Understanding Chain Abstraction by Problem Framing
By Lydia Wu, Researcher at Mint Ventures
If you found yourself baffled upon your first encounter with the “chain abstraction” concept, you’re not alone.
It appears significant, with numerous projects, and extensive funding, all claiming to be the standard… yet its practical use still needs to be discovered. Is “chain abstraction” just another buzzword in the pipeline of new Web3 concepts?
This article will start with the concept, return to the fundamental questions, and aim to make something out of nothing.
TL; DR:
- The purpose of abstraction is to hide complexity, and the levels of abstraction in the Web3 context are often higher than in Web2, making it more challenging.
- Modularity simplifies the process of building blockchains. Meanwhile, chain abstraction involves restructuring the relationships among chains and enhancing the experience for both users and developers.
- Analyzing cross-chain asset transfers, cross-chain communication, interoperability, and chain abstraction: A conceptual hierarchy centered on coordinating state changes (transactions) across different chains, though these concepts often blur into one another in practice.
- Intent-based chain abstraction solutions are becoming a popular architecture, with many component-based products potentially coming together like puzzle pieces to gradually shape the final form of chain abstraction.
- Current discussions and efforts around chain abstraction have yet to break free from an infrastructure-centric orthodoxy. The validity of chain abstraction as a real issue depends on active on-chain engagement, advancements in modularity, and the influx of new users and developers.
- The future of chain abstraction is not a straightforward journey; it requires an evaluation of its impact on long-tail chains and an exploration of non-DeFi applications.
What exactly is chain abstraction?
- Is chain abstraction a real problem?
- What kind of problem does chain abstraction belong to?
- What is the difference between cross-chain, interoperability, and chain abstraction?
Is Chain Abstraction A Real Problem?
— Not necessarily. A problem’s validity depends on its context. Imagine asking someone 500 years ago for their opinion on an energy crisis.
So, where does the discussion of chain abstraction come from?
The answers vary but often touch on key terms such as the Ethereum roadmap, modularity, intent, and mass adoption… At present, the most compelling perspective seems to be that chain abstraction represents the latter stages of modularity.
A clear definition of chain abstraction is essential to grasp this perspective.
In computer science, “abstraction” is the process of extracting high-level operations and concepts from the backend processes, intended to simplify comprehension by masking complexity. For example, most Web2 users merely need to be familiar with browsers and ChatGPT, remaining oblivious to the underlying complexities or even the notion of abstraction itself.
Similarly:
- Account Abstraction: Facilitates seamless account functionality by hiding internal details like addresses, private keys, and mnemonic phrases, to facilitate a seamless user experience.
- Chain Abstraction: Ensures seamless operation across chains by hiding internal specifics such as consensus mechanisms, gas fees, and native tokens.
In traditional software development, abstraction, and modularity are interconnected and critical concepts. Abstraction outlines the system’s structural hierarchy, whereas modularity is the practice of implementing this structure. Each module symbolizes a level of abstraction, and the interactions between modules hide their internal complexities, which aids in code extension, reuse, and maintenance. Without abstraction, the demarcations between modules would be intricate and challenging to manage.
It’s important to recognize that Web2 products often perform abstraction and modularity within closed or semi-closed ecosystems, concentrating abstraction layers within a single platform or application in controlled environments, typically devoid of cross-platform or systemic compatibility concerns. In contrast, within the Web3 framework, driven by the commitment to decentralization and open ecosystems, the dynamics between modularity and abstraction are considerably more complex.
Although modularity can help deal with abstraction issues within single chain and reduce the barriers to chain development, it has not entirely addressed the abstraction of user and developer experiences in a multi-chain context. There’s a noticeable “island effect” among various chains and ecosystems, particularly evident in the fragmentation of liquidity, developers, and users. The introduction of chain abstraction involves redesigning the relationships among different chains to facilitate their interconnectivity, integration, and compatibility, as demonstrated in an article released by Near in January of this year.
We can argue that the urgency of chain abstraction as a legitimate concern is intimately tied to the evolution of the following factors:
- On-chain activity: Whether the presence of diversified dAPPs leads to increased user engagement on chain.
- Progress in Modular Blockchain: Whether heightened on-chain activities encourage the development of more rollups and appchains.
- Barriers for New Users and Developers: To what extent does the current blockchain environment inhibit the entry of newcomers and developers (referring to the friction in a rising trend, rather than frustration in a stagnant state)?
What Kind of Problem Does Chain Abstraction Belong to?
Chain abstraction itself is an abstract concept that operates at a high-dimensional level within the Web3 narrative. This may partly explain why it presents as both all-inclusive and somewhat perplexing. Specifically, chain abstraction is not a solution but an instructive philosophy.
Similar to how Bitcoin today, after several halvings, dramatic price fluctuations, and the introduction of ETFs, has transcended its original identity as a technology solution or an asset. It has transformed into a timeless ideology and a crypto totem that embodies core cryptographic values and will continue to steer industry innovation and development well into the future.
Differences and Connections: Cross-chain, Interoperability, and Chain Abstraction
These concepts can be understood on a spectrum from concrete to abstract. They represent a conceptual hierarchy centered on coordinating state changes (transactions) across different chains, yet often involve a great deal of grey area in practical use.
Cross-chain applications and protocols can broadly be divided into two main categories:
- Cross-chain Asset Transfer: Such as cross-chain bridges, cross-chain Automated Market Makers (AMMs), and cross-chain aggregators.
- Cross-chain Communication: Protocols such as Layerzero, Wormhole, and Cosmos IBC, etc.
Asset transfer also relies on message passing. In cross-chain asset transfer applications, the message layer typically involves a set of on-chain smart contracts and state update logic. Abstracting this message-passing functionality into a universal, protocol-layer solution is what defines a cross-chain communication protocol.
Cross-chain communication protocols can handle complex operations across blockchains, including governance, liquidity farming, NFT trading, token issuance, and gaming interactions. Interoperability protocols extend these capabilities further, delving into deeper data processing, consensus, and validation to ensure consistency and compatibility between different blockchains. In practice, however, these two concepts are often two sides of the same coin and can be used interchangeably depending on the context.
The essence of chain abstraction includes blockchain interoperability but also introduces an additional layer focused on enhancing the experiences of users and developers. This aspect is closely linked to the intent narrative that has gained attraction in this cycle. The integration of intent with chain abstraction will be further detailed in the subsequent sections.
What specific issues are involved in chain abstraction?
- How can chain abstraction be achieved?
- Why is the integration of intent with chain abstraction significant?
How can chain abstraction be achieved?
Different projects have distinct interpretations and entry points concerning chain abstraction. We can classify these into two schools: the Classical School, which emerged from interoperability protocols and focused on developer-side abstraction, and the Intent School, which incorporates new intent architectures and concentrates more on user-side abstraction.
The roots of the Classical School can be traced back to Cosmos and Polkadot, well before the advent of the chain abstraction concept. Newer entrants like Optimism Superchain and Polygon Agglayer are now focusing on liquidity aggregation and interoperability within the Ethereum L2 ecosystem. Cross-chain communication protocols such as Layerzero, Wormhole, and Axelar are expanding to additional chains and striving for greater adoption to amplify their network effects.
Within the Intent School, L1 projects like Near and Particle Network are devoted to offering comprehensive chain abstraction solutions. Additionally, component-based strategies that tackle specific challenges are prevalent, especially within DeFi protocols, exemplified by UniswapX, 1inch, and Across Protocol.
For both the Classical and Intent schools, the fundamental design principles emphasize secure and fast cross-chain functionalities along with intuitive user interactions. Key features include unified user interfaces, seamless cross-chain functionality for dAPPs, as well as the management and subsidy of gas fees.
Why is the integration of intents with chain abstraction significant?
“Intent-based protocols” are emerging in abundance, and this section will explore why they have become a popular architectural choice and their potential implications.
Similar to abstraction and modularity, intent is not a native concept in Web3. Intent recognition has been a significant aspect of natural language processing for decades and has been extensively studied in human-computer dialogues.
When discussing intent research in Web3, it’s impossible to ignore the famous paper by Paradigm. While similar design principles have already been implemented in products like CoWSwap, 1inch, and Telegram Bots, it was this paper that formally articulated the essence of intent architecture: users simply define what they want to achieve and leave the complexities of the process to be handled by third parties. This philosophy aligns with the focus of chain abstraction on enhancing user experience, providing a distinct and practical solution approach.
The market features a diverse range of frameworks for chain abstraction, with the CAKE framework (Chain Abstraction Key Elements) from Frontier Research being particularly prominent. This framework, which incorporates intent architecture, organizes the various technologies and solutions of chain abstraction into distinct layers: permission layer, solver layer, and settlement layer. Other frameworks have fine-tuned this approach, such as Everclear, which added a liquidation layer between the solver layer and settlement layer.
Specifically:
- Permission Layer: Central to this layer is account abstraction, acting as the portal for dAPP users to request intent quotes.
- Solver Layer: This is generally an off-chain third-party solver layer tasked with fulfilling user intents.
- Settlement Layer: Once users approve transactions, tools such as oracles and cross-chain bridges come into play to guarantee the execution of transactions.
In the Solver Layer, solvers are third-party off-chain entities known by various titles — such as solvers, resolvers, searchers, fillers, takers, and relayers — in different protocols. These solvers are generally required to stake assets as collateral to be eligible to compete for orders.
The process of using intent-based products is similar to filling a limit order. In cross-chain scenarios, to quickly satisfy user intents, solvers often advance funds and collect a risk premium upon settlement. This arrangement is similar to a short-term loan where the loan duration is equivalent to the blockchain state syncing time, and the interest is akin to a service fee.
The comprehensive solutions represented by Near, which hopes to combine permission, solver, and settlement layers into a unified infrastructure, are in the early stages of proof-of-concept, making it difficult to observe and evaluate its utility.
Conversely, component-based solutions, particularly those in cross-chain DeFi protocols, have demonstrated advantages over traditional cross-chain solutions. Across Bridge, the flagship product of Across Protocol, utilizes an intent-centric architecture to offer higher speed, lower price, and stronger fee-generating capability among EVM-compatible cross-chain bridges, with its benefits being particularly pronounced in smaller transactions.
According to the roadmap, Across Protocol plans to launch a modular settlement layer to facilitate cross-chain intents in its third phase. Uniswap Labs and Across Protocol have co-proposed ERC-7683, which seeks to simplify the entry process for solvers by standardizing intent expressions and creating a universal network for solvers.
Intent-based chain abstraction solutions will likely become a popular architecture, with many components potentially assembling the ultimate standard of chain abstraction like pieces of a puzzle.
What challenges exist in our understanding and implementation of chain abstraction?
- What issues stem from an infrastructure-centric perspective?
- What other concerns related to chain abstraction are worth further exploration?
What issues stem from an infrastructure-centric perspective?
As leading interoperability protocols, Layerzero has raised a cumulative $290 million and Wormhole $225 million, yet the substantial FDV and low market cap have led their tokens to become symbols of the much-criticized VC tokens of this cycle, undermining market confidence in the chain abstraction.
Returning to the cartoon at the beginning, it is apparent that chain abstraction projects, despite their unique technology stacks and token standards, are often branded as “useless infrastructure” due to the stagnant external market growth. Additionally, the downturn in metrics before and after Layerzero’s airdrop has intensified doubts regarding the market demand for “cross-chain communication.”
On the ERC-7683 forum page, developers discussed the role of the ERC standard itself in response to criticism that cross-chain asset transfer functionality is too minor, not universal enough. Proponents of minimalist ERCs argue that tool-level standards are sufficient to address existing problems and can be combined with existing standards, making adoption relatively easier.
Given that the design philosophy of intent architecture is largely application-focused, “universal, full-stack, and compatible” protocol standards can sometimes become “too vague to be meaningful” or “too complex to address real-world problems.” This leads to an ironic phenomenon: the chain abstraction protocols, which are born to solve fragmentation issues, end up providing fragmented solutions themselves.
What other concerns related to chain abstraction are worth further exploration?
- Similar to how globalization affects underdeveloped regions, chain abstraction makes it more difficult to maintain TVLs for new and long-tail chains. What effect will this have on the adoption of chain abstraction?
- A study by Variant suggests that UniswapX may lead to a new situation where long-tail tokens are directed towards AMMs, while mainstream tokens are increasingly filled by off-chain solvers. Is this the future trend for DEXs? Will there be a global solver layer stacked on top of the global liquidity layer in the future?
- Besides DeFi protocols, what other forms might intent-based product architectures take?
- Will chain abstraction become the next big trend after modularity, or will it turn out to be a major bubble
