Uniswap Labs and cross-chain interoperability supplier Across Protocol have proposed a new Ethereum token standard for cross-chain intents to handle liquidity fragmentation challenges.
The new standard is underneath Ethereum Request for Remark 7683 (ERC-7683) and goals to set up a unified framework for specifying cross-chain actions in intents-based methods. Intents are automated blockchain interactions primarily based on the consumer’s desired end result, excluding the necessity for particular data.
For instance, intents can automate a cross-chain token swap by way of an optimum route with out requiring extra effort from the consumer, like understanding essentially the most environment friendly bridges and exchanges.
ERC-7683
The ERC-7683 standard is designed round a standard cross-chain intents move whereas permitting for flexibility in implementation particulars. This move 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 standard on the cross-chain model of UniswapX, however the ERC-7683 standard is already accessible for any decentralized utility to implement.
Furthermore, the standard permits customization of varied facets, equivalent to value decision strategies, achievement constraints, and settlement procedures. The proposal has been submitted to the CAKE Working Group for dialogue and overview.
Intent-based methods have emerged as a number one answer for end-user cross-chain interplay, simplifying the complexity and time constraints related to conventional bridges.
Nonetheless, these methods face challenges in accessing adequate liquidity and sustaining lively filler networks throughout chains, points which will intensify because the variety of distinct chains grows.
Liquidity fragmentation difficulty
Ethereum’s layer 2 blockchains handle the scalability points that the business has struggled with for years. But, they current a new problem: the fragmentation of funds flowing into totally different smaller ecosystems.
Moreover, this difficulty goes to the technical degree, as every layer 2 blockchain processes and orders transactions in blocks in a centralized method, in accordance to CoinShares analyst Max Shannon.
Shannon defined that every blockchain retains its personal ledger and set of good contracts, leading to a fragmented international state of transactions that negatively impacts liquidity effectivity. He added:
“Addressing fragmentation promises shared liquidity, gas efficiency, bridge-less bridging, seamless app upgrades, and easier L2 bootstrapping and development.”
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