Problem as method: a new framework for understanding chain abstraction

Original author: Lydia Wu, Researcher at Mint Ventures

If you were confused when you first encountered the concept of chain abstraction, you are not alone.

——It looks very important, there are many projects, a lot of financing, and they all claim to be standards... but I don’t know what they are for. Is “chain abstraction” another buzz word in the new concept pipeline of Web3?

This article will start from the concept and return to the basic issues in order to scoop out pearls from the sea of nothingness.

TL;DR

• The purpose of abstraction is to hide complexity, and the level of abstraction in the context of Web3 is often higher than that of Web2 (and therefore more difficult)

• Modularization lowers the threshold for building public chains, and chain abstraction includes the re-architecting of public chain relationships and improving user/developer experience.

• Cross-chain asset transfer, cross-chain communication, interoperability and chain abstraction: a subset of concepts centered on coordinating state modifications (transactions) on different chains (but often filled with middle ground in actual use)

• Intent-based chain abstraction solutions have become a popular architecture, and many component products may gradually move towards the final form of chain abstraction in the form of puzzles.

• The current discussion and construction of chain abstraction in the industry has not yet broken the superstition of infra-based. The establishment of chain abstraction as a real problem is inseparable from the activity on the chain, modularization progress, and the entry of new users and developers.

• The future of chain abstraction is not a bright and smooth road. It is necessary to consider the impact on long-tail public chains and the exploration of non-DeFi applications.

What is the problem with chain abstraction?

• Is chain abstraction a real problem?

• If so, which category of problems does it fall into?

• What is the difference between cross-chain, interoperability, and chain abstraction?

Is chain abstraction a real problem?

——Not necessarily. Questions need context. Imagine asking people 500 years ago about their views on the energy crisis.

So where does our discussion of chain abstraction come from?

The answers given by different people may include several keywords: Ethereum roadmap, modularization, intention, large-scale adoption... At present, the most explanatory point of view may be: chain abstraction is the second half of modularization.

In order to understand this point, it is necessary to explain the definition of chain abstraction.

In computer science, abstraction refers to the process of separating high-level operations and concepts from background processes, with the goal of simplifying understanding by hiding complexity. For example, most Web2 users only need to know browsers and ChatGPT, and they may know nothing about the abstract content or even the abstract concepts themselves.

Similarly:

• Account abstraction: By hiding the internal information of the blockchain account, such as the address, private key, and mnemonic phrase, the account is made invisible.

• Chain abstraction: By hiding the internal information of each chain, such as the consensus mechanism, gas fee, and native token, the chain is realized without any sense.

In traditional software development, abstraction and modularity are a set of closely related important concepts. Abstraction defines the hierarchy and architecture of the system, and modularity is the way to implement this architecture. Specifically, each module represents a level of abstraction, and the interaction between modules hides its internal complexity, making it easier to expand, reuse, and maintain the code. Without abstraction, the boundaries between modules will become complex and difficult to manage.

Source: https://web.cs.ucla.edu/classes/winter12/cs111/scribe/3a/

It is worth noting that Web2 usually abstracts and modularizes within a closed or partially closed ecosystem, where the abstraction level is concentrated within a single platform or application, the environment is relatively controlled, and there is usually no need to solve cross-platform or cross-system compatibility issues. However, in the context of Web3, due to the pursuit of decentralization and an open ecosystem, the relationship between modularization and abstraction is more complicated.

At present, although modularization helps solve the abstraction problem within a single public chain and lowers the threshold for public chain construction, the user/developer experience abstraction under the multi-chain pattern is an area that modularization has not fully covered. There is a relatively obvious island effect between different public chains and ecosystems, which is specifically reflected in the dispersion of liquidity, developers and users. The proposal of chain abstraction includes the re-architecting of public chain relationships to achieve connection, integration and compatibility between multiple chains, which can be confirmed in the article published by Near in January this year.

We can argue that the urgency of chain abstraction as a real problem is closely related to the development of the following conditions:

• On-chain activity: Are there more dAPPs that bring more active user on-chain behaviors?

• The progress of modular blockchains: Does more active on-chain behavior drive more rollups and app chains?

• Barriers to entry for new users and developers: To what extent does the current blockchain environment hinder the influx of new users and developers (referring to attrition in an upward trend, not anger at stagnation)

To what category of problems does chain abstraction belong?

Chain abstraction itself is an abstract concept, and the narrative level within Web3 is also relatively high-dimensional, which may explain to some extent why chain abstraction presents an all-encompassing and even confusing appearance. Specifically, it is not a solution, but a guiding ideology.

Another example is Bitcoin today. After experiencing several halvings, sharp rises and falls, and the launch of ETFs, Bitcoin is no longer just a technical solution or asset class, but has also become a timeless ideology and industry totem, representing a series of core crypto values, and will continue to guide the industrys innovation and development in the foreseeable future.

What are the differences and connections between cross-chain, interoperability, and chain abstraction?

We can also understand cross-chain, interoperability and chain abstraction along a spectrum from concrete to abstract. From a morphological point of view, they are a set of concept subsets centered on coordinating state modifications (transactions) on different chains, but in actual use, there is often a lot of middle ground.

We can roughly divide cross-chain related applications and protocols into two categories:

• Cross-chain asset transfer: cross-chain bridges, cross-chain AMMs, cross-chain aggregators, etc.

• Cross-chain communication: Layerzero, Wormhole, Cosmos IBC, etc.

The transfer of assets is also inseparable from messaging. The messaging layer of cross-chain asset transfer applications is generally composed of a set of on-chain smart contracts and state update logic. The cross-chain communication protocol is the solution that abstracts the messaging function into a general, protocol-layer solution.

The cross-chain communication protocol can handle more complex cross-chain operations, such as governance, liquidity mining, NFT transactions, token issuance, game operations, etc. The interoperability protocol goes a step further and involves deeper data processing, consensus and verification, ensuring consistency and compatibility between different blockchains from the blockchain system level. However, in actual use, these two concepts are often complementary and can be substituted for each other depending on the context.

The connotation of chain abstraction includes the interoperability of blockchain, but the usage context adds a layer of experience improvement on the user and developer side, which is related to the intention narrative that has emerged in this cycle. The combination of intention and chain abstraction will be explained below.

What specific issues does chain abstraction cover?

• How to implement chain abstraction?

• Why should we care about chain abstraction and intent binding?

How to implement chain abstraction?

Different projects have different understandings and entry points of chain abstraction. Here we divide them into the classical school that evolved from interoperability protocols and is closer to developer-side abstraction, and the intentional school that combines the emerging intentional architecture and pays more attention to user-side abstraction.

The history of the classical school can be traced back to Cosmos and Polkadot, which were born long before the concept of chain abstraction. As rising stars, OP superchain and Polygon Agglayer are currently focusing on liquidity aggregation and interoperability within the Ethereum L2 ecosystem. Layerzero, Wormhole and Axelar, which originated from cross-chain communication protocols, are also expanding to more chains and striving for more customer adoption in order to enhance their own network effects.

IntentPai includes L1s such as Near and Particle Network, which are committed to providing comprehensive chain abstraction solutions, as well as component classes that focus on solving specific problems. Currently, it focuses on DeFi protocols, represented by UniswapX, 1inch and Across Protocol.

Whether it is the classical school or the intentional school, safe and fast cross-chain and friendly interaction are at the core of the design, including but not limited to a unified user interface, seamless cross-chain of dAPP, gas sponsorship and management, etc.

Why should we care about the combination of chain abstraction and intent?

There is a proliferation of “intent-based xx protocols” and this section will explore the reasons and potential for them to become a popular product architecture.

Similar to abstraction and modularity, intent is not a concept native to Web3. Intent recognition has existed in the field of natural language processing for decades and has been widely studied in human-computer dialogue.

When it comes to intention research in the Web3 field, we cannot do without Paradigms famous paper . Although similar design concepts have been reflected in products such as CoWSwap, 1inch, and Telegram Bot, the core of the intention architecture was formally proposed in this article - users only need to specify the expected results, without caring about the process, and the complex process of implementing the task is best outsourced to a third party. This is consistent with the improvement of user experience that chain abstraction focuses on, and provides a more specific solution.

There are many classifications of chain abstraction architectures in the market, and the more well-known one is the CAKE framework (Chain Abstraction Key Elements) developed by Frontier Research. This framework combines the intent architecture and divides the various technologies and solutions that make up the chain abstraction into the permission layer, the solution layer, and the settlement layer. There are also other frameworks that make fine adjustments on this basis, such as Everclear, which adds a layer of clearing function between the solution layer and the settlement layer.

Source: Frontier Research

Specifically:

• Permission Layer: The core is account abstraction, which serves as the user entry of dAPP to request an intention quotation - the user expresses the intention

• Solver Layer: Generally, it is a third-party solver layer off-chain, used to meet user intent - solvers compete for orders

• Settlement Layer: After the user approves the transaction, the oracle, cross-chain bridge and other solutions are called to ensure the execution of the transaction - the user gets the expected result and the solvers get paid

Solvers at the solution layer are a group of third-party off-chain entities, which are called solvers, resolvers, searchers, fillers, takers, relayers, etc. in different protocols. Solvers usually need to pledge assets as margin to obtain the qualification to compete for orders.

The process of using an intention product is similar to filling a limit order. In a cross-chain scenario, in order to satisfy the users intention as quickly as possible, solvers usually advance funds and charge a certain risk fee at the time of settlement (this model is similar to a short-term loan, where the loan term = blockchain state synchronization time and interest = service fee).

Comprehensive intent solutions represented by Near hope to combine the permission layer, solution layer and settlement layer into a unified infrastructure product. They are currently in the early stages of proof of concept and it is difficult to directly observe and evaluate their effectiveness.

The component-based intention solutions represented by the cross-chain DeFi protocol have shown obvious advantages over traditional cross-chain models (such as Lock Mint, Burn Mint). As the flagship product of Across Protocol, Across Bridges intention-based architecture enables it to have first-tier speed, low prices and charging capabilities among cross-chain bridges in the EVM ecosystem, and its advantages are particularly obvious in small cross-chain scenarios.

Aggregator showing cross-chain speed and fees for different products Source: Jumper

Speed and cost comparison between Across Protocol and Stargate in L2-L1 scenarios Source: https://dune.com/sandman2797/across-vs-stargate-taxi-vs-bus-eth

Across Protocol has a high charging capacity. Source: DefiLlama

According to the roadmap, Across Protocol will launch a cross-chain intention settlement layer in the third phase. ERC-7683, jointly proposed by Uniswap Labs and Across Protocol, attempts to lower the entry barrier for solvers through standardized intent expression and build a universal network for solvers. Many component products may gradually abstract the final form of the chain in the form of puzzle pieces.

What is wrong with our understanding and practice of chain abstraction?

• What problems does Infra Standard bring?

• What other questions are worth thinking about regarding chain abstraction?

What problems does Infra Standard bring?

As the leaders of interoperability protocols, Layerzero has raised a total of 290 million yuan, and Wormhole has raised 225 million yuan. The billions of FDV and low circulation have made their tokens the representatives of the most criticized VC coins in this cycle, undermining the markets confidence in the chain abstraction track.

Back to the cartoon at the beginning of the article, chain abstraction projects each have a technology stack and token standards. In a market environment lacking external growth, they are inevitably criticized as empty infrastructure. The data gap before and after the Layerzero airdrop also made the market doubt the real demand for cross-chain communication.

The data difference before and after the Layerzero airdrop is obvious Source: https://dune.com/cryptoded/layerzero

In the ERC-7683 forum page, developers discussed the responsibilities of the ERC standard itself in response to questions about the cross-chain asset transfer function being too small, not universal enough, and not supporting enough ecosystems. Supporters of minimalist ERC believe that tool-level standards are sufficient to solve existing problems and can be combined with existing standards, with relatively little resistance to adoption.

Considering that the design concept of intent-based architecture is largely application-oriented, universal, full-stack, and compatible protocol standards sometimes become too general and meaningless and too large to solve practical problems, resulting in an ironic phenomenon - the chain abstraction protocols that were created to solve the fragmentation problem themselves deliver fragmented solutions.

Source: https://ethereum-magicians.org/t/erc-7683-cross-chain-intents-standard/19619/18

What other questions are worth thinking about regarding chain abstraction?

• For new public chains/long-tail public chains, chain abstraction makes it more difficult to retain TVL (analogous to the impact of globalization on underdeveloped regions). What impact will this have on the adoption of chain abstraction?

• A study by Variant pointed out that UniswapX will lead to a new situation where long-tail tokens are directed to AMMs and mainstream tokens are more likely to be filled through off-chain solvers. Is this the development trend of DEX in the future? Will a global solver layer be superimposed on the global liquidity layer in the future?

• Beyond DeFi protocols, what might other intent-based product architectures look like?

• Will chain abstraction become the hottest trend after modularization or a big bubble?