Therefore, "chain abstraction" is a user experience, so any component or improvement can be regarded as a component improvement to "realize the future of chain abstraction."
Today, being a multichain user requires bridging capital between multiple chains, navigating complex user interfaces, paying transaction fees in multiple different tokens, each with their own risk profile, etc. Users need to interact with the plumbing of the crypto economy, which is complex and cumbersome - in traditional finance, the equivalent plumbing is transacting on FedWire. Considering chain abstraction from the end goal of a Web2 UX type, there are two key pain points that need to be addressed in Web3 UX complexity, and fragmentation of users and liquidity.
Abstraction is defined as “the simplification or elimination of technical complexity in the user experience, resulting in technology that hides these details and processes.” These complexities still exist, but are invisible to the user.
As the go-to search engine, Google can be thought of as the ultimate abstraction. As an extensive directory of the internet, it simplifies information retrieval, allowing users to enter search queries without having to understand complex search algorithms or web crawling processes. Google's algorithms index billions of web pages and rank them by relevance, presenting the most important results to users. Google brings together its various features into a cohesive ecosystem, further enhancing the user experience.
Ethereum’s rollup-centric roadmap and the popularity of appchains, application-specific rollups, and modularity with their own stack has led to increased fragmentation of liquidity and users, and the loss of a unified, smooth user experience.
Take Ethereum, for example. When a user joins the Ethereum ecosystem, they may encounter multiple forms of USDC and multiple forms of ETH. For example, while ETH on Op and ETH on Arb are for all intents and purposes the same asset, both of which have been bridged from the Ethereum mainnet using their own bridges, they cannot be used interchangeably. Certain applications only exist on Optimism, while others only exist on Arb. For all practical purposes, ETH on Op and Arb are on completely different chains, with different ecosystems and different use cases.
Fragmentation often results in a complex and often frustrating user experience where users must navigate multiple chains, bridge assets, and manage different gas tokens. For developers, this means having to launch on numerous chains and try to bootstrap liquidity and users on all of them.
Chain abstraction is a potential solution to these problems. It is about providing a user experience that is free from the manual processes required to interact with multiple chains. This includes abstracting away the complexity of bridges, gas tokens, account and wallet fragmentation, liquidity fragmentation, and key management. The goal is to create an experience similar to traditional Internet applications, where users can interact with blockchains without going through a steep learning curve.
Various approaches to chain abstraction are currently being developed, ranging from comprehensive solutions to component-level solutions. Comprehensive solutions such as NEAR, Particle, and Okto aim to provide end-to-end abstraction across multiple chains. Ecosystem-specific solutions such as Polygon's AggLayer and Op's Superchain focus on unifying liquidity and improving interoperability within their respective ecosystems.
Protocol-based solutions have great potential in simplifying cross-chain interactions and improving capital efficiency. They allow users to express desired outcomes rather than specific execution paths, and solvers compete with each other to efficiently implement these intentions. This approach can potentially unify cross-chain liquidity and simplify complex cross-chain operations.
The potential of AI agents in chain abstraction is particularly noteworthy. Although still in the early stages of development, AI agents can revolutionize the way users interact with blockchain technology by enabling natural language commands to perform complex cross-chain operations. This can greatly simplify the user experience and make blockchain technology accessible to a wider audience.
Chain abstraction is critical to the development of cryptocurrencies, especially given that Ethereum has adopted rollups as its scaling plan and the modularity thesis and appchain narrative continue to evolve. By solving the problems of fragmentation and complexity, chain abstraction can create a more unified, user-friendly on-chain experience. However, it is worth noting that chain abstraction itself faces challenges. Ironically, the fragmentation of chain abstraction solutions reflects the problems they are trying to solve. Many of the proposed solutions are still in the early stages of development and face many technical and adoption barriers. There is still a long way to go.
