Research Summary
The report discusses the concept of ‘intents’ in the crypto world, a development aimed at making trading and cross-chain ordering more efficient. It explains how intents work, their advantages and disadvantages, and their potential impact on the crypto landscape. The report also highlights several projects that have adopted the intent/solver architecture, including IntentX, CowSwap, UniswapX, and Anoma.
Key Takeaways
Understanding Intents in Crypto
- Definition and Function: An ‘intent’ is a user’s request, such as wanting to buy a certain coin at a specific price. Intents aim to solve issues related to order flow and impermanent loss in Automated Market Makers (AMMs). They are picked up by “solvers” who compete to find the best price available to fulfill the user’s request, making transactions more cost-efficient.
- Advantages of Intents: Intents can access liquidity both on and off-chain, resulting in deep liquidity, lower slippage, and better execution. They also improve the user experience by simplifying the trading process. Furthermore, intents can handle complex requests, including bridging from one chain to another.
- Challenges with Intents: Intents require a high level of trust in the solver by the user. There’s a risk that a major player could control the majority of solvers and secure most transactions. Another issue is the Ethereum mempool’s design, which is not equipped to handle intent messages. Developers must decide whether to build their intent architecture in a permissionless way or control who can be a solver by permissioned design.
- Hybrid Approach: Some platforms, like UniswapX, are starting with permissioned solvers and plan to transition to a more permissionless design over time. A hybrid of both permissioned and permissionless structures could also be a viable option.
Notable Projects Using Intents
- IntentX: IntentX is a perpetual futures exchange that uses intent technology to fill orders efficiently. It currently supports 185 trading pairs and plans to allow trading on any chain in the future.
- CowSwap: CowSwap is a fully permissionless trading platform that uses batch auctions to maximize liquidity. It uses solvers to find the best price available for the user, providing better prices, bigger savings, and optimization in fees and gas.
- UniswapX: UniswapX is a platform launched by Uniswap that uses off-chain orders submitted on-chain by “fillers” to route orders. It offers gas-free swaps, increased MEV protection, no cost for failed transactions, and best possible prices.
- Anoma: Anoma is building a unified architecture for building full-stack decentralized applications. It uses intent-centric execution and is working on a privacy technology called Taiga to categorize intents into different types of privacy states.
Actionable Insights
- Monitor the Adoption of Intents: As more protocols adopt intent technology, new use cases will emerge. Keeping an eye on this trend could provide insights into the future direction of the crypto industry.
- Research the Potential of Intent-Based Projects: Projects like IntentX, CowSwap, UniswapX, and Anoma are pioneering the use of intents. Understanding their strategies and progress could offer valuable insights into this new technology’s potential.
- Consider the Implications for User Experience: Intents aim to simplify the trading process and improve the user experience. Assessing how well they achieve this goal could help predict their impact on user adoption and the growth of the crypto market.
