At this point, I’m convinced that without Cross-Chain Intents, Ethereum’s future looks grim. Cross-Chain Intents is how we solve the UX problem posed by a million L2s.
One of the not-so-great experiences in the Ethereum Ecosystem is being stuck waiting for the bridging to happen. Across is a permissionless bridge intents protocol (bridging vs cross-chain swaps) that fosters competition. They don’t want you to wait either, so they solved that exactly.
In this article, I use Across as an example to illustrate the efficiency of intent-based systems and discuss the journey of a protocol that has cleverly aligned people's incentives while allowing anyone to solve these intents in a permissionless manner, thus, providing an exceptional service to bridge users in the industry.
Across is an intent based bridging protocol that supports bridging ETH, USDC and 10 other tokens between 6 EVM chains.
I do not want to do it. Because I have seen it a thousand times on X in the past 2 months. But my editor insists. So here we go. Yet another definition of intents.
Intents are any intentions a user would have that they are willing to pay others to fulfill.
Let's look at an example of bridge intent.
Imagine a user who wants to bridge 5 ETH from Arbitrum to Ethereum **for a small fee. It's a limit order. Here’s how it’s filled through Across:
The user deposits ETH on Arbitrum with a fee proposed by Across.
Many Across relayers race with each other to fill the order by making a transaction on Ethereum.
The winning relayer who fills the order gets paid on any chain they choose by Across after ~2 hours.
In Across' system, the relayers compete with each other to be the first to fill an order. The filler contract on the destination chain allows a unique pair of depositID and chainID to fill an order. After the first relayer fills the order, the second relayer’s transaction will inevitably fail. There is no second prize in relaying. So in essence:
Bridging is usually slow because the relayers have to wait for the source chain finality, otherwise, they risk losing funds. But Across’ bridge intents force the relayers to put a price on the finality risks in a race to fill the order. The key difference between any intent and a blockchain intent is that blockchain intents often have many fillers competing to realize users' intents.
Across’ focus on speed is evident in the chart below. Across has become faster with more competition over time.
Across relayers are like hawks, optimizing for the best node infrastructure to keep a close watch on the deposit transactions before they swoop down to make the destination transaction. If you're a solver looking to be an Across relayer, you now know what to focus on. Across is lucrative. I have a table in my Dune dashboard for Across that ranks the top Across relayers.
Across has won over a million impatient bridgoooor hearts by hosting these relayer races. But to offer the fastest bridging and best prices, Across needs to attract loads of relayers. And their strategy is simple.
It is fairly simple to run a relayer bot for Across. That’s why around 29 relayers in the last one month were filling various Across orders. In comparison, UniswapX has 15 fillers. And Stargate just has one.
Note: The Across team runs the first 2 relayers. However, even then, 50% of the fees generated right now are going to other competing relayers.
If users had to rely on relayers from the Across team, it would have been a single point of failure, a trusted system, and a slow UX. In fact, Across had a single point of failure until the beginning of 2023. But they have realized that and have worked towards improving their system to attract more relayers to compete with them. The fact that it’s permissionless is enough to conclude that the users are getting market price and speed.
Other intent protocols will all be offering similar services like swapping, limit orders, TWAPs, bridging, etc., but the ones that win will have a robust solver network. So, keep your solvers happy, you need them. Your solver network is your moat.
One of the main tasks of a cross-chain relayer is to rebalance liquidity between chains. For example, UniswapX allows fillers to fill orders and accept users’ locked funds on the source chain. Rebalancing is a chore these fillers will have to handle themselves. But this creates an unfair advantage for fillers with fat portfolios, as they can rebalance in larger batches. We should wait and see how this plays out.
This is where Across is positioned better than UniswapX. Across uses its LP funds to help relayers get refunded on any chain they prefer, and the LP funds are rebalanced in batches. This allows smaller players with smaller pockets to come in and compete with faster fills. Across founder Hart L mentioned this on this X Spaces.
Everyone asks about the intents of the users, but nobody asks about the intents of the relayers. Except Across
There are consequences to offering this additional service to your relayers. Because, now you have just one rebalancer relied on by most of the relayers, a single point of failure. Maybe there are better ways to rebalance the funds.
To better understand Across’ advantage for incentivizing relayers, let’s take a closer look at how rebalancing works.
After the relayers fill user orders, they wait for 2 hours for UMA's optimistic oracle to verify the fills and refund the relayers on the chain they have chosen. If there isn't enough liquidity to refund on a specific chain, the locked Across LP funds are used to refund the relayers. To access these funds, an LP fee is deducted from the bridge amount.
But this posed a problem. As most relayers depended on Across' system to avoid rebalancing the funds, whenever there was an increase in bridge volume, there was also an increase in LP fees deducted from the users. Take a look at the spikes in LP fees (green line) prior to April 2023.
The relayers were not incentivized to request a refund on the source or any other chain. While the LP fee would increase during periods of high demand, which users would have to pay, the relayer fee would remain unchanged.
To address this issue, in April of 2023 (note that the LP fee never spiked after this timestamp), Across introduced the UBA fee model. This model incentivized relayers to receive refunds on a chain with higher liquidity by implementing a fee called the "balancer fee". As a result, the utilization of the LP funds decreased.
I believe LP funds will always be useful to batch the rebalancing of ETH from L2s to the Ethereum Mainnet. Therefore, the APY of the pooled funds will be equivalent to the interest rate for borrowing ETH. Across is essentially borrowing ETH for a duration of 7 days. This will always be an edge for Across.
Please refer to this page to understand this in a deeper manner.
In conclusion, Across just realigned the incentives and let the market forces take care of its problems.
Across, as an intent-based bridge, is ready to blow LP-based bridges out of the water — as Across is more cost-efficient and lacks the large “honeypot” for attackers to target compared to liquidity networks like Stargate.
Furthermore, due to the permissionless nature of relayers and the decision to open-source relayer infrastructure, Across is far and away the best positioned to host a varied, secure solver set.
And, lastly, Across has built a rebalancing module that further incentivizes relayers to use their system.
Overall…
Low bridge fees
Super fast bridging
And batched rebalancing for their relayers
These features make Across a formidable player in the bridging industry. In the future, Across can enable Cross-Chain Swaps with some additions and removals to its existing architecture. Maybe just supporting many more tokens and removing the LP fee for accepting user funds on the source chain.
Hart said they are looking into it right now here 👀. The future is exciting.
I am grateful to have found extremely smart people like Arjun and Kram who reviewed this article and gave valuable feedback. Please DM if you’d like to review future articles. Maybe there’s a $SAND token on the way.
Sources:
My Across Dashboard
UniswapX kills Bridging
How Across Works