By Adam Arreola
Translation: Tudd Cai & Henry Zhang
introduce
At this stage, conducting transactions using blockchain solutions is too complex for the average user. Users may know what their goal is, but complex steps hinder their ability to achieve their intent. Recently, a solution called "intent-centric design" has attracted the attention of the community. Intentions allow users to describe their desired outcome rather than listing every step needed to achieve that goal. For example, if a user wants to receive a certain amount of Ethereum (ETH) and is willing to pay a certain amount of Bitcoin (BTC) to receive it, an intent-centric solution would make this possible without Users specify the specific steps for cross-chain transactions.
This article will explore the emerging intent-centric designs and how they will simplify blockchain interactions, and will explore in detail the life cycle of intent, the current implementation of related designs, and the future application of this technology. In addition to evaluating the risks and challenges brought by intent-centric systems, this article will also evaluate the value flow and conduct a comprehensive examination of this innovation that is rapidly changing the blockchain landscape.
Users need a simple blockchain interaction process
The complexity of blockchain transactions creates an uneven playing field where only the most savvy users can expect to profit. Sophisticated players such as market makers, high-frequency trading firms, and MEV searchers compete using advanced resources, systems, and algorithms to maximize profits.
Intent-centric design helps level the playing field, simplifies how users transact on-chain, and improves capital efficiency across the system. For experienced participants, becoming a solver in an intent-centric system is not a major transition given their existing capabilities, as they already have the capabilities. Intent-centric systems provide better UI, optimized gas fees, slippage handling, and better composability.
Users only need to describe the effect they want to achieve, and they can easily achieve their goals. Users do not need to know or understand the underlying processes required to achieve their goals; they only need to know what the final effect they want is. This makes on-chain transactions more accessible to ordinary participants. Providing users with an improved and easier-to-use operating interface can increase user demand for blockchain systems, thereby increasing overall liquidity and making the blockchain ecosystem more robust.
Digging deeper, intent-centric systems eliminate common user frustrations when dealing with gas fees and slippage. For example, in traditional blockchain transactions, users must pay gas fees, which can be an unfamiliar experience for new users who are used to these fees being abstracted away in traditional financial systems. Account abstraction (introduced via ERC-4337) allows users to pay gas fees with any ERC-20 token, or sponsor and pay gas fees for their users through authorization protocols, making gas fee payments more flexible. This not only simplifies the interaction process, but also increases control over transactions. Intent-centric systems can optimize the gas fees required for each transaction to achieve the desired effect of the user without making the user painfully estimate the required gas. Similarly, users are often affected when estimating slippage. Intent-centric systems can abstract and optimize slippage settings and transaction timing to minimize the price impact on users.
Intent Lifecycle
While intents simplify the transaction experience for users, the technology behind them is complex. There are multiple different teams working on building intent systems, but the general intent-centric transaction flow is as follows:
Image from Flashbots’ article “MEV supply chain: a peek into the future of the industry”
Off-chain submission: Users use their wallet to submit their intent.
Enter the mempool or send to the block builder: Transactions can choose to enter the mempool or be sent directly to the block builder to speed up execution. The choice of using the alternate mempool, the standard mempool, or bypassing the mempool entirely depends on the specific requirements of the intent. For example, high-value exchanges, especially those that follow the ERC-4337 standard, are often designed to bypass the public mempool entirely. This is to mitigate the risks associated with harmful MEV such as front-running and sandwich attacks. Instead, these transactions are sent directly from the bundler (usually acting as a block builder), ensuring a faster and more secure transaction process.
MEV Seekers look for opportunities: If a transaction enters the memory pool, the MEV Seeker will see the data in the memory pool and look for the best path to achieve the intention and profit opportunity. MEV Seekers can choose to process the transaction themselves or sell the information they find to "processors". In most cases, MEV Seekers not only find opportunities, but also act as processors themselves.
Processors compete for best trade execution and bundles of intents: Processors act as market makers as they compete to provide the best trade execution for users. Users naturally seek the cheapest and fastest solution to fulfill their intents, and processors who can provide that solution earn fees. Processors aggregate multiple intents into bundles, enabling them to be executed in a single transaction, and then forward these bundles to block builders to accommodate them in upcoming blocks.
Block Construction and Validation: Block builders select bundles and package them into blocks. These blocks are then sent to validators to be included in the blockchain. This stage represents the final assembly and verification of the intentions, ensuring that they are correctly executed and recorded on the blockchain.
Existing intent-related projects
Early forms of intent-centric design can already be seen in existing applications and blockchains. Some of the most notable projects include:
Cow protocol + Cow swap
Cow protocol is a permissionless trading protocol that uses batch auctions to discover prices. It maximizes liquidity by finding "coincidence of wants" opportunities (situations where two users each have something the other wants) and aggregating all available on-chain liquidity sources. Unlike traditional trading protocols, Cow protocol processors compete to provide users with the best solution to achieve their intentions.
Cow swap is a front-end interface to the Cow protocol developed by the same team. It is a decentralized exchange (DEX) that helps users find the lowest trading prices from all DEXs and aggregators with an intent-centric approach. In addition, Cow swap's intent-centric design protects users from front-running and other harmful MEV. Cow swap's new feature Cow Hooks allows developers and advanced traders to write custom actions (such as trades, cross-chain, pledges, deposits, etc.) that can be performed before or after a transaction, and all are included in a single transaction, fully embodying the intent.
Soul wallet
Soul wallet (one of NGC Ventures’ portfolio companies) is an upcoming user-friendly smart contract wallet that leverages account abstraction to increase flexibility in gas fee payments and sponsorships. It also enables social recovery, a secure mechanism for recovering crypto wallets without using a mnemonic. A majority (e.g., three-fifths) of other wallets owned by the user or their trusted friends and family members (called “guardians”) can sign an agreement to recover the wallet to help the user regain access to it. In addition to social recovery, Soul wallet also provides two-factor authentication, allowing users to specify another wallet to approve transactions. In addition, Soul wallet abstracts the underlying blockchain mechanisms to provide a seamless experience when using Ethereum and its various Layer-2 solutions. Soul wallet’s One-Click secure swap leverages account abstraction to allow users to trade without worrying about security risks and manual token approvals.
UniswapX
Uniswap’s new product, UniswapX, addresses some of the most pressing challenges in the DeFi space through its intent-centric architecture.
One of the goals of UniswapX is to solve the fragmented liquidity problem. By aggregating various sources of liquidity, such as Uniswap V2 and V3 pools for various asset pairs, UniswapX will satisfy each user's intent to find assets and provide users with the best asset prices. This is driven by third-party fillers who use liquidity from these different pools or their own private liquidity to enable transactions.
UniswapX also brings gas-free trading to users by having fillers bear the gas fees of the exchange and include them in the transaction price. This eliminates the need for users to pay for failed transactions or hold native network tokens to pay for gas fees, further simplifying the Uniswap user experience.
UniswapX's intention-centered design also helps prevent harmful MEV. For example, UniswapX reduces user losses by returning the surplus generated by orders to users in the form of price optimization. In addition, UniswapX's design protects users from front-running and sandwich attacks by arbitrageurs by using Permit2 and Reactor Contract to ensure that transactions meet user expectations and adjust transactions that do not meet user expectations. UniswapX uses Dutch auction orders with time-dependent execution to encourage competition among fillers and minimize the occurrence of harmful MEV.
Looking ahead, UniswapX plans to launch additional features that are consistent with its intent-driven philosophy. The upcoming support for Uniswap V4 is a noteworthy development, but even more groundbreaking is the introduction of gas-free cross-chain transactions. Users will be able to specify the assets they receive on the target chain, thereby avoiding the high fees and delays incurred by cross-chain transactions.
Coming Soon Intent Protocol
Anoma
Anoma (another NGC Ventures portfolio company) is a multi-purpose intent solution being developed by Heliax that will allow transactions with attached conditions. The protocol seeks to find the best match for the user's intent across blockchains, ensuring that the transaction is completed according to the conditions specified by the user. This is achieved through a decentralized counterparty discovery mechanism, which eliminates the protocol's reliance on centralized third parties, thereby strengthening the protocol's consistency with the decentralized spirit of blockchain.
Through a distributed approach, Anoma allows processors to compete with each other to fulfill user intent. Decentralized counterparties open up direct and trustless interactions between parties, while distributed solutions leverage the collective computing resources of processors to efficiently fulfill user intent.
In addition, Anoma's multi-chain atomic settlement capability optimizes digital asset transactions across multiple blockchains by compressing the process into a single transaction. This feature eliminates the hassle of manually conducting a series of transactions, improving the efficiency of cross-chain transactions and the overall user experience.
SUAVE powered by Flashbots
SUAVE (Single Unified Auction for Value Expression) is a product developed by Flashbots (another NGC Ventures portfolio company) that decouples the roles of memory pools and block builders from existing blockchains and provides a highly specialized and decentralized plug-and-play alternative. SUAVE aims to promote the decentralization of block building to reduce the potential for censorship and abuse of power by block builders within the blockchain ecosystem. As of the week of August 25, 2023, the top five block builders on Ethereum have built approximately 90% of the blocks, and approximately 48% of the built blocks are compliant with OFAC requirements. This creates a risk of centralized censorship for users, which goes against the original intention of the decentralized and censorship-resistant system that Ethereum was built on.
SUAVE is developing the MEVM, a specialized version of the EVM that enables developers to create MEV applications as smart contracts in a flexible and expressive programming environment. The MEVM consists of three main components: the Universal Preference Environment (UPE), which is a chain and memory pool designed to express and aggregate preferences (intents) across different chains; the Best Execution Marketplace (OEM), where processors compete to provide the best execution for user-submitted intents, and a decentralized network of block builders that incorporate encrypted user intents into blocks. This architecture makes it easier to build new MEV applications, promotes competition to resolve intents, and decentralizes the MEV supply chain.
SUAVE's roadmap (divided into three phases: Centauri, Andromeda, and Helios) describes their plan to reshape the MEV landscape through intent-centric design. In the Centauri phase, SUAVE introduced privacy-aware order flow auctions, allowing users to reclaim the MEV generated by their transactions. In the Andromeda phase, SUAVE's mainnet launch will enable users to express intent in SUAVE's execution market and adopt SGX-based mechanisms to improve the efficiency and privacy of auctions and block generation. The Helios phase will further decentralize the building network and lay the foundation for cross-domain MEV solutions. This intent-centric approach is in line with SUAVE's mission to build a neutral home for users, searchers, builders, and validators of different blockchains.
Essential
The intent-based infrastructure that Essential is developing is a suite of three products: a domain-specific language (DSL) for expressing intents, a new intent-centric account abstraction (ERC) standard for Ethereum and the EVM, and a modular intent layer.
As it stands, intents lack a standardized language for communicating across blockchain systems. This can lead to cross-chain intents being misinterpreted, resulting in undesirable outcomes, such as incorrect token swaps. Essential wants to solve this problem by generating a domain-specific language (DSL) for intents so that users can effectively communicate intents between different systems and have them interpreted by processors.
According to the project team, Essential's new ERC standard differs from ERC-4337 in that it will assign processors the task of constructing valid transactions to satisfy user intent. As of August 25, 2023, the team has not shared further details about the upcoming ERC standard mechanics. This new solution will bring the benefits of intent-centric design to EVM-compatible blockchains, extending intent beyond Ethereum through the EVM and creating a smoother experience for the broader blockchain ecosystem.
Finally, Essential aims to take this a step further by making a modular intent layer. Intents will be grouped into batches, and the modular intent layer will process each new block as a resolution to a batch of intents. Essential’s modular intent layer will facilitate transparent order flow aggregation by directing all order flow through a unified network of processors, ensuring they have access to as much information as possible to process trades. Additionally, by encouraging competition between processors to provide users with the best implementation of intents, the modular intent layer will be able to resist harmful MEV in transaction-centric design systems. The modularity of this layer will enable the protocol to be integrated into various ecosystems, creating a path for efficient cross-chain intent execution.
Potential future applications
There are many novel intent applications being developed that will be available to users in the future;
Conditional intents will enable actions to be executed based on specific conditions, such as the outcome of certain governance decisions or the price reached.
Continuous intents will allow actions to be performed repeatedly with a single intent expression, enabling tasks such as cost leveling or market making.
Multi-step intents implement a series of operations by expressing a single intent, where the completion of one operation prompts the subsequent operations to be executed in sequence.
Intent-centered design can also be combined with other unique technologies such as artificial intelligence. For example, by leveraging intent-centered design through account abstraction and combining it with artificial intelligence, users can enjoy personalized and automated investment strategies. Enabling each user to have a tailored blockchain experience makes on-chain operations easier while opening the door to new innovative applications and services. In addition, artificial intelligence can also be used to enhance the capabilities of processors, helping them optimize trade execution and adapt to market conditions more effectively.
Another interesting potential application of intents is in conjunction with real-world assets (RWAs):
Intent can be used to connect traditional finance and DeFi if users want to convert traditional financial assets into tokenized blockchain assets.
Intents can be used in lending protocols where users indicate their intent to use RWA as collateral for a DeFi loan. Protocols can tokenize assets for users and use them as collateral without requiring users to specify every transaction necessary to achieve their goals.
In the case where users want to earn returns on real estate tokenization, intent can help users generate RWA returns. The protocol can invest in real estate on behalf of users and earn returns from rental income or property appreciation.
Furthermore, intent-centered design has the potential to be applied beyond the blockchain space, revolutionizing many aspects of daily life. For example:
Intent-centric solutions can aggregate ride-sharing apps like Uber and Lyft, allowing users to express their travel intent and have the system find the best ride options for the user across multiple platforms.
When booking a flight, intent-based systems can analyze user preferences, such as travel dates, preferred airlines, and budget constraints, to find the best flight options for the user.
Through intent-centered design, users can find the best deals across many online stores and enhance their online shopping experience.
Unlike traditional aggregators like Expedia, which can only compile options, intent-centric systems consider and interpret the user’s potential needs. While aggregators offer a fixed set of choices based on predefined criteria, intent-centric systems actively cater to each user’s unique preferences, dynamically adjusting to provide more personalized solutions.
Risks and Challenges
While intents optimize the user experience, they also come with a range of risks and challenges. First, intents rely on outsourcing decision making to third parties — processors and block builders. This means that users must place a certain level of trust in these parties and the systems that connect them. Users need to be wary of processors and block builders abusing their ability to charge high fees for the execution of intents, or to prioritize the execution of intents that offer the highest rewards. This can lead to users paying excessive fees to execute intents and make the system inefficient. Similarly, if a small group of people controls the execution of most intents, the system faces the risk of a small number of people dictating terms, setting prices, or censoring transactions. This can lead to problems such as shrinking competition, rising user costs, and reduced overall decentralization. To prevent these factors from stifling innovation and undermining the user experience, crypto users must demand system designs that resist centralization and incentivize good behavior among middlemen through transparency and cryptoeconomic incentives to help build a trusted and neutral ecosystem.
Users interacting with intent-centric systems also run the risk of their intent being misinterpreted, for example by performing the wrong action and causing unintended consequences. Builders should be careful to avoid this risk by developing standardized forms of communication for intent-centric systems (such as the universal domain-specific language that Essential is building).
Finally, with the advent of intent-centric systems, new security threats may emerge. Examples include accidentally granting unauthorized account access, data breaches that lead to user privacy violations, and information leaks that lead to other traders front-running or manipulating the market. In this case, it is unrealistic to expect processors to behave fairly and impartially. Just as today's MEV seekers exploit the system for profit, processors in intent-centric systems will have an incentive to cheat if it is profitable. Therefore, it is the architects of these systems to build a framework that prevents malicious behavior while promoting the most favorable outcomes for users.
Changing Flows of Value in Intent-Centric Systems
In an intent-centric architecture, the interests of MEV searchers, processors, block builders, and validators are aligned with the realization of user intent. As it stands, value in intent-centric blockchain systems flows primarily to MEV searchers, processors, and block builders as they work together to communicate and execute the best possible outcomes for users and profit from the process.
Clearly, MEV Seekers and Processors accrue value. They are the first to see intents and the individuals who find the most value in a single fragmented intent or in a grouping of potential intents that they can process in batches. Processors effectively act as market makers as they compete to provide the best deal for users. Users want their intents fulfilled in the cheapest and fastest way possible. Fulfilling intents in the best way possible is not only a service, but also a lucrative opportunity for these individuals that helps incentivize them to provide the best results. The alignment of interests between users, MEV Seekers, and Processors helps the system run efficiently and transparently, leading to a competitive environment that benefits all participants.
A large portion of the value also flows to block builders. Responsible for building and determining the formation of blocks, block builders play a key role in fulfilling the intent of each user. Because searchers, processors, and users rely on block builders to fulfill intent, the role of block builders is especially valuable to all participants as the system becomes more complex.
However, as competition among searchers, processors, and builders continues to intensify, value is expected to be redistributed to validators, stakers, and users, reflecting the evolving nature of the MEV ecosystem.
Validators and stakers will benefit greatly from the fierce competition between searchers, processors, and builders. As more processors, searchers, and builders join the MEV space, individual profit margins will decline. As the transparency of the on-chain intention-centric architecture continues to increase, and when parties combine algorithms that copy each other, gas fees may eventually erode much of the profits that processors hope to earn. It is worth noting that value does not disappear, but is redistributed to validators and stakers. This change is critical to the long-term stability of the network. A fully compensated validator can increase the network's security budget, and higher staking returns will incentivize further staking, improving the overall security of the network.
Furthermore, users (transaction initiators) will also benefit as the system becomes more efficient and competitive. Reduced processor profits and gas fees allow users to execute their intentions at a lower cost. Furthermore, increased competition among processors to provide the best execution path results in better prices and faster transactions for users.
Conclusion
The intent-based paradigm shift is not only a technological advancement, but also a shift in value preferences. Project developers should focus on realizing user intentions rather than complex operations. Intent-centric systems provide a path to building a composable blockchain landscape that values user needs, efficiency, and transparency. Not only that, enhanced user experience can also accelerate the adoption of crypto applications, making complex blockchain technology closer to users' daily usage habits.
Research on intent gives us a glimpse into the future: aligned interests between users, MEV searchers, processors, and block builders can simplify blockchain interactions and drive the development of the entire crypto ecosystem. By putting the fulfillment of user intent first, developers pave the way for a more fair and user-centric blockchain landscape where the flow of value is tied to the fulfillment of human intent.
The rise of intent-centered design marks a transformative moment and the beginning of a new era for blockchain, transforming a complex technological maze into a user-driven frontier.