Chain Abstraction & Intent-Based Swaps

Concept of Chain Abstraction

Chain abstraction simplifies user interactions with blockchain technology by hiding the complexities and technical details, making cross-chain transactions as intuitive as single-chain operations. This allows users to seamlessly engage with DApps without worrying about the underlying blockchain.

This approach also enhances liquidity by enabling access across various blockchains, eliminating the need for permanent liquidity pools and utilizing private liquidity. Chain abstraction holds the potential to create more user-friendly and interconnected blockchain ecosystems, paving the way for broader adoption and enhanced functionality in DeFi.

To illustrate chain abstraction, imagine that every time you need to pay for your coffee with a bank card, you would need a card that matches the terminal's bank. Otherwise, you wouldn't be able to make the payment. With chain abstraction, you can use any bank card on any terminal without any issues, making the process much simpler and more convenient.

Intent-Based Swaps Concept

An intent is an order type where users define the desired result rather than the method of execution. The basic idea is straightforward: rather than dealing with the complexities of determining paths, bridging, switching between chains, and covering interchain transaction fees, users can rely on a resolver to manage these tasks. This makes transactions across different chains fast, inexpensive, and straightforward.

Intent-based swaps have three consequential steps:

1. Intent. The user specifies their intent to swap tokens from the source chain to the destination chain. The destination chain can be the same as the source chain, and tokens on the source chain can be bridged or swapped for other types of tokens on the destination chain. After signing the intent, it becomes an intent-based order and flows into the Order Pool of the Unified Order Network, where it is available for execution by relevant participants (resolvers integrated in the Resolver Pool and Matching Engine), who monitor the pool for suitable orders to fulfill.

2. Execution. The Quotex matching algorithm, along with competing resolvers, fulfills the user's intent-based order at the best price, with the winning resolver submitting the user’s transaction to the target chain.

3. Clearing. After verifying that the execution of the intent-based order is complete, Quotex repays the winning resolver with the funds they provided on the destination chain.

In this model, transactions on the target chain are executed at the lowest possible base fee that the resolvers can offer.

Quotex Intent-Based Architecture

Quotex's intent-based architecture can be split into a three-layer system, each corresponding to a step in executing intent-based swaps: the intent layer, execution layer, and clearing layer. This process involves a signed intent order flowing into a Unified Order Network, where a Matching Engine finds a mirror order or resolvers compete for execution if a mirror order is absent, followed by a clearing layer that verifies the execution and processes repayment to relevant resolvers.

Below is a diagram of how the Quotex Intent-Based Architecture is built:

Intent Layer

1a. User Intent. The user fills in their intent and signs it, which becomes an order in the system. The order is not a transaction per se.

1b. Order Flow. The order flows into an Order Pool within the Unified Order Network.

Execution Layer

2. Order Arrival. When a new order arrives in the Unified Order Network, it triggers the Matching Engine to start the execution process.

2a. Matching Engine Process - Mirror Orders. The Matching Engine first looks for mirror orders within the Unified Order Network. For this explanation, let's assume no mirror orders are found.

For more information about “mirror” orders, please, visit pages “Order Type” and “Types of Orders Matching “ and “Matching Engine Algorithm”.

2b. Matching Engine Process - Resolvers. The Matching Engine proposes relevant resolvers in the Resolver Pool to compete for the order's execution.

3. Order Claiming. The resolver that wins the bid claims the order, prompting the Matching Engine to call the execution contract.

4a. Funds Blocking. The execution contract blocks the funds specified in the order to be swapped.

4b. Execution Notification. The execution contract notifies the resolver that the funds are blocked, and they can proceed with the order execution.

5. Fund Transfer. The resolver transfers the funds to the user on the destination chain.

Clearing Layer

6a. Verification. The execution contract verifies that the funds have been transferred by the resolver to the user on the destination chain.

6b. Fund Release. Upon successful verification, the execution contract releases the blocked funds of the user.

6c. Resolver Compensation. The execution contract transfers the user’s funds to the resolver on the source chain.

Intent-Based Swaps as a driver for Chain Abstraction

Intent-Based Swaps serve as a pivotal driver for Chain Abstraction due to their capacity to streamline cross-chain transactions with a focus on interoperability, efficiency, user experience, and scalability within blockchain ecosystems.

Intent-Based Swaps strive for chain abstraction in several key ways:

• Simplification. Intent-Based Swaps abstract away the complexities of individual blockchain protocols, allowing users to specify their desired transaction outcomes without needing to understand the technical nuances of each chain. This abstraction enables seamless interoperability, making it easier for transactions to move across different chains effortlessly;

• Interoperability. Intent-Based Swaps ensure that transactions can traverse different blockchain networks without friction, fostering a more connected and cohesive blockchain ecosystem. This capability is central to achieving true chain abstraction, where the underlying infrastructure becomes invisible to the user;

• Enhanced Accessibility. By abstracting the technical details and providing a straightforward user interface, Intent-Based Swaps lower the barrier to entry for interacting with multiple blockchain networks. This not only simplifies the process but also encourages wider participation in the blockchain ecosystem;

• Unified User Experience. By offering a unified interface, Intent-Based Swaps simplify user interactions with diverse blockchain networks. This approach eliminates the need to manage multiple blockchain protocols individually, thereby enhancing user adoption and making cross-chain transactions more accessible to a broader audience.

Scaling Chain Abstraction in DeFi by integrating Quotex

The trend of chain abstraction in DeFi is shaping the market's medium-term development. Historically, DeFi projects had to develop their own solutions to keep up with new technological trends. However, this approach is not always feasible because: (i) it cannot be technically unified; and (ii) it requires significant resource allocation, which is not rational for many projects. A good example is bridge infrastructure: as DeFi became cross-chain, instead of creating their own bridges, protocols integrated with specialized infrastructure protocols to bridge their tokens.

Recognizing the imminent need for infrastructure to support intent-based swaps and the emerging trend of chain abstraction, we have decided to provide several types of integration with Quotex: (i) direct integration of Quotex; (ii) integration in the Unified Order Network; (iii) via API & Widgets.

API & Widgets

Our API & Widgets give market participants quick access to any feature.The API enables users to access intent-based transaction executions via the protocol’s interface, while the tailored widgets provide market participants with straightforward access to Quotex, enhancing their services and improving user experience. By creating these products, we are committed to supporting and developing DeFi along the vector of chain abstraction.

Consider a potential example: Lending Protocol Q operates on Chains X and Y. For a user to unstake their USDT on Chain X and stake it in a pool on Chain Y, they would traditionally need to unstake, use a third-party bridge, bridge to Network Y, pay a commission, wait for the transaction, and then stake it in the pool on Chain Y.

If Lending Protocol Q integrates the API into its operations, it could provide users with a single point of entry on any chain. The user could then stake on Chain Y using assets from any chain, including Chain X. Under the hood, the lending contract on Chain Y would use Quotex to swap assets with minimal waiting time, at a low cost, and efficiently.

Alternatively, Lending Protocol Q can integrate a widget that pops up when cross-chain transactions are needed. This way, the user would not need to change windows or go to a third-party service, as they could complete their bridge operations without leaving the Lending Q platform.