Uniswap Labs Proposes New Ethereum Token Standard (ERC-7683) for Cross-Chain Intents to Address Liquidity Fragmentation Challenges

The new standard is under Ethereum Request for Comment 7683 (ERC-7683) and aims to establish a unified framework for specifying cross-chain actions in intents-based systems.

Uniswap Labs, together with cross-chain interoperability provider Across Protocol, have proposed a new Ethereum Request for Comment (ERC) standard for cross-chain intents to tackle liquidity fragmentation challenges.

The proposal, designated as ERC-7683, aims to establish a standardized framework for specifying cross-chain actions within intent-based systems. These systems automate blockchain interactions based on a user's desired outcome, eliminating the need for specific technical knowledge.

For instance, intents can be used to automate a cross-chain token swap through the optimal route without requiring the user to identify the most efficient bridges and exchanges.

ERC-7683 is designed around a common cross-chain intents flow, while maintaining flexibility in implementation details.

The typical flow begins with the swapper signing an off-chain message, which is then disseminated to a filler on the origin chain. Subsequently, the order is filled on the destination chain.

notably, Uniswap Labs, a key contributor to the ERC standards, will be implementing this standard on the cross-chain version of UniswapX.

However, the ERC-7683 standard is open for any decentralized application to implement. The proposal has also been submitted to the CAKE Working Group for discussion and review.

Intent-based systems have emerged as a primary solution for end-user cross-chain interaction, simplifying the complexity and time constraints involved with traditional bridges.

However, these systems encounter challenges in accessing sufficient liquidity and maintaining active filler networks across chains, which become more acute as the number of distinct chains grows.

Highlighting this issue, Ethereum’s L2 blockchains, while resolving the scalability concerns that have plagued the industry for years, present a new challenge: the fragmentation of funds flowing into different smaller ecosystems.

Moreover, this issue extends to the technical level, as each L2 blockchain processes and orders transactions in blocks in a centralized manner, according to CoinShares analyst Max Shannon.

Each blockchain maintains its own ledger and set of smart contracts, resulting in a fragmented global state of transactions that hinders liquidity efficiency, he noted.

“Addressing fragmentation promises shared liquidity, gas efficiency, bridge-less bridging, seamless app upgrades, and easier L2 bootstrapping and development,” he added.

Mentioned in this article

Gino Matos

Gino Matos is a law school graduate and a seasoned journalist with six years of experience in the crypto industry. His expertise primarily focuses on the Brazilian blockchain ecosystem and developments in decentralized finance (DeFi).

Assad Jafri

AJ, a passionate journalist since Yemen's 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.

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