Intent-Centric Protocols: Revolutionizing Blockchain Architectures Across Layers

Introduction

Blockchain technology, originally designed as a monolithic structure with a single layer, has evolved into sophisticated architectures comprising multiple layers to enhance scalability, efficiency, and usability.

Intent-based protocols are poised to further revolutionize these multi-layered systems by abstracting complex blockchain interactions into user-friendly intents. This article delves into how intent-based protocols integrate with and optimize Layer 1 and Layer 2 solutions, reshaping blockchain's future.

In the past few months, discussion around “intents” and their application have been a dominant topic in the Ethereum community.

Let us put it this way: If a transaction explicitly refers to “how” an action should be performed, an intent refers to “what” the desired outcome of that action should be. If a transaction says “do A then B, pay exactly C to get X back”, an intent says “I want X and I’m willing to pay up to C”.

What Are Intents?

Intents are declarative constraints that allow users to outsource transaction creation without relinquishing control. Instead of specifying exact steps, users define their goals and certain conditions. For example, a user might state they want to exchange one token for another at the best possible rate. The system then matches and executes the intent in the most efficient way possible.

Intents have been developed to simplify the complexities of interacting with blockchain technology while allowing users to maintain control over their assets and cryptographic identity.

Established Concepts Similar to Intents

Several existing systems have been utilizing principles similar to intents for years:

• Limit Orders: For instance, a user can specify that 100 X tokens may be taken from their account if they receive at least 200 Y tokens in return.
• CowSwap-style Auctions: Similar to limit orders but rely on third-party mechanisms to match multiple orders, optimizing execution quality.
• Gas Sponsorship: Users can pay transaction fees in alternative tokens like USDC instead of ETH. The intent is fulfilled only if it matches another intent that covers ETH fees.
• Delegation: Users can interact with specific accounts in pre-authorized ways, ensuring transactions adhere to defined access controls.
• Transaction Batching: Intents can be grouped together to improve gas efficiency.
• Aggregators: Actions are executed using the best price or yield available, with proof that multiple venues were aggregated to determine the optimal path (Paradigm) (Paradigm) (CoinDesk).

Renewed Excitement and Future Applications

Intents are gaining renewed interest, particularly in areas such as cross-chain MEV (e.g., SUAVE), ERC4337-style account abstraction, and Seaport Orders. ERC4337 is progressing rapidly, but other novel applications like cross-domain intents still require further research.

Critical Elements for Intent-Based Applications

For all intent-based applications, both old and new, there must be at least one party aware of the intent, incentivized to execute it, and capable of doing so promptly. Key questions to consider include who these parties are, how execution occurs, and what their incentives are. Addressing these questions is essential for determining the effectiveness, trustworthiness, and broader impact of an intent-driven system.

The Middlemen & Their Mempools

Intent-based systems necessitate intermediaries—often referred to as solvers or middlemen—that handle the execution of intents. These middlemen operate within specialized mempools designed for intent handling, which differ significantly from traditional transaction mempools in their operations. For example, Ethereum’s current mempool does not support intents natively, leading to the development of specialized intent handling systems.

Permissionless Mempools

Permissionless mempools allow any party to participate as a solver, creating a highly competitive and decentralized environment. While this promotes openness, it also introduces risks such as potential network spam or manipulation, as there are minimal barriers to entry for solvers. For instance, systems like UniswapX utilize permissionless models to aggregate liquidity and improve trading efficiency, demonstrating both the strengths and vulnerabilities of this approach.

Permissioned “Mempools”

Permissioned mempools restrict solver participation to vetted participants, enhancing security and predictability at the expense of centralization. This approach is favored in scenarios requiring high trust and reliability, where the risks of open participation outweigh the benefits. These systems often implement rigorous vetting processes to ensure solvers meet high standards of reliability and ethical conduct.

Hybrid Solutions

Hybrid systems combine the openness of permissionless models with the security of permission, aiming to strike a balance between efficiency and safety. These systems might use cryptographic techniques to ensure that while the pool of potential solvers is open, the actual execution of intents is secured by trusted mechanisms. This model attempts to harness the benefits of both worlds, often leading to innovative solutions for complex transaction scenarios.

What Can Go Wrong?

The adoption of intent-based systems can lead to new forms of market inefficiency and potential centralization. The design of intent handling systems must carefully balance openness with security to prevent scenarios where a few large solvers dominate the market, potentially leading to reduced competition and higher costs for users (CoinDesk).

Order Flow

In intent-based systems, the flow of orders—or intents—through the network can create opportunities for rent-seeking behavior if not properly managed. Exclusive control over a large volume of intents can give certain solvers disproportionate influence, distorting the market dynamics and potentially leading to monopolistic practices.

Trust

Trust is a crucial factor in the effectiveness of intent-based systems. Users must trust that their intents will be handled securely and efficiently, which requires transparent operations and robust security measures to prevent abuse. However, the complexity of these systems can sometimes obscure operations, making it difficult for users to verify the integrity and fairness of the process.

Opacity

The abstraction from specific transactional steps to high-level intents can make blockchain systems more opaque, where users see less of the underlying operations. This lack of visibility can lead to uncertainties, especially if the system does not provide sufficient feedback or auditing capabilities to track the fulfillment of intents.

Mitigating Risks

Mitigating the risks associated with intent-based systems involves enhancing transparency, improving security, and fostering a competitive environment for solvers. Robust auditing mechanisms, clear regulatory frameworks, and the development of open standards for intent handling can help address these challenges, ensuring that the benefits of intent-based systems are realized without compromising user trust or network integrity.

Conclusion

Intent-based protocols represent a transformative development in the blockchain space, offering the potential to dramatically enhance the usability, efficiency, and functionality of blockchain networks across both foundational and scaling layers. As these protocols continue to evolve, they promise to unlock new possibilities for blockchain applications, making the technology more accessible and effective for a broader range of users and use cases.

Credits: Paradigm, Cointelegraph, CoinDesk, Halborn, Anoma, Kaisar Network.