Uniswap Labs and cross-chain interoperability provider Across Protocol have proposed a new ethereum token standard for cross-chain intents to address liquidity fragmentation challenges.
The new standard falls under ethereum Request for Comments 7683 (ERC-7683) and aims to establish a unified framework for specifying cross-chain actions in intent-based systems. Intents are automated blockchain interactions based on the user’s desired outcome, without requiring specific knowledge.
For example, intents can automate a cross-chain token swap through an optimal path without requiring additional effort from the user, such as knowing the most efficient bridges and swaps.
ERC-7683
The ERC-7683 standard is designed around a common cross-chain intent flow, while allowing flexibility in implementation details. This flow begins with the exchanger signing an off-chain message, followed by broadcasting their order to a filler on the source chain. The order is then filled on the destination chain.
It is worth noting that Uniswap Labs x.com/Uniswap/status/1828786136229310763″>Outstanding which will implement this standard in the cross-chain version of UniswapX, but the ERC-7683 standard is already available for any decentralized application to implement.
In addition, the standard allows for customization of various aspects, such as price resolution methods, compliance restrictions, and settlement procedures. The proposal has been submitted to the CAKE Working Group for discussion and review.
Intent-based systems have emerged as a leading solution for end-user cross-chain interaction, simplifying the complexity and time constraints associated with traditional bridges.
However, these systems face challenges in accessing sufficient liquidity and maintaining active refill networks across all chains, problems that may intensify as the number of distinct chains grows.
Liquidity fragmentation problem
ethereum’s layer-2 blockchains address scalability issues that the industry has struggled with for years. However, they present a new challenge: the fragmentation of funds flowing into different, smaller ecosystems.
Also, this The problem moves to the technical level, as each layer 2 blockchain processes and orders transactions into blocks in a centralized manner, according to CoinShares. Analyst Max Shannon.
Shannon explained that each blockchain maintains its own ledger and set of smart contracts, resulting in a fragmented global state of transactions that negatively impacts liquidity efficiency. He added:
“Addressing fragmentation promises shared liquidity, gas efficiency, bridgeless connectivity, seamless application upgrades, and easier L2 startup and development.”
