As decentralized finance (DeFi) and the broader crypto landscape continues to evolve, new challenges like MEV protection, liquidity fragmentation, and deteriorating user experience (UX) are consistently arising. Left unchecked, these issues could make it harder to onboard new users into DeFi than it already is. Fortunately, intent-based solutions are now emerging as a promising approach to tackle these challenges.

From the user’s perspective, suppose Alice wants to trade her USDC on Ethereum for WETH on an L2. Traditionally, Alice would have to go through multiple steps including transferring USDC to her wallet, connecting to a bridge and transferring the USDC to the L2, then connecting to a decentralized exchange (DEX) and executing a swap transaction. The process is complex and time-consuming. With intents that outsource execution to a network of solvers that compete to fill orders, Alice doesn’t need to take multiple steps or worry about how it happens. Intent-based systems simply allow users to specify their “intent”, which determines the end state of the chain — and a network of solvers compete to fulfil the user’s outcome as fast and cheaply as possible.

There are two main benefits of intent-based design:

• User experience – Intent-based systems offer a seamless and fast process. Users simply express their intent, and solvers handle the execution. Features like gas abstraction and Just-In-Time (JIT) liquidity contribute to a smooth, "one-click" experience reminiscent of Web2 apps.

• Execution efficiency – Professional market makers (MMs) acting as solvers manage transaction execution with greater expertise than basic automated market makers (AMMs) contracts or end users. Their specialized knowledge allows for building more optimized on-chain transactions that further enhance capital efficiency.

  
  

Given these advantages, intent-based solutions have been gaining significant traction in DeFi, particularly in spot DEXs and bridges. While not yet widespread in perp DEXs, we anticipate significant adoption in this sector in the coming months.

Source: Defilama, Dune, Spartan Capital

Intent-based spot DEXs or swaps (e.g., UniswapX, Cowswap) function as aggregators with maximal extractable value (MEV) protection, prioritizing the best execution for swappers. Expanding on the aggregator analogy, the protocol acts as an aggregator of solvers, with solvers aggregating on-chain and off-chain liquidity. Thus, combining intents with an order-flow auction (OFA) users get better pricing, as they source liquidity from different venues, and lower fees, due to benefiting from auction proceeds in the form of surplus rebates, compared to traditional on-chain swaps. For instance, on Cowswap, users typically receive an average token surplus of 0.75% (also known as “execution welfare”) on volumes, indicating the price improvement facilitated by solvers.

Intent-based bridges (e.g., Across, deBridge), where users submit an intent to bridge tokens from Chain A to Chain B, and solvers are tasked with finding the optimal routing. This approach enables faster bridging times (vs messaging-based bridge approaches like Stargate) by allowing solvers to take on finality risk and bridge optimistically. Once the transaction on Chain B is confirmed, the solver receives user funds on Chain A, along with the execution fees.

Intent-based perp DEXs (e.g., SYMMIO) allow users to submit intents for opening positions, which are broadcast to market makers (MMs). This creates a decentralized over-the-counter (OTC) desk with bilateral trading agreements. When a MM fulfils an intent, an on-chain agreement is formed with both parties locking collateral. This offers advantages over AMMs and central limit order book (CLOB) based perp DEXs. Unlike AMMs, which rely on passive LPs with limited asset variety, intent-based systems leverage MMs who can source liquidity from various venues, giving users access to global liquidity and asset exposure. Compared to CLOBs, intent-based systems reduce the need for high-throughput on-chain interactions as MMs only need to interact on-chain when they opt to fulfil a user’s intent.

ERC-7683 can create network effects for solvers

Source: LIFI Blog

Furthermore, by reducing the solver’s complexities involved with intent solving, the ERC-7683 standard facilitates one of the biggest moat a solver network can have, which is having a large and diversified network of solvers and MMs with inventory that compete with each other to provide fast and cheap fills. This mirrors the “liquidity begets liquidity” phenomenon that we have seen on DEXs: A large-liquidity DEX pair offers better prices to swappers, while a large solver network offers better execution (in terms of price and speed) to intent users. It is a network effects game, more solvers lead to better execution (price and speed), attracting more order flow, which in turn incentivizes more solvers to join. By standardizing intent-orders, ERC-7683 helps bootstrap this network, creating a powerful moat.

Source: Spartan Capital

In terms of market structure and positioning, as the complexity of becoming a solver gets reduced, the middle solver layer gets commoditized, with resulting value flowing to the edges where Across is strategically positioned: upstream in the off-chain Request-for-Quote (RFQ) auction that Across is building for bridge transfers, and downstream as the settlement network for any auction mechanism that produce intent-based signed orders following the ERC-7683 structure. One such example is UniswapX cross-chain swaps, which potentially expands Across’ TAM from its $25M daily average settlement volume, to potentially net new $1.5B - which is what Uniswap currently averages every day.