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Executive Summary
- In the cryptocurrency space, an ‘intent’ refers to the specific goal or objective that a user aims to accomplish within the blockchain ecosystem. It is an expression of the individual’s desired end state(s). Generally, a transaction explicitly refers to ‘how’ an action should be performed, while an intent refers to ‘what’ the desired outcome of that action should be.
- Intent-based protocols aim to simplify user experience and reduce barriers to entry into crypto. The landscape can be generally classified into:
- Infrastructure: Architectural layer built to cater to a wide range of intent use cases.
- Specific Applications: Dapps or protocols that focus on a particular use case (e.g., trading, smart accounts, bridging).
- One of the first movers in the intent-centric Web3 space, dappOS has developed a series of intent task frameworks for different use cases:
- Intent assets allow users to earn yield while utilising them like native tokens on-chain.
- Intent EX helps users achieve optimal transaction costs in spot trading through both on-chain and off-chain strategies.
- The intent-centric dapp interaction fosters a network of dapps currently supported on dappOS.
- Intent-based protocols are significant, as they improve user experience and also unify the fragmented crypto landscape, where the user does not have to spend time navigating across the multiple available wallets and protocols to achieve their target. In addition, there’s potential to integrate with AI agents to process natural language and automatically execute transactions based on user inputs.
- Challenges appear, however, due to the opaque intermediate processes (i.e., how the outcome is achieved), and service providers may act in their own self interests or be centralised, which could jeopardise users’ interests.
- We see the potential for intent-based protocols to be the large-scale aggregators and agents for Web3, as they are also the key drivers for Web3 massive adoption. We envision a future where users input their intents and receive optimised solutions from a diverse service ecosystem, bridging the gap between Web2 and Web3.
1. Introduction
One of the potential blocks for cryptocurrency adoption is the user experience, especially performing transactions effectively in this multichain world where users have to manage different crypto assets on different chains. Take the example of exchanging ETH on Ethereum to USDC on Solana — this involves having wallets on both the Ethereum and Solana blockchains and bridging funds from the two chains.
Additional complications arise due to the fragmented nature of crypto protocols. There are multiple Web3 protocols providing transfer, swaps, and bridging functionalities, and users may have to spend time to compare them to find the optimal way with the lowest cost.
This gives rise to intent-based protocols, which aim to simplify user experience and reduce barriers to entry into crypto. Intent means user-desired outcomes, or simply “I want X and I’m willing to pay up to C,” and users can set a list of constraints and outsource transaction creation to a third party without defining the execution path to satisfy the outcome.
This report provides an overview of the intent-based infrastructure protocols, with dappOS as a case study.
2. Overview of Intent-Based Protocols
The intent-centric concept was first formally introduced by Paradigm in June 2023. The landscape can be generally classified into two categories:
- Infrastructure: Architectural layer built to cater to a wide range of intent use cases.
- Specific Applications: Dapps or protocols that focus on a particular use case.
Intent-Centric Architecture
Projects in this category are designed to satisfy general intents and cater to a wide range of blockchains and dapps. Below is a general workflow of intent-based architecture:
Anoma and dappOS are both similar, as they are designed to cater to multiple dapps and blockchains. They provide a search space to match user intents with solvers who compete to find optimised solutions for the users.
Anoma enables intents to be solved by multiple solvers and has a system to share earnings amongst those who contributed to the final outcome. In addition, Anoma has a unique feature named Chimera, which acts as a shared sequencer to facilitate cross-chain atomic transactions, provided the chains share similar trust assumptions.
For dappOS, a unique feature is Optimistic Minimum Staking (see below), which compensates the user in case the transaction fails.
On the other hand, there are specific intent-based protocols built for a particular use case:
Trading
Users can set target outcomes in trading scenarios, including swaps and spot trades. For example, 1inch Fusion+ enables intent-based atomic cross-chain swaps using the Dutch Auction mechanism. Users specify their swap intents and constraints, and resolvers compete to find the most efficient strategies. UniswapX is another example, where users create an ‘Exclusive Dutch Order’ that specifies the maximum and minimum outputs they are willing to receive in a trade, and the time horizon. Subsequently, market makers will provide liquidity quotes on-chain or off-chain.
Bridging
Bridging enables efficient execution of cross-chain orders, and solvers generally provide capital up front to satisfy the users’ intents; in return, they receive a fee for assuming these risks. Across collects user intents, and relayers compete to fill orders in a fast and low-cost way.
Smart Accounts
Smart accounts enable account abstraction (AA), which supports a more efficient execution of intents. AA enhances user experience by allowing functions like batching transactions (approving a series of transactions at a time), gas abstraction (gasless transactions or paying gas in any token), and security (e.g., multisig). ZeroDev is an example of a chain-abstracted smart account that aggregates tokens across chains as a unified balance and enables transaction automation through session keys (users specify the transaction permissions, which can be executed without confirmation).
3. dappOS
One of the first movers in the intent-centric Web3 space, dappOS is an intent execution network connected to multiple dapps and chains, where users simply need to type in their intents and the network will match them with appropriate service providers to handle the intermediate processes.
3.1 Intent Task Frameworks
The dappOS protocol has developed a series of intent task frameworks for different use cases. When users interact with partner infrastructure or dapps of dappOS, their intents are automatically generated by the intent task frameworks. These frameworks are: intent asset, intent EX, and intent-centric dapp interaction.
Intent Asset
With intent assets, users can earn yield and utilise the assets like native tokens on-chain. Users can convert their BTC, ETH, and USDT into intentBTC, intentETH, and intentUSD, respectively, which can be used freely on dapps supported by dappOS. For example, users can buy tokens on a DEX and use them as collateral on centralised exchanges or to pay for gas. Tokens that are not utilised can accrue yield from platforms (for example, Pendle, BENQI, GMX).
This feature is beneficial for users, as they do not have to go through any unstaking or lockup process in order to utilise their tokens (e.g., ETH), which is often the case if users want to redeem their yield-bearing assets outside of dappOS. In addition, dappOS supports cross-chain functions. For example, if a user wants to purchase a token on a Layer-2 (L2) with ETH, they can directly do that with intentETH without having to consider bridging, unstaking, or swapping.
Intent EX
Intent EX helps users achieve optimal transaction costs in spot trading by satisfying users’ intents both on-chain and off-chain. Service providers compete to provide the best solution for users, and users can enjoy institutional-level cost efficiency and speed, even for relatively smaller orders.
Intent-Centric Dapp Interaction
This is a network of dapps currently supported on dappOS, and users can easily manage their assets across various blockchains on dappOS.
One example is GMX, where users can buy and trade GM/GLP tokens on dappOS. With the integration, the execution time is reduced by 90% and fees reduced by 20%, according to dappOS. In addition, the protocol has integrated multiple chains, including Arbitrum, Avalanche, and Manta. Based on the aggregate figures across six dapps integrated with dappOS (GMX, SOFA, Perpetual Protocol, KyberSwap, BENQI, and Aark Digital), it has a cumulative total transaction count of 986,000 and a peak weekly user count of 47,000 (from 1 July 2023 to 13 October 2024). KyberSwap accumulated the largest share in both weekly transactions and users over the past six months.
3.2 Special Features
The first feature of dappOS is unified account, which means users can use a single account to manage all their assets cross-chain. For most of the existing DEX wallets, assets are segregated across chains (e.g., 30 USDC on Arbitrum, 20 USDC on Ethereum); under dappOS, it would appear as 50 USDC total balance, which the user can deploy across various dapps supported by the platform. The service providers handle the cross-chain transfers on the backend, simplifying the user experience.
In addition, a unique feature of dappOS is Optimistic Minimum Staking (OMS). Essentially, this means “provide C, want X, get Y when fail.” The user’s intent will either be successfully executed or the user will receive compensation. On the flipside, the service provider will stake a minimal amount of collateral relative to the value of the intent tasks, then receive C from the user to achieve X.
If the task is detected as failed, the collateral Y will be used to compensate the user and reward the validators that challenged the task. This design is beneficial to both parties. For the users, this ensures efficiency and security: If the task is not completed within a certain time frame, it will be deemed a failure and the user will be compensated. For the service providers, the capital burden is relatively low, as they receive C up front from the user.
Overall, dappOS is a significant development in the intent-based space. The approach of allowing users to state the starting and ending outcome, and letting service providers compete to figure out the ‘how’, offers flexibility. Service providers can adopt a wide range of solutions (on-chain, off-chain, centralised or decentralised) to satisfy the user outcomes in an efficient and timely manner. For users, it offers reliability and potentially lowers transaction costs.
In 2023, dappOS launched V2, and has since been focusing on expanding the number of partners in the ecosystem. During the V2 roadmap announcement in 2023, dappOS also announced its intention to allow for permissionless integration of dapps in the future. The protocol is working towards becoming a ‘Windows for Web3’, aiming to be an integral part of Web3 and bringing convenience to users.
4. Significance and Challenges
Significance
| Improves User Experience | Users can type in their intents and leave the intermediate processes (‘how’) to the service providers. Users are potentially able to enjoy lower transaction costs as service providers compete to provide the most optimal solution. |
|---|---|
| Unifies Crypto Fragmentation | From a user’s perspective, intent-based service ‘unifies’ the fragmented crypto landscape (multiple wallets and protocols), as the user does not have to spend time navigating across the crypto landscape to achieve their target.dappOS’ unified accounts are an example, where assets across multiple blockchains are aggregated together and free for users to deploy. |
| Potential Integration With AI | Integration with AI agents to process natural language and automatically execute transactions based on user inputs. AI can also help to provide strategies for order routing or matching between users and service providers. |
| Improves User Experience | Unifies Crypto Fragmentation |
|---|---|
| Users can type in their intents and leave the intermediate processes (‘how’) to the service providers. Users are potentially able to enjoy lower transaction costs as service providers compete to provide the most optimal solution. | From a user’s perspective, intent-based service ‘unifies’ the fragmented crypto landscape (multiple wallets and protocols), as the user does not have to spend time navigating across the crypto landscape to achieve their target.dappOS’ unified accounts are an example, where assets across multiple blockchains are aggregated together and free for users to deploy. |
| Improves User Experience | Potential Integration With AI |
| Users can type in their intents and leave the intermediate processes (‘how’) to the service providers. Users are potentially able to enjoy lower transaction costs as service providers compete to provide the most optimal solution. | Integration with AI agents to process natural language and automatically execute transactions based on user inputs. AI can also help to provide strategies for order routing or matching between users and service providers. |
Challenges
| Lack of Transparency | Opaqueness in the intermediate processes may lead to service providers acting in their self interest; for example, charging higher fees or prioritising their own orders over users.Users are theoretically provided the optimised solution, but it is also not clear how many service providers are competing to provide solutions to the user. |
|---|---|
| Centralisation | For certain tasks that are complex, there may be a domination of service providers that are specialised or more skilled in a particular area — potential centralisation concerns may arise, and user interests may be jeopardised. |
| Maintain Solver Incentives | Protocols need to provide sufficient incentives (rewards or volumes) to keep solvers on the platform and their interests aligned, which may be challenging during initial stages of the protocol when volumes and users are still low. |
| Lack of Transparency | Centralisation |
|---|---|
| Opaqueness in the intermediate processes may lead to service providers acting in their self interest; for example, charging higher fees or prioritising their own orders over users.Users are theoretically provided the optimised solution, but it is also not clear how many service providers are competing to provide solutions to the user. | For certain tasks that are complex, there may be a domination of service providers that are specialised or more skilled in a particular area — potential centralisation concerns may arise, and user interests may be jeopardised. |
| Lack of Transparency | Maintain Solver Incentives |
| Opaqueness in the intermediate processes may lead to service providers acting in their self interest; for example, charging higher fees or prioritising their own orders over users.Users are theoretically provided the optimised solution, but it is also not clear how many service providers are competing to provide solutions to the user. | Protocols need to provide sufficient incentives (rewards or volumes) to keep solvers on the platform and their interests aligned, which may be challenging during initial stages of the protocol when volumes and users are still low. |
5. Conclusion
Intent-based protocols simplify user experience by handling all the intermediate steps for the user. In addition, these protocols offer users optimal solutions to achieve users’ targets.
Moreover, with AI development, AI agents can potentially revolutionise the intents space, as intent-based protocols can integrate AI agents as solvers, which can bring automation, efficiency, and accuracy. At the same time, the protocols can use their inherent security mechanisms to gain users’ trust in using AI.
The Web3 space is getting more fragmented with multiple chains and dapps, but we see the potential for intent-based protocols to be the large-scale aggregators and agents for Web3, as they are also the key drivers for Web3 massive adoption. We look forward to seeing a future where users can input their intents and receive optimised solutions from a healthy ecosystem of service providers, effectively bridging the gap in user experience between Web2 and Web3 services.
Read the full report: Intent-Based Protocols
Authors
Crypto.com Research and Insights team
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