How does "intent transaction" prop up the next wave of Web3 narrative?

By: Mike Calvanese and the team at Brink Compiled by: Luccy, Joyce, BlockBeats

This is Part 1 of a 3-part series on Intents by Mike Calvanese and the Brink team.

Intents are spreading rapidly, they are one of many user experience improvements enabled by account abstraction, and were a hot topic discussed in Vitalik's talk at EthCC. Intents let users define their desired on-chain outcomes, and outsource the technical work of achieving those outcomes to third-party solvers that interact directly with the network and protocols. Ultimately, the abstraction layer will make Web3 applications feel like normal applications. It reduces the existing technology learning curve and will attract millions of new users.

A paradigm shift to Intents means that future users won't need to care about things like submitting transactions, paying gas fees with ETH, mitigating MEV on AMMs by setting slippage limits, aggregating token swaps for optimal path routing, or asset bridging.

A simple way to understand Intents is to think of them as declarative expressions of "what" the user wants to happen, rather than imperative steps of "how" to achieve something.

Current Intents

Intents are not a new concept.

Ethereum projects like EtherDelta and 0x offered Intents-based order books long before Uniswap and AMMs existed. The NFT market has been using signed Intents for NFT pending orders and quotations for many years, and newer systems like CoW Swap and UniswapX now provide a more advanced Intents-based infrastructure for ERC20 limit orders.

Looking at the current landscape, the word "Intents" seems to be synonymous with "limit orders", because the only Intents that are widely supported in Web3 today are "I want X, and I'm willing to pay Y". The Intents structure for limit orders is usually simple and focused on one goal: to exchange at a better price than the current market offer. Users sign their limit order Intents, and the solver looks for paths to "fill" signed Intents using AMMs, other liquidity sources, or in some cases other Intents. Solvers are incentivized to find paths, because after the user's Intents are satisfied, they can keep the remainder as a bonus.

Limit order Intents architecture

Many systems are already built to support use-cases for limit orders, but as more advanced Intents tools are developed we will see more general architectures enabling more powerful use cases.

Some examples of generic Intents systems include Anoma and Flashbots SUAVE, both currently under active development. They will provide a Gossip layer of Intents where users broadcast signed Intents to Gossip nodes. These chains will be specific to Intents, facilitating the connection between users signing Intents on different networks and solvers executing them.

Another example is Brink, a solution for creating composable Intents. Brink allows users and developers to build, sign, and resolve conditional state-based Intents across multiple EVM-compatible networks.

The Future of Intents

Let's explore a few ways Web3 Intents go beyond simple limit orders, here are some new concepts:

Conditional Intents: Allow an action to be performed when one or more conditions are met

**Continuous Intents: **Express a desire to take repeated actions

Multi-step Intents: When an Intent is resolved, one or more new Intents will be opened

**Intents graph: **A path formed by a set of related Intents

Conditional Intents

Current Web3 applications only have one type of conditional Intents: limit orders. In the future, we will have Intents that can consist of any number of conditions in any state, resulting in various actions.

If you're a Web3 user, you've made many conditional decisions in the past, which could be expressed as Intents, signed and delegated to 3rd party solvers like:

Price Threshold: "If A/B price is lower than X, then exchange B for A". In traditional finance (trad-fi) this is called a "stop loss"

Governance decision: "If a governance proposal I do not support passes, sell token A".

Wallet Balance: "If I don't have enough ETH in my hot wallet, please transfer more ETH from my cold wallet to my hot wallet".

Elapsed Time/Blocks: "If more than X blocks were mined, then transfer ETH to the recipient".

All of these can be signed as single Intents. The solver will monitor these Intents and take action on behalf of the user when the conditions are met. Users sign these conditions, as part of their Intents will force the solver to check the on-chain state to prove the conditions.

Intents can be expressed with any number of conditions, for example:

I would like to buy 2 ETHs with DAI when the following three conditions are met: 1) ETH price is below $1,750; 2) The average DAI yield for lending ETH is high; Purchased at least 10 ETH within an hour.

When any number of complex state conditions are met, users will be able to express Intents to buy, sell, pledge, transfer, or bridge assets, all with a single signed Intent.

Continuous Intents

Intents will provide a protocol-agnostic way to perform sequential operations, and while intents today typically involve a single signature corresponding to a single operation (limit order), we will soon see the emergence of serial intents.

Users take continuous actions today by depositing funds into protocols or exchanges, here are some examples:

Cost averaging: "Use DAI to buy ETH at market price once a month". Users typically use CEXs such as Coinbase to accomplish this task.

Revenue compounding (aka re-staking): "Withdraw rewards from A, exchange for B, then re-stake". This is a cumbersome process involving multiple transactions and interactions across multiple DeFi protocols.

Hot wallet top-up: "I have a cold wallet with 50 ETH in it. Whenever my hot wallet ETH balance falls below X, transfer Y ETH from my cold wallet to my hot wallet". This requires many separate transactions.

Payment flow: "Transfer X USDC to the receiving address once every two weeks". Streaming payment apps support this, but require users to deposit assets into a smart contract

MARKET MAKING: An AMM-based LP position basically follows the same pattern as two opposing swaps that continue in an infinite loop: "When the price of A/B exceeds X, put A exchange for B; when the price of A/B is less than X, exchange B for A".

As you can see from these examples, continuous operations today require users to deposit into specific protocols and submit many transactions. With Intents, users can express the sequential actions they want with a single signature.

Cost averaging is a perfect example. Users intending to average costs (buy or sell repeatedly over time) can express this as a signature that allows 1 ETH to be converted to DAI every 50,000 at the price provided by the hard-to-manipulate ETH/DAI TWAP oracle block (approximately once a week on the Ethereum mainnet), with a 1% fee (0.01 ETH). The solver monitors this Intents and checks for:

1. Can I exchange 1 ETH in the user account?

2. Have 50,000 blocks been mined since the last swap?

Is 3.1% (0.01 ETH) enough to cover the gas cost of the swap?

4. After the solver pays gas for the exchange, is there any ETH left to cover the solver's operating costs, which may include the risk of recovery after losing the PGA (Priority Gas Auction) or any other costs? Is the potential profit worth it to the solver?

If all of these pass, the solver will send a transaction to satisfy the user's intent for the ETH→DAI exchange. As long as the user's account has enough ETH, the solver can monitor individual signature "cost averaging" intents and generate a continuous flow of transactions. Users get what they want without directly interacting with the EVM network or a specific protocol.

Cost-averaging Intents architecture

Market making with Intents is another example of a continuous and potentially infinite number of operations that can be delegated to a solver. A user wishing to do ETH/DAI market making might create Intents that allow DAI→ETH swaps at 1,800 ETH/DAI or lower, and ETH→DAI swaps at 2,000 ETH/DAI or higher exchange. Through this Intent, the user attempts to lock in a profit of 200 DAI each time the market fluctuates between the 1,800 and 2,000 ETH/DAI price points.

Market Making Intents

Think of it as two limit orders restricting each other, where one opens when the other is filled, and vice versa. Users can sign a single exchange intent at each price point. As long as the market continues to fluctuate at these price points, the solver can theoretically fill an infinite number of such orders without any action from the user.

Multi-step Intents

Intents can consist of multiple steps. You can think of these intents as a state machine where each transaction is a transition from a previous state to a new state depending on the conditions defined by the previous state.

A simple example of multi-step Intents is the classic traditional financial pending order arbitrage transaction. These orders can vary in complexity, but simpler versions are commonly found in traditional financial trading applications. Based on the composability and multi-step Intents of Web3, we can carry out very powerful pending order arbitrage transactions.

A Web3 pending order arbitrage transaction Intents can be expressed as: "I want 1 ETH, and I am willing to pay 1,800 DAI. Once I have paid 1,800 DAI and have 1 ETH, I am willing to hold this 1 ETH until I can Sell for 2,000 DAI. If the ETH/DAI price drops below 1,620 DAI, I hope to reduce my loss by selling this 1 ETH, in which case I will accept 1,600 DAI and give The solver pays a fee of 20 DAI. If I still hold this 1 ETH when the [Random Governance Proposal] passes, I want to sell this 1 ETH at the ETH/DAI price in the market and give 10% of the proceeds to to the solver."

"Bracket Order" Intents

This is a relatively simple 3-step order with some conditional triggers, but these types of orders can be much more complex.

Intents Chart

The relationship between different user Intents can form an Intents graph. These graphs represent user-defined combinations of conditions and actions that result in exchanges, asset transfers, or other on-chain behavior. All of the previous Intents examples are really just names for specific graphical arrangements.

Just like limit orders represent the current state of market liquidity, Intents graphs can represent not only the current state, but conditional liquidity across many different potential future states.

Example: A user trades XYZ and ETH in a fictional market. Intents representing the purchase and sale of XYZ under various conditions, such as based on the outcome of a governance proposal, the mining of a particular block, the rise and fall of market prices, or whether other Intents have been met.

Intents graph for fictional XYZ-ETH market

The graph represents the liquidity that exists now, and the liquidity that exists in a possible future state. Intents graphs can span markets and even across different chains.

in conclusion

Intents is progressing with new developments every day.