ERC-7683: A New Standard for Inter-Chain Intent Coordination on Ethereum

1. Addressing the Challenges of Ethereum Fragmentation

With the rapid development of Layer 2 solutions and DeFi projects, the Ethereum ecosystem is facing an increasingly serious liquidity fragmentation problem. Assets and transactions are scattered across multiple decentralized platforms and protocols, lacking effective interoperability, which results in liquidity on each chain only operating within its own independent environment, exacerbating the overall fragmentation cost issue.

It is expected that over 100 new Ethereum chains will be launched in 2024, which is like seeing a dazzling array of products in a mall, but needing to settle using different currencies from various countries. To address this challenge, the Ethereum Foundation launched the Open Intents Framework on February 20 this year, aiming to provide a seamless trading experience for Ether similar to a "single chain." The framework quickly gained support from over 50 protocols.

The Open Intents Framework mainly consists of three core components:

1. Open-source solver: Written in TypeScript, capable of monitoring on-chain events and processing intents. It has protocol independence and supports features such as indexing, transaction submission, and rebalancing, allowing developers to customize it according to their needs.

2. Composable Smart Contracts: Based on the ERC-7683 standard, it defines the logic for intent interpretation, execution, and settlement. It supports limit order trading and Hyperlane ISM settlement by default.

3. UI Template: Provides customizable user interface templates designed to simplify access to and use of intent products.

2. Analysis of ERC-7683 Standard

ERC-7683 is a universal standard for cross-chain intents on Ethereum, co-developed by Across and Uniswap Labs. This standard aims to provide a unified framework for Ethereum and other blockchains to express and execute cross-chain operations, particularly between multiple Layer 2 solutions and sidechains.

The core content of ERC-7683 includes:

1. Cross-Chain Order Structure: Defines a unified format for cross-chain orders, ensuring consistency between different blockchains and platforms.

2. ISettlementContract interface: standardized the handling of the settlement process, allowing cross-chain transactions to be flexibly settled across different platforms.

3. Fulfil mechanism: Allows participants to compete in a shared network to fulfill cross-chain intentions, improving transaction efficiency.

4. Fill in the deadline: Mark the expiration time of the cross-chain intention to avoid long periods of invalid transaction waiting.

5. Order Data Type: Use EIP-712 type hash to specify the structure and format of intent data.

6. Order Data: Contains the core parameters of cross-chain transactions, defining the expected outcome of the transaction.

The main advantage of ERC-7683 lies in achieving seamless cross-chain interaction, simplifying the operational process, and lowering the technical threshold for cross-chain operations. At the same time, it also enhances cross-chain governance capabilities, enabling decentralized autonomous organizations (DAOs) to govern across multiple platforms more efficiently.

3. Intent and DeFAI: Abstract Boundaries

Intent and DeFAI both originate from the financial attributes of DeFi, but the core issues that DeFi really needs to address are scalability and liquidity. Intent aggregates liquidity through UNI and ERC-7683, while DeFAI enhances attractiveness through AI narratives and automated trading.

The core goal of Intent is to simplify user interaction processes through an "intent-driven trading" mechanism, enhancing the usability and trading efficiency of DeFi. It may also address liquidity bottlenecks through cross-chain technology, breaking down barriers between different chains.

DeFAI, as an AI-based decentralized finance protocol, focuses on solving compliance and risk control issues in DeFi. It utilizes AI technology to analyze market trends, helping to identify potential risks and optimize market operations and risk management.

Solving the problem of liquidity fragmentation requires finding a balance between abstraction and practical application. This depends not only on the increase in abstraction levels but more on how to achieve the integration of the ecosystem by optimizing existing protocols.

4. Uniswap: The Key Driver of ERC-7683 Development

The core support of ERC-7683 mainly relies on Uniswap for implementation. This is because both Intent and DeFAI are essentially aimed at better serving DeFi, and maintaining the healthy development of DeFi is key to market liquidity.

1. The liquidity advantages of Uniswap V4: The V4 version introduces a more flexible and efficient liquidity pool management mechanism, optimizing capital efficiency. The use of a single PoolManager contract significantly reduces deployment and exchange costs, while Hooks allow for the development of customized AMM pools.

2. The potential of Uniswap X: Uni X is expected to further enhance cross-chain interoperability, possibly by adding new cross-chain bridging mechanisms or by integrating deeply with ERC-7683, providing more efficient cross-chain asset exchange channels.

3. Dependence on the Implementation of Cross-Chain Protocols: ERC-7683 relies on standardized cross-chain transaction structures and settlement mechanisms, while Uniswap plays a pivotal role in decentralized exchanges. The liquidity pools, automated market making, and cross-chain trading capabilities provided by Uniswap, particularly the support from Uniswap X and Unichain, not only facilitate the efficient execution of ERC-7683 but also ensure the stability and security of its cross-chain and multi-asset transactions.

V. Actual Significance of Intent

Putting aside abstract definitions, "intent" can actually be understood as a clear trading objective or driving force. The launch of ERC-7683 provides new ideas for solving the fragmented liquidity problem.

The ultimate goal is to inject new vitality into Uniswap, hoping to trigger a new wave of DeFi enthusiasm. The intention of ERC-7683 is not only to continue Layer 2 scaling but also to achieve more efficient trading through Uniswap, create richer functionalities, and stronger cross-chain interoperability, and even introduce new incentive mechanisms or trading models to attract more users and liquidity.

If Uniswap V4 or Uniswap X introduces new smart contract logic or trading models at the protocol level, through ERC-7683, Uniswap can further enhance cross-chain liquidity, reduce transaction costs, and add more trading pairs and liquidity pools on top of the existing AMM model. This will make Uniswap no longer just a liquidity-dispersed AMM, but an important practical platform for the "intention" concept.