LianGuai Encyclopedia | What is Intention and What Are the Risks?

Understanding Intention and Mitigating Risks A Comprehensive Guide from LianGuai Encyclopedia

Author: Sam Kessler, CoinDesk; Translation: Song Xue, LianGuai

A quietly happening revolution is changing the way we use blockchain, and at the heart of it is one of the latest buzzwords in cryptocurrency: “intent”.

Simply defined, intent is the specific goal that blockchain users want to achieve. While no two “intent-based” systems are the same, they all work on a similar principle: users, whether traders or protocols, submit their intent to a service, which then outsources it to a “resolver” – which could be a person, an AI robot, or another protocol – that will do its best to get the job done.

These have become increasingly important as blockchain expands rapidly. With the rise of Bitcoin, Ethereum, a range of layer one networks, layer two networks, and now even layer three networks, along with countless “bridges” and other “interoperability” solutions connecting them all, it can all become overwhelming.

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As the cryptocurrency market matures, “what can be done on the blockchain becomes more complicated,” explained Arjun Bhuptani of interoperability protocol Connext. “At any given time, you have an infinite number of ways to transact.”

The newer intent-based services promise to find the best way for users to accomplish their tasks – maximizing transaction profits and saving on gas fees, among other benefits.

But these platforms’ advantages also come with risks, and some observers have sounded the alarm: while we may welcome the help of third-party resolvers in handling our blockchain busywork, the new services could spawn a new breed of monopolizers.

1. Understanding Intent

Blockchain can be thought of as a massive global computer. Traditionally, users provide detailed instructions (e.g., use Uniswap to swap token A for token B at a specific price), and the blockchain gradually executes those instructions.

However, in the new world of intent, this pattern is disrupted. Users express what they want to achieve (e.g., swap A for B at the best price) without specifying how to do it, letting the protocol handle the details.

Think of it like hailing a cab. Traditional blockchain services are like providing the driver with navigation directions, which can be tedious and costly if your route is convoluted or hard to find shortcuts. With intent, all you need to do is provide the destination to the taxi driver and then sit back and trust your driver.

A new wave of blockchain and protocols, including Anoma, Flashbots, and CoW Swap, are already offering intent-based services for crypto users. Users can submit a general goal to one of these services, like “exchange these tokens at the best price,” and have it processed by a third-party resolver for a fee.

2. How Does Intent Work?

Different platforms use different terms to describe the concept of “intent,” but the overall premise remains the same.

Today, most intent-based protocols begin with some kind of “intent discovery” system, a place where users “broadcast the content they want,” explains Bhuptani. In blockchain terms, these discovery venues can be viewed as “memory pools” – areas where unprocessed transactions are waiting.

Buhptani says, “The intent could be something like, ‘I have USDC, and I want to figure out how to convert it to XYZ assets, and I want to do it on another chain or in a specific way.’ “The complexity of intent that one can express is limitless.”

“So then you have a marketplace of solvers,” continues Buhptani. Solvers “listen” to intent and if the price is right, they implement it. “These intent solvers are automated executors, and they essentially say, ‘Oh, the user wants to do XYZ? Well, let me do it on their behalf because I can earn some fees for doing so.”

From a higher level, this may sound familiar. When we ask Coinbase to convert Ethereum (ETH) to Bitcoin (BTC), or if we instruct a transaction aggregator like 1inch to sell our Solana tokens to the market with the highest price, aren’t we expressing intent? Well, yes. “Intent,” like many other things in the crypto world, is a peculiar way of describing a phenomenon that already exists.

The intent of 2023 – and the reason why the word has become increasingly popular over the past year – is that many services, whether new or old, are trying to fit user-friendly intent into the box of decentralized cryptocurrency spirit and can be applied to almost any use case.

Most new intent-based protocols “decentralize” their systems by outsourcing to solver networks, where solvers compete to fulfill user requests at the best possible price. This competitive system aims to ensure that no central third party is burdened with the task of meeting all user needs.

III. Intent-related Use Cases

Intent-centered systems have been applied to various use cases.

Bhuptani’s ConneXt protocol uses intent to manage transactions between different blockchains. For example, users can express intent to transfer tokens from one chain to another, and the solver network finds the best route.

The Anoma protocol promotes the concept of intent on the blockchain, providing so-called “intent-centered infrastructure.” In simple terms, Anoma’s infrastructure aims to extend intent-centered functionality to almost any use case, helping other services match intent with solver networks.

SUAVE is one of the most notable services designed around the concept of intent that Flashbots, an infrastructure company focused on Maximum Extractable Value (MEV), is about to launch. When SUAVE is launched, users will be able to submit “preferences” to the competitive network operator market, where network operators bid against each other to fulfill these preferences. The system aims to balance user priorities with MEV.

4. Risks in the Intent-based System

While intent-based services offer a range of user experience advantages, one only needs to consider the taxi example to understand where the system can go wrong.

Providing detailed directions for all our taxi trips, similar to the traditional model of specifying each step in a blockchain transaction, would be cumbersome and prone to errors.

But the “trust the driver” approach also presents a problem, as it is more akin to an intent-based system: we have all had the experience of hopping into a taxi in an unfamiliar city, hoping for a quick ride, only to find ourselves uncomfortable as the driver takes us on a suspiciously long route with the meter running.

In this analogy, the taxi driver is like the resolver in an intent-based system: trusting the resolver to handle the task implies trusting that they will execute the task honestly.

Intent-based programs typically have proper mechanisms in place to keep resolvers honest, meaning a more appropriate analogy might be Uber, which allows drivers to check their pre-determined pricing and in-app routing. But ride-sharing apps only further highlight the risks of intent-based systems: anyone who has experienced the surge in Uber prices in recent years has witnessed how convenience can come at the cost of sacrificing the end user to solidify the position of large corporations. The true risk of intent-based systems goes beyond just dishonesty; it also opens the door to potential new monopolies.

Lian Guairadigm, a renowned blockchain investor and researcher, highlighted these risks in a blog post: “While intent is an exciting new paradigm for transactions, their widespread adoption may mean a larger trend of user activity shifting toward alternative memory pools is accelerating,” wrote Lian Guairadigm, the researcher. “If mismanaged, this shift could bring entrenched risks of centralization and rent-seeking intermediaries.”

As we become increasingly reliant on these third parties to fulfill user intentions, these companies may start acting in their own interests – either by charging higher fees (e.g., Uber) or by filling orders in a way that benefits them instead of the users.

Although most intent-based services outsource to a competitive marketplace of solutions – ostensibly to avoid centralization – there is still the possibility for certain companies to dominate the field.

For example, one can imagine a cryptocurrency exchange building a solution to dominate the “buying” and “selling” use cases – effectively driving all market activity onto their own ledger. The exchange may initially subsidize their fees as a way to push out competitors, but once they have captured the market, they will increase prices.

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