It’s clear that there are many problems with blockchain, but probably one of the biggest problems is making cross-chain transactions. In this text, I will examine 2 different solutions for this problem. Let’s get started with the summarization of both these “Ethereum Request for Comment(ERC)”s.
ERC-7281 (aka xERC20):
For ERC-7281 the main schematic is shown below. Firstly you should lock your ERC20 token into a “lockbox” rather than minting your xERC20 token. It kind of looks like a liquid staking platform. ( e.g. Stake ETH then take stETH etc.) With this move, you are gettinga new token with the xERC20 token standard. This standard gives the privilege of using your token with any supported smart contracts. This ERC is now used on Connext.
Advantages of ERC-7281
- Funds can be useable in cross-chain transactions and it may create an opportunity for chain abstraction.
- Like EigenLayer, this structure has the potential to create an additional security layer
Disadvantages of ERC-7281
- It needs new smart contracts that support ERC-7281.
- Lockbox is susceptible to attack.
ERC-7683 (aka Cross Chain Intents):
Uniswap Labs and Across Protocol propose a new standard for cross-chain intents, establishing an unified framework for intent-based systems to specify cross-chain actions. This ERC is similar to aggregators. But, it works cross-chain and is more decentralized due to the distribution and variation of AMMs.
An intent is a type of order where a user specifies an outcome instead of an execution path. In practice, intents manifest as a combination of a cross-chain limit order and an action to execute, all encoded within a standarized order structure.
This Comment is planned to be implemented on Uniswap v4 with the help of Across Protocol.
Request for Quote: This layer is kinda like of a mempool. Users can share their intents here.
Relayer Network: In this layer lots of AMMs can take a role. First intents added into RfQ, and Uniswap chooses suitable AMMs for the intents.
Settlement: This layer securitizes the funds. Until the intents end, funds are locked here. After successful execution, funds are transferred to the service provider.
The user starts the process and expresses its desired outcomes without specifying the technical steps to achieve them. Then this info transfers to “Relayer Network”. Networks are competiting with each other to process transactions. Lastly, all of the users’ funds are locked into the settlement layer until verification is performed. After that verification, these funds are paid to relayers.
Advantages of ERC-7683
- The first and the biggest advantage is being a cross-chain aggregator.
- Creates a more decentralized structure for AMMs and it may create less slippage although needed less liquidity.
- Due to rivalry between AMMs, MEV may decrease.
- This structure may open the doors for chain abstraction.
Disadvantages of ERC-7683
Transaction cancellation is a big problem for this structure especially, for optimistic rollups. (Testing time is relatively long time e.g. for Arbitrum and Optimism this period is like 7 days.)
- Due to rivalry, AMM’s are affected negatively. Because they need to supply almost positive slippage to be chosen.
Both of these ERC’s relatively new concepts. I just want to share their structures and structural differences, roughly. Thank you for reading.
