Introduction
In our governance-focused research for the Uniswap Foundation, we examined the potential impact of the ERC-7683 standard on intent-based protocols and on-chain liquidity dynamics. Introduced in Q2 2024 by Uniswap Labs and Across, ERC-7683 establishes a unified framework for intent-based systems to define and execute cross-chain actions with precision.
Our findings, detailed in this governance post, reveal that while the standard challenges traditional bridging models by addressing user "think time," it also correlates with an increase in on-chain liquidity.
Notably, our analysis shows that the liquidity-enhancing effects are more pronounced on Ethereum compared to Arbitrum or Base, and vary across different asset pairs.
Scope
- Analyze the impact of ERC-7683 on intent-based protocols, specifically how this new standard redefines cross-chain actions and influences user behavior around liquidity provision.
- Evaluate the role of transaction costs and bridging complexities in deterring liquidity provision on emerging blockchain networks, and assess how atomic cross-chain swaps can mitigate these challenges.
- Compare liquidity dynamics across major networks (Ethereum, Arbitrum, Base) by examining the correlation between intent-based protocols and on-chain liquidity levels.
- Investigate the differential effects of ERC-7683 on high-cap versus long-tail assets to understand the varying impact on liquidity pools.
- Provide actionable insights and strategic recommendations for adapting Uniswap’s liquidity framework to harness the potential benefits of ERC-7683, ensuring improved user experience and sustained TVL growth.
Audit Date: 2024-09-01
Type: Ecosystem Growth