Produced by | OKG Research
Author: Samuel Qin
In the current rapid evolution of the crypto market, user growth has become the cornerstone of the industry's sustainable development. The current mainstream view is shifting from pure technical exploration to a more application-oriented direction in the process of promoting the industry forward. Although the Web3 ecosystem has developed rapidly in recent years and the entry of traditional capital has also brought new vitality, there are still some areas worth paying attention to in the actual operation of the expansion of the application level.
The ever-expanding public chain ecosystem is overwhelming. The rapid development of the Web3 ecosystem has brought about the need for cross-chain interoperability. Only by utilizing the superior resources on different chains can greater value be brought into play. This reflects the law of the natural evolution of the industrial ecology, just like the development of e-commerce platforms from a single platform to the integration of the entire industry chain.
However, from the perspective of public chain competition, the ecological moat built by killer applications and users is the absolute reliance for ensuring industry advantages, so setting higher compatibility thresholds and migration costs will be taken into consideration. From the perspective of technological development, different consensus mechanisms and programming languages make cross-chain technology itself very difficult, which also makes the value transmission and information interaction between different blockchains face technical barriers.
To some extent, the relationship between public chains and applications can be inspired by the different mobile phone ecosystems of Apple and Android.
*Table Source: OKG Research
Apple uses a hardware and software integration strategy. This strategy ensures a high degree of compatibility between hardware and software, providing a smooth and consistent user experience. Android allows multiple manufacturers to use its operating system, forming a diverse hardware ecosystem, but it also brings about problems such as device fragmentation and uneven application quality.
This just confirms two different ways of ecological development. The integration of software and hardware can better define its own ecological closed loop, and application entry and migration require relatively higher costs; while open systems require a wide variety of compatible devices, and user experience is also closely related to hardware.
As an open environment, the public chain system needs to lower the development threshold and improve the user experience as much as possible to form its own competitive advantage. At present, the following strategies are usually adopted:
- Modular functional components: Provide easy-to-integrate modular development tools, such as smart contract templates, SDKs, and API interfaces, to help developers quickly build applications. For example, Ethereum's Truffle framework and OpenZeppelin's smart contract library provide developers with rich resources and simplify the development process.
- Improve the underlying infrastructure: optimize the performance and security of the blockchain to ensure high throughput, low latency, and strong security. For example, Solana achieves high TPS through its high-performance consensus mechanism, meeting the needs of large-scale applications.
- Improve user experience: Develop intuitive and secure wallets and user interfaces to lower the entry barrier for users. For example, OKX Web3 Wallet currently supports more than 100 public chains, provides one-stop user management functions, has a rich built-in DApp ecosystem, and provides users with a comprehensive and convenient Web3 experience, compared to single-chain ecosystem wallets or multi-chain wallets that only support a few chains.
Although the overall user-friendliness of Web3 has been significantly improved. But for newcomers who have just entered Web3, it is a rather strenuous process to understand the on-chain working path, but it is often just a sentence to express their intentions. If you need to transfer 1 eth from the Ethereum network to the Polygon network at this moment, the specific process can be broken down into:
*Flow Chart Source: OKG Research
We can find out from the flowchart:
- Users need to judge the account balance (if it is insufficient, ETH in other wallets needs to be collected into the designated Ethereum wallet)
- Confirmation of the transfer direction
- Gas fee confirmation
- Confirmation of receipt
If users only need to pay attention to whether their transfer needs are ultimately met, and leave the rest of the cross-chain and inspection actions to specific networks or applications, then the interaction behavior will be greatly simplified.
Imagine if you are planning to travel to different countries, if you are using international credit cards to shop around the world, as a user, you don't need to worry about the currency types of different countries, the exchange rate conversion between currencies, the clearing process of cross-border payments, the payment network systems of different countries, etc. You just need to swipe the card, and then the whole complex process will be automatically completed at the bottom layer. This is a kind of "abstraction", hiding the complexity and providing a simple user experience.
The same is true for the "chain abstraction" mentioned above. Its core value lies in:
- Simplify complexity: users only need to specify the "starting point" and the end point
- Unified interface: All underlying chains or bridge protocols are managed by the same simple interface.
- Intelligent routing: automatically select the best path and the best bridging protocol
- Error handling: automatic retry, automatic exception handling, and unified error feedback
We can try to think of chain abstraction as a technical means to solve the asset, liquidity and account fragmentation problems of the multi-chain ecosystem. It enables users to interact across chains based on their intentions through unified interfaces and standards, simplifies the user experience, and enables users to complete cross-chain asset operations and value transfer without having to understand the details of the underlying chain. It reduces complexity and enhances interoperability for users in a multi-chain environment.
However, judging from the current development of chain abstraction technology, the current technical implementation still faces many challenges, such as the delay of cross-chain message transmission, the security and cost of cross-chain operations. Some projects are trying to improve these problems through lightweight cross-chain protocols, cross-chain asset transfers or decentralized gateways to achieve cross-chain communication, but large-scale deployment is still limited.
The current mainstream view is to divide the chain abstraction into four levels: application, permission, solution/execution, and settlement. CAKE Framework breaks down user intentions layer by layer to obtain specific optimal execution steps.
*Graph Source: OKG Research, https://frontier.tech/the-cake-framework
However, there are various problems involved in the process, such as disassembly based on the subjective intention of users, cross-chain, cross-Dapp, trusted execution environment, and status confirmation. Each of them seems to be quite difficult to solve. At present, many projects in the industry are promoting the application of chain abstraction technology in specific practical cases based on users, and are currently in the stage of continuous development and iteration. Multi-chain wallet applications represented by OKX Web3 Wallet can just serve as an important infrastructure for the chain abstraction track. Chain abstraction technology has achieved initial results in OKX Web3 Wallet, which is manifested in the simplification of multi-chain asset management and the convenience of cross-chain interaction. Users can manage assets on different chains in the same interface, avoid frequent network switching, and use a single wallet to complete cross-chain transfers, which significantly reduces the complexity of cross-chain operations. The online smart contract wallet function has also improved the shortcomings of the original complex EOA (externally owned account) wallet in terms of multi-chain wallet management integration, user authorization, and gas fee integrated payment.
In many discussions in the past, multi-chain wallets and chain abstraction were compared, and most of the discussions focused on whether wallet applications, which have already had a significantly improved interactive experience compared to EOA, no longer need chain abstraction.
Here I would like to discuss the following two directions:
- Does the user experience need to be significantly improved in the current application context? In the current multi-chain environment, there is indeed room for significant improvement in user experience, but the urgency of the demand may not be one-size-fits-all. Taking cross-chain transactions as an example, the current mainstream multi-chain wallets still require users to manually switch networks and pay gas fees. This operational requirement does not really solve the fragmentation problem of the multi-chain ecosystem. However, in actual applications, the flow of funds on the chain is often profit-oriented, and users are more inclined to choose known paths or applications with good experience optimization. Due to the Matthew effect of head applications, a large number of projects have spontaneously invested in the optimization of cross-chain processes. For example, many DeFi protocols simplify users' cross-chain operations and provide a more convenient experience through built-in cross-chain bridges and liquidity aggregators. For chain abstraction projects, it is difficult to form sufficient competitive barriers simply by relying on the narrative of improving user experience. Therefore, the value of chain abstraction lies more in its role as an infrastructure to gradually achieve seamless interoperability of multiple chains. At this stage, the liquidity between chains is reintegrated to provide support for possible large-scale user migration and cross-chain application scenarios in the future.
- Liquidity integration is an important issue that the current industry cannot avoid, especially in the process of achieving the migration of Web2 users to Web3. The continuous entry of incremental users is crucial for future development, but the key to this transformation lies in providing a more convenient user experience, especially in the integration of assets, transactions and payment scenarios in a multi-chain environment. The smooth migration from Web2 to Web3 must lower the interaction threshold faced by initial users. Chain abstraction technology helps users reduce cumbersome operation steps in a multi-chain environment through unified interfaces and cross-chain resource integration, allowing Web2 users to seamlessly enter the Web3 ecosystem. For example, chain abstraction can automatically manage the liquidity of multi-chain assets, simplify payment processes and integrate transaction experiences on different chains, thereby solving the fragmentation problem in the Web3 environment. This liquidity integration not only improves the user experience, but also lays a solid foundation for the widespread application of Web3 and large-scale user migration.
*Chart Source: OKG Research
It can be seen that the application scenarios of chain abstraction are actually laying the foundation for the true maturity of Web3. It is not only committed to solving the interoperability problems in the current blockchain ecosystem, but also significantly reduces the complex operations in the multi-chain environment through cross-chain resource integration and liquidity management.
These improvements have driven the Web3 ecosystem towards a more open and interconnected direction. In the future, chain abstraction is expected to become an important pillar for the large-scale popularization of decentralized applications, providing efficient and seamless infrastructure support, helping more users to easily enter the Web3 world and achieve seamless multi-chain interaction.
