The Web3 industry is booming at a rapid pace, with around 4.2 million active wallets using dApps each day, showcasing its growth. However, the Web3 industry also suffers from two pain points that hinder its global adoption: user experience complexity and the fragmentation of users and liquidity. This is where the transformative concept of Chain Abstraction comes in, addressing these issues effectively.
In this blog, we will explore the significance of chain abstraction, how it works, and its benefits, and highlight six leading projects that are gaining popularity for chain abstraction web3 in 2024.
The current Web3 ecosystem forces users to navigate multiple chains and manage various wallets to fully engage with different networks. Protocols often select chains based on co-marketing efforts, market sentiment, and total value locked (TVL), rather than focusing on technology or innovation. Not only this, but developers also struggle with the complexity and maintenance of chain-specific contracts that affect the overall experience of maintaining dApp.
So, what defines an ideal Web3 experience? It is an ecosystem where the complexities of crypto are completely abstracted. Users should be able to transfer money, manage savings, repay loans, or receive salaries without needing to worry about the underlying chain or token involved.
Chain abstraction streamlines user interactions with the blockchain. It enables transactions, asset management, and DApp interactions across multiple blockchains through a single interface. It eliminates the complex blockchain elements to lower entry barriers for users.
“Chain abstraction could induce the next transition of the crypto space and Web3, necessary for mainstream adoption.” – Near Protocol co-founder Illia Polosukhin said during an interview with The Block.
Image Src: Particle Network
Chain abstraction web3 allows users to interact across different blockchain networks seamlessly through a unified interface. This interoperability enables users to leverage the assets and accounts across any blockchain. It also breaks down silos & makes it convenient to create cross-chain applications & services.
Chain abstraction solutions play a crucial role in creating dApps that are not constrained by the liquidity or user base of any single blockchain. This allows them to access resources from across the entire ecosystem, enhancing network effects and expanding the potential user base for their applications.
The transformative concept of chain abstraction allows users to interact with applications without needing to understand the complexities of the different blockchains used by a dApp. This abstraction offers a smoother and more intuitive interface, which improves the user experience and makes blockchain technology more accessible to a broader audience.
Chain abstraction solutions reduce costs by minimizing the need for multiple integrations and maintaining various blockchain interfaces. It streamlines operations and optimizes resource usage, resulting in lower expenses. Additionally, it supports scalability by enabling applications to easily adapt to different blockchain networks, accommodating growing demands without significant overhead.
The primary objective for many projects focused on chain abstraction is to onboard the next billion users into the digital economy. The following are some case studies in this aspect you must have a look at in 2024.
The NEAR Protocol is a Proof of Stake (PoS) Layer 1 blockchain designed to simplify the user experience for decentralized applications (dApps) by abstracting the complexities of blockchain interactions. NEAR chain abstraction involves
NEAR Accounts
Unlike traditional blockchains with alphanumeric key hashes, NEAR utilizes human-readable names (e.g., nathan.near) for accounts. This, combined with NEAR’s Chain Signature, simplifies user interactions and removes the need for multiple accounts.
Chain Signatures using MPC
While creating the NEAR account, the private key of the user is generated via MPC, which plays a crucial role in maintaining security and privacy. It allows independent parties to conduct shared computations on private data without disclosing secrets to one another. MPC utilizes two key participants, indexers, and relayers, to sign the transaction between blockchains.
Gas Abstraction with NEP-366
NEP-366 introduced meta transactions to NEAR protocol, enabling users to execute transactions without needing to hold the native token for gas fees. Relayers provide all the necessary tokens to manage these transactions and cover the gas fees before submitting them to the network.
Socket Protocol is an innovative solution, reputed to be the first chain abstraction protocol. It was developed to address fragmentation challenges within a modular blockchain ecosystem through the use of Modular Order Flow Auctions (MOFA).
MOFA functions as a marketplace where execution agents, called Transmitters, vie to fulfill user requests. For instance, if you want to mint an NFT on Ethereum without facing the complexities including gas fees, network congestions, or validation times, transmitters first assess your request and place bids in the MOFA marketplace. They might offer to complete the task the fastest or at the lowest cost, depending on their specific strengths. In this way, you receive your minuted NFT in your wallet without facing the gas issues or technical complexities involved in the process. It’s important to highlight that MOFA represents chain abstraction rather than cross-chain functionality.
The chain abstraction web3 approach of Everclear, formerly known as Connext, introduces the first “clearing layer.” This layer functions similarly to the Visa network. It calculates and nets token bridge transactions. This netting process allows solvers to balance their debts with one another, removing the necessity of settling each transaction individually.
The fragmentation issues associated with cross-chain transactions can easily be addressed through Everclear’s unified settlement system. This distinctive method accelerates settlement times and enhances overall transaction efficiency. Everclear utilizes the netting approach for cross-chain settlements as it helps reduce the number of transactions required between parties.
Everclear’s core architecture features solvers/LPs, watchers, and relayers to detect and prevent fraud. It enhances the auction and verification of transaction batches through the integration of a tailored Arbitrum Orbit rollup, optimizing both efficiency and security.
The next on our list is Arcana Network, which follows a unique abstraction approach with a prime focus on addressing account fragmentation issues across multiple chains, prevalent issues of assets, and overall user experience. The chain abstractions protocol of Arcana Network simplifies interactions across multiple chains, providing a unified interface for the user with their “Unified Wallet” technologies. Arcana addresses several issues in the following ways-
Archana Networks provides a unified view of assets across distinct multiple blockchains. With Arcana, users can interact with various dApps across different chains without the hassle of creating redundant accounts or acquiring new tokens. It eliminates the need for manual token swapping or bridging.
Arcana leverages multi-party computation (MPC) and distributed key generation (DKG) to ensure security and decentralization are seamlessly integrated without sacrificing the user experience.
Users can leverage their existing EOA wallets for chain abstraction web3 without switching to new account systems like smart contract wallets, which often involve onboarding difficulties and higher gas fees.
Arcana Network manages liquidity using its network of vaults and liquidity providers, aggregating liquidity from both on-chain and off-chain sources.
Arcana simplifies fee management across multiple chains by removing the need for native tokens for each blockchain. The network manages this process in the background, ensuring a smooth transaction experience. It also automatically covers the required gas fees on different chains.
Particle network was initially considered as a provider of account abstraction services that allow users to build smart contract wallets linked to their Web2 social accounts for simplified use within dApp-embedded interfaces. Over time, the protocol has broadened its scope, now focusing on advancing chain abstraction across the blockchain ecosystem through a comprehensive suite of wallet, liquidity, and gas abstraction services on its Layer 1 blockchain.
Particle envisions a future where transactions across multiple blockchains can be easily managed through a single account, with the flexibility to pay gas fees in any preferred token. The underlying Layer 1 blockchain will serve as a coordinator for this multi-chain ecosystem, connecting users and liquidity across both EVM and non-EVM environments.
The Particle Chain Abstraction Stack
Particle Network provides a full-stack toolkit for chain abstraction services, that plays a crucial role in contributing to the functioning of the overall ecosystem.
Particle’s Universal Accounts offers users a single address and balance that spans multiple blockchain networks. This incredible feature streamlines cross-chain wallet management by unifying user interfaces across all chains, whether EVM or non-EVM.
These Universal Accounts utilize Universal Liquidity to perform atomic cross-chain transactions that allow users to deposit and use funds across different blockchains as if they were all on a single network.
There are no multiple chain-specific gas tokens as Universal Gas enables users to pay for cross-chain transactions with any token. For instance, paying fees on Arbitrum using USDT from Base. This feature can easily be accessed through Universal Accounts.
Universal Liquidity combines the liquidity of various blockchains through the atomic execution of multi-chain transactions. It allows users to seamlessly interact with new chains, eliminating the need to hold tokens on them.
It leverages universal liquidity that enables required funds to be automatically sourced from users’ balances on other chains. It further eliminates the need for manual bridging which consumes a lot of time and is tedious as well.
As the Web3 landscape continues to evolve, chain abstraction emerges as a critical solution to the complexities and fragmentation that hinder widespread adoption. The five projects highlighted in this blog—each with their unique approach to chain abstraction solutions—are setting the stage for a more seamless, user-friendly blockchain experience. By simplifying cross-chain interactions, enhancing interoperability, and improving overall efficiency, these initiatives are not just advancing the technology but also paving the way for the next billion users to enter the digital economy. As we move forward, these chain abstraction solutions will likely play a pivotal role in shaping the future of decentralized applications and the broader blockchain ecosystem.
