As for the next development of the Web3 world, it will be crucial to optimize and simplify cross-chain transactions and further unlock liquidity. What can ERC-7683 do?
(Summary:
How to solve cross-chain interaction? Vitalik Buterin: ERC-3770 and ERC-7683 can greatly improve user experience, and the synchrony and atomic composability are overestimated.
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(Background:
Vitalik Buterin declares the goal of “The Surge”: Ethereum TPS breaks 100,000, cross-L2 interoperability leaps forward, further Rollups
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Table of Contents
Security
High Gas fees
Complexity
ERC-7683
Current state of application development
Support from the founder of Ethereum
In the multi-chain landscape of the blockchain world, achieving more secure and convenient cross-chain interoperability has always been a challenging problem. With the increasing demand for cross-chain transactions by blockchain users, the challenges faced by cross-chain interoperability are becoming more prominent. Common challenges include:
Security is the most common challenge in cross-chain transactions, and cross-chain bridge protocols that can attract large-scale asset retention have become the primary targets of hackers in recent years.
Blockchains rely on validators to verify and execute transactions, and cross-chain bridge protocols also rely on trusted third-party validators to verify and process cross-chain transactions. In this process, if the incentive measures of the cross-chain bridge are not sufficient, there are few validators, or the trust model is too centralized, hackers may attack the validators to disrupt the cross-chain bridge and steal assets. In addition, vulnerabilities in the cross-chain protocol itself often become the entry point for hackers to launch attacks.
On August 6, 2024, Ronin Bridge was suspected to have been attacked by hackers, with approximately 4,000 ETH and 2 million USDC stolen, with a total loss value of about $12 million. In March 2022, Ronin Bridge had already experienced a security incident known as the “largest loss in DeFi history,” where hackers attacked 5 out of 9 validators, stealing a total of 173,600 Ethereum and $25 million worth of USDC, with a total value exceeding $600 million.
Cross-chain transactions tend to incur higher Gas fees. This is because users need to calculate the actual transaction cost based on the Gas fees paid for operations on both the source and destination chains in a cross-chain transaction.
Each blockchain operates independently, and each blockchain network has its own consensus mechanism and protocol. This scattered and isolated state between chains leads to relatively complex and cumbersome operations when users transfer assets and data across chains. In cross-chain transactions, users with frequent trading needs are more likely to encounter asset price slippage, which increases the difficulty of transactions.
In response to these challenges, Uniswap Labs and the interoperability protocol Across jointly proposed a new standard solution, ERC-7683, on May 20, 2024. The goal is to make cross-chain transactions simpler, faster, and more secure through a shared execution network.
The ERC-7683 standard is based on the CrossChainOrder structure and will provide an ISettlementContract smart contract interface to implement standard APIs for cross-chain transaction execution systems.
The core technical proposal of the ERC-7683 standard is that all “cross-chain intents” follow the same order structure. This approach greatly improves the flexibility and user-friendliness of cross-chain operations.
As Uniswap Labs demonstrated on its social platform X, the ERC-7683 standard provides a clear path for unifying Ethereum.
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△ Figure 1: Illustration of the cross-chain order structure under the ERC-7683 standard | Source: Uniswap Labs
On August 21, 2024, Layer 2 solution Optimism announced the adoption of the ERC-7683 cross-chain standard. The goal is to achieve more efficient transfer operations of ETH and USDC on Superchain and further promote application layer interoperability in the broader Ethereum ecosystem. Currently, Optimism has integrated the cross-chain solution from the interoperability protocol Across.
In May 2024, when Uniswap Labs released the ERC-7683 standard, it stated that it would adopt the standard when collaborating with UniswapX for cross-chain transactions.
It is worth noting that, although the ERC-7683 standard only implements standard APIs for cross-chain transaction execution systems, ensuring consistency in user experience at the entry point, it is still difficult to address a common challenge in cross-chain transactions: whether sufficient cross-chain liquidity can be obtained.
For the implementation of the ERC-7683 standard, if there is insufficient cross-chain liquidity, it means that the standard will have difficulty obtaining enough active “Fillers” (refer to Figure 1 in the article) to support users’ “cross-chain intents”. If there are not enough “Fillers,” users’ “cross-chain intents” will not be able to obtain better costs or better experiences through competition.
This means that the implementation of the ERC-7683 standard needs to form a network effect – more use cases accessing the standard, more users using the standard, and ultimately achieving overall efficiency improvement in cross-chain transactions.
To learn more about ERC-7683, please visit:
https://www.erc7683.org
To view the Ethereum Improvement Proposal jointly released by Uniswap Labs and Across on the Ethereum Magicians forum, please visit:
https://ethereum-magicians.org/t/erc-7683-cross-chain-intents-standard/19619
Media reports have pointed out that Vitalik Buterin, co-founder of Ethereum, is supporting the development of the new cross-chain standard ERC-7683 through the community platform, indicating that operations based on the ERC-7683 standard can include batch transactions, Merkle proofs, and other on-chain activities. He gave an example of how the ERC-7683 standard will work, stating:
“With the ERC-7683 standard, users can paste an ERC-7683 address into their wallet and then simply click to easily transfer any asset on any chain to another account.”
The multi-chain landscape is an inevitable development in the Web3 era, and for the next development of the Web3 world, whether cross-chain transactions can be optimized, simplified, and further unlock liquidity will be a crucial challenge.
The ERC-7683 standard directly addresses the pain points of cross-chain transactions and can significantly improve interoperability between blockchains. Its application will have a profound impact on the blockchain world. Currently, users can expect that the improved user experience brought by implementing the ERC-7683 standard can directly benefit more DeFi projects – injecting more liquidity support and accelerating development.
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