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Why is Web3 Intents considered the next new narrative?

23-08-22 19:11

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Original Title: Powerful Intents: Part 1

Original Author: Mike Calvanese and the team at Brink

Translated by: Luccy, Joyce, BlockBeats

This is the first part of a 3-part series on Intents written by Mike Calvanese and the Brink team.

Intents are spreading rapidly and are one of the many user experience improvements achieved through account abstraction. They were also a hot topic discussed by Vitalik during his speech at EthCC. Intents allow users to define the on-chain results they expect and outsource the technical work of achieving these results to third-party solvers that interact directly with the network and protocol. Ultimately, the abstraction layer will make Web3 applications as easy to use as regular applications. It reduces the existing learning curve for technology and will attract millions of new users.

The paradigm shift towards Intents means that future users do not need to worry about things like submitting transactions, paying gas fees in ETH, mitigating MEV on AMMs by setting slippage limits, aggregating token swaps for optimal path routing, or bridging assets between networks.

One simple way to understand Intents is to see them as declarative expressions of what the user wants to happen, rather than imperative steps of how to accomplish something.

https://twitter.com/CannnGurel/status/1663292583550803969

Current Intents

Intents is not a new concept.

Before the emergence of Uniswap and AMM, Ethereum projects such as EtherDelta and 0x provided order books based on Intents. The NFT market has been using signed Intents for years to place NFT orders and quotes, and updated systems like CoW Swap and UniswapX now provide more advanced Intents-based infrastructure for ERC20 limit orders.

Observe the current pattern, the word "Intents" seems to be synonymous with "limit order" because the only Intents widely supported in Web3 today is "I want X, and I'm willing to pay Y". The Intents architecture of limit orders is usually simple and focused on one goal: to exchange at a more favorable price than the current market quote. Users sign their limit order Intents, and the solver looks for paths using AMM, other liquidity sources, or in some cases, other Intents to "fill" the signed Intents. The solver has an incentive to find paths because they can keep the remaining portion as additional revenue after the user's Intents are satisfied.

Limit order Intents architecture

Many systems have already established scenarios that support the use of limit orders, but with the development of more advanced Intents tools, we will see more universal architectures that enable more powerful use cases to be realized.

Some examples of general Intents systems include Anoma and Flashbots SUAVE, which are currently under active development. They will provide the Gossip layer for Intents, where users broadcast signed Intents to Gossip nodes. These chains will be specific to Intents, facilitating the connection between users signing Intents on different networks and solvers executing them.

Another example is Brink, a solution for creating composable Intents. Brink allows users and developers to build, sign, and settle condition-based Intents on multiple EVM-compatible networks.

Intents 的未来

translates to

The Future of Intents

in English.

Let's explore several ways to go beyond simple limit orders with Web3 Intents. Here are some new concepts:

条件 Intents: Allow execution of an operation when one or more conditions are met.

连续 Intents: Expressing the desire to take repeated actions.

Multi-step Intents: When resolving an Intent, one or more new Intents will be opened.

Intents Chart: A path formed by a set of related Intents.

条件 Intents

translates to

Conditional Intents

in English.

The current Web3 applications only have one type of conditional Intents: limit orders. In the future, we will have Intents that can consist of any number of conditions from any state, resulting in a variety of operations.

If you are a Web3 user, you have made many conditional decisions in the past, which can be expressed as Intents, signed and delegated to third-party solvers, such as:

Price threshold: "If the price of A/B is lower than X, then replace B with A." In traditional finance (trad-fi), this is called "stop loss."

Governance decision: "If a governance proposal that I do not support is passed, then sell token A."

Wallet balance: "If my hot wallet ETH is insufficient, please transfer more ETH from my cold wallet to my hot wallet."

已用时间/区块数："If more than X blocks are mined, transfer ETH to the recipient."

All of these can be used as a single Intents signature. The solver will monitor these Intents and take action on behalf of the user when the conditions are met. Users sign these conditions, which will force the solver to check the on-chain state to prove the condition as part of their Intents.

Intents can express any number of conditions, such as:

I want to buy 2 ETH with DAI when the following three conditions are met: 1) ETH price is below $1,750; 2) the average DAI yield for lending ETH is high; 3) a whale wallet that I am following has purchased at least 10 ETH in the past 24 hours.

When any number of complex state conditions are met, users will be able to express Intents to buy, sell, pledge, transfer, or bridge assets, all of which can be completed with just one signature Intents.

连续 Intents

Continuous Intents

Intents will provide a protocol-agnostic way to execute sequential operations. Although today's Intents typically involve a single signature corresponding to a single action (limit order), we will soon see the emergence of sequential Intents.

The user today takes continuous actions by depositing funds into protocols or exchanges. Here are some examples:

Cost Average: "Buy ETH once a month using DAI at market price." Users typically use CEX such as Coinbase to complete this task.

Compound Interest (also known as re-staking): "Extract rewards from A, exchange for B, and then re-stake." This is a cumbersome process that involves multiple transactions and interactions with multiple DeFi protocols.

Hot Wallet Recharge: "I have a cold wallet with 50 ETH inside. Whenever my hot wallet ETH balance falls below X, I transfer Y ETH from my cold wallet to my hot wallet." This requires many independent transactions.

Payment Flow: "Transfer X USDC to the receiving address once every two weeks." This is supported by the streaming payment application, but requires users to deposit assets into the smart contract.

Market making: LP positions based on AMM basically follow the same pattern as two opposite swaps, which continue in an infinite loop: "When the price of A/B exceeds X, exchange A for B; when the price of A/B is below X, exchange B for A".

From these examples, it can be seen that today's continuous operations require users to deposit specific protocols and submit many transactions. Through Intents, users can express the continuous operations they want with a single signature.

The average cost is a perfect example. Users who plan to average costs (by repeatedly buying or selling over time) can express it as a signature that allows 1 ETH to be exchanged for DAI at a price provided by an ETH/DAI TWAP oracle that is difficult to manipulate, charging a fee of 1% (0.01 ETH) every 50,000 blocks (approximately once a week on the Ethereum mainnet). The solver will monitor this Intents and check:

1. Can the user's account exchange 1 ETH?

2. Have you mined 50,000 blocks since the last exchange?

4. After the solver exchanges payment Gas, will there be any remaining ETH to pay for the solver's operating costs, which may include the risk of losing PGA (Priority Gas Auction) or any other fees? Is the potential profit worth it for the solver?

If all of these pass, the solver will send a transaction to fulfill the user's Intents for ETH→DAI exchange. As long as the user's account has enough ETH, the solver can monitor "cost-averaged" Intents with a single signature and generate a continuous flow of transactions. Users can get what they want without directly interacting with the EVM network or a specific protocol.

Cost-averaging Intents architecture

Using Intents for market making is another continuous and potentially infinite operation that can be delegated to solvers. A user who wishes to make a market for ETH/DAI may create an Intents that allows for the exchange of DAI→ETH at a price of 1,800 ETH/DAI or lower, and the exchange of ETH→DAI at a price of 2,000 ETH/DAI or higher. Through this Intents, the user attempts to lock in a profit of 200 DAI per trade when the market fluctuates between the 1,800 and 2,000 ETH/DAI price points.

Market Making Intents

It can be imagined as two mutually restrictive limit orders, where one will open when the other is executed, and vice versa. Users can sign a single exchange intention at each price point. As long as the market continues to fluctuate at these price points, the solver can theoretically execute countless such orders without any action required from the user.

Multi-step Intents

Intents can be composed of multiple steps. You can think of these intents as a state machine, where each transaction transitions from the previous state to a new state, depending on the conditions defined by the previous state.

A simple multi-step Intents example is the classic traditional financial order arbitrage trading. These orders may vary in complexity, but a simple version is common in traditional financial trading applications. With the composability and multi-step Intents of Web3, we can perform very powerful order arbitrage trading.

A Web3 order arbitrage trade Intents can be expressed as: "I want 1 ETH and I am willing to pay 1,800 DAI. Once I have paid 1,800 DAI and own 1 ETH, I am willing to hold this 1 ETH until I can sell it at a price of 2,000 DAI. If the ETH/DAI price falls below 1,620 DAI, I hope to reduce my losses by selling this 1 ETH. In this case, I will accept 1,600 DAI and pay a 20 DAI fee to the solver. If I still hold this 1 ETH when [random governance proposal] is passed, I want to sell this 1 ETH at the market price of ETH/DAI and give 10% of the proceeds to the solver."

"Bracket Order" Intents

This is a relatively simple 3-step order that includes some conditional triggers, but these types of orders can be much more complex.

Intents Chart

The relationship between different user Intents can form an Intents chart. These charts represent the combination of user-defined conditions and actions, resulting in on-chain behaviors such as exchanges, asset transfers, or other actions. All of the previous Intents examples are actually just names for specific graph arrangements.

Just as limit orders represent the current state of market liquidity, the Intents graph can represent not only the current state, but also the liquidity conditions of many different potential future states.

For example: Users trade XYZ and ETH in a fictional market. Intents to buy and sell XYZ are expressed under various conditions, such as the results of governance proposals, mining of specific blocks, market price fluctuations, or whether other Intents have been fulfilled.

Intents graph for fictional XYZ-ETH market

This chart represents the current liquidity that exists, as well as the potential liquidity that may exist in the future. The Intents chart can span across markets and even different chains.