Blockchain’s new buzzword “intent” – its mechanism and risks | CoinDesk JAPAN

A quiet revolution is underway, transforming the way we use blockchain. A representative example of this is “intents,” one of the latest buzzwords in crypto assets (virtual currencies).

Simply defined, an intent is a specific goal that a blockchain user wants to achieve. No two “intent-centric” systems are the same, but they all behave similarly. That is, users, whether traders or protocols, provide their intent to a service, delegate it to a “solver” (be it a human, an AI bot, or another protocol), and Solvers do whatever it takes to accomplish their goals.

Intent-centric systems are becoming important as blockchain is expanding rapidly. The rapid proliferation of Bitcoin, Ethereum, Layer 1, Layer 2, and now even Layer 3 networks has also created countless “bridges” and “interoperability” solutions that connect them all. is becoming more difficult to master.

As the crypto market matures, “there are more and more possibilities for what you can do on blockchain,” explains Arjun Bhuptani of interoperability protocol Connext.

“At a given point, there are an infinite number of ways to do a trade.”

Intent-centric services promise to help users find the best way to get things done. It brings benefits such as maximizing trading profits and saving gas costs.

But the benefits of these platforms come with risks, and some are already sounding the alarm. While we may welcome the support of third-party solvers to take on the heavy lifting with blockchain, new services could create new kinds of monopolists.

Understand intent

Blockchain can be thought of as a giant, global computer. Traditionally, users provide detailed instructions (e.g., to exchange token A and token B at a certain price using Uniswap), and the blockchain executes them step-by-step.

But the new world of intents turns this model on its head. Users leave the details to the protocol without specifying what they want to do (e.g. exchange A token for B token at the best price).

For example, consider a taxi. Traditional blockchain services have been like telling drivers where to turn every time. If the route is winding or shortcuts are difficult to find, it can be tedious and costly. Using intents, on the other hand, means telling the driver where you want to go, and then sitting back and trusting him.

Blockchains and protocols such as Anoma, Flashbots, and CoW Swap are already providing intent-centric services to crypto users. Users can present these services with a goal, such as “swap these tokens at the best price,'' and have third-party solvers handle it for a fee.

structure

Different platforms use different words to express the idea of ​​”intent,” but the general premise remains the same.

Currently, most intent-based protocols start with some kind of “intent discovery” system, where “the user tells you what they want,” Bhuptani explained. In blockchain terminology, these discovery spaces can be thought of as mempools, or waiting areas for transactions that have yet to be processed.

The intent could be something like, “I have USD coin (USDC) and I want to think about how to convert it into another asset. I want to do it on a different chain or in a specific way,'' Bhuptani said.

“There is no limit to the complexity of intents that can be expressed,” Bhuptani continued, “and there will be a market for solvers.” The solver will “listen” to the intent and fulfill it if the price is right. These intent solvers are automated actors that say, “Hey, the user wants ◯◯? OK, I want you to do that for them and earn a commission.” is.

This system may sound familiar. When I ask Coinbase to exchange Ethereum (ETH) for Bitcoin (BTC), or when I instruct an exchange aggregator like 1inch to sell Solana (SOL) at the highest price, I are expressing an intent.

“Intent”, like many other things in the crypto world, is a fancy way of explaining an already existing phenomenon.

The ingenuity of intents in 2023, and the reason the term has been gaining traction over the past year, is that many services, old and new, are trying to adapt user-friendly intents to the decentralized spirit of crypto assets. It's because I'm here. Intents can be dragged and dropped into virtually any use case.

Most new intent-based protocols “decentralize” their systems by outsourcing them to a network of solvers that compete to meet user demands at the best possible price.

This competitive system is intended to ensure that no central third party meets all user needs.

Intent in action

Intent-centric systems are already in operation for a variety of use cases.

Bhuptani's Connext protocol uses intents to mediate transactions between different blockchains. A user can, for example, present an intent to transfer tokens from one chain to another, and the network of solvers will find the best way to do so.

Anoma, the protocol that popularized the concept of blockchain-based intents, provides, simply put, “intent-centric infrastructure.” In basic terms, Anoma's infrastructure is designed to extend intent-centric functionality to virtually any use case, allowing other services to match intents to a network of solvers. support.

SUAVE is a blockchain planned to be launched by Flashbots, an infrastructure company focused on MEV (Maximal Extractable Value), and is one of the most talked-about services designed around a type of intent called “preferences.” It is one.

When SUAVE launches, users will be able to submit their 'preferences' to a competitive marketplace of network operators, who will then bid and compete. The system is built to balance user priorities and MEV.

Monopoly risk

Intent-centric services bring a variety of benefits to the user experience (UX), but the taxi analogy shows where the system can go wrong.

Providing a detailed route for every taxi ride, like the traditional model of specifying every step of a blockchain transaction, is burdensome and error-prone.

However, there are also problems with the “trust the driver” approach, which is more like an intent-centric system. We've all had the experience of getting into a taxi in an unfamiliar city, expecting to get there quickly, but then the driver takes a suspiciously long route and the meter goes up, leaving you feeling uneasy.

A taxi driver is like a solver in an intent-centric system. By entrusting a task to a solver, you are trusting them to drive honestly.

Intent-centric programs typically have systems in place to keep the solver honest. A better analogy might be Uber. Uber controls its drivers through upfront pricing and in-app routing.

However, Uber highlights the risks of intent-based systems. Anyone who has lived through Uber's recent price hikes has seen firsthand how convenience can entrench the big company at the expense of users. The real risk of intent-centric systems is not just fraud, but the possibility of new monopolies.

Investment firm Paradigm highlights these risks in a blog post.

“Intents are an exciting new paradigm for transactions, but their proliferation may mean the acceleration of a larger trend in which user activity shifts to alternative memory pools. If improperly managed, this shift There is a risk of centralization and the entrenchment of intermediaries whose purpose is rent-seeking (manipulating the environment and rules in order to profit without creating new value).

As relying on these third parties to fulfill user intent becomes more common, companies may begin to act in their own self-interest. By charging higher prices or fulfilling orders in a way that benefits them, not the users.

Most intent-centric services are outsourced to a competitive market of solvers, ostensibly to avoid overconcentration, but which could lead to a few companies dominating the field.

For example, one could imagine a crypto exchange developing a solver and dominating the “buy” and “sell” use cases, thereby directing virtually all market activity to its own order book. The exchange can initially subsidize fees as a way to beat out competitors, then jack up prices once it gains control of the market.

In the best case, the intent-based model will usher in a new movement of blockchain-based systems that save users time and money, and make blockchain technology more easily accessible to more users. But achieving such a future will require careful steps.

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: Unsplash/Mike Tsitas
｜Original text: 'Intents' Are Blockchain's Big New Buzzword. What are They, And What Are the Risks?