Delphi Digital: 2024 Crypto Infrastructure 6 Major Themes and Related Project Outlook

Original Author: Delphi Digital

Original Compilation: xiaozou, Jinse Finance

"Unlike today's tokens that are associated with specific applications, in the future, tokens may increasingly be used to support specific solvers that may participate in one or more independent applications to earn rewards. Since intent-based cross-chain value transfer applications (such as Across, deBridge's DLN, @hashflow, Connext, CHAINFLIP LABS, Uniswap Labs, etc.) require solvers to have similar functionalities, it is reasonable to expect the same solvers to participate in multiple applications." ------ Excerpt from "2024 Infrastructure Outlook."

Our "2024 Infrastructure Outlook" provides a comprehensive and in-depth exploration of the following six major themes:

Theme 1: The Battle of L2s

• Research and analysis of Blast L2, the biggest catalysts that may lead to the next market crash, and the increasingly fierce competitive landscape among rollups.
• The L2 ecosystem is becoming increasingly isolated -- an analysis of Arbitrum, Optimism, Base, zkSync, Mantle, Starknet, Polygon, etc.
• Ethereum alignment: The need for alternative DA (data availability) to achieve scalability and top protocols with competitive products.
• In-depth study on value accumulation: from ETH, L2 tokens to alternative DA -- reflecting different fee generation designs and future rollup structures.
• Entering the L1 competitive landscape, with major competitors being Monad, Sei, Berachain, Sui, and Aptos.

Theme 2: Solana

• A comprehensive overview of the state of Solana -- assessing the pros and cons of Solana's architecture, the evolving fee structure, and the changing relationship between NFTs and SOL prices.
• Firedancer & Franendancer: A concise summary of Firedancer, the latest optimizations and performance updates, and the Franendancer architecture.
• Payments: Solana's area of expertise -- an assessment of payment activities and infrastructure, analysis of payment applications, and integrations with Sphere, Code, Sling, Shopify, etc.
• OPOS: Only possible on Solana -- a unique application profile for Solana, mainly featuring Crankless Limit Orderbook DEX "Phoenix," consumer-facing apps, and creator-focused cNFT platform DRiP, as well as a liquidation DAO sanctum focused on Solana LSTs, etc.

Theme 3: Intent-Based Cross-Chain Future, Value Will Flow to Solvers

• Profitable token bridges will decline, and a thorough review of the USDC cross-chain standard CCTP will change the bridging landscape.
• The main player in the intent-based bridging future is Across, which is the most mature intent-based bridge.
• Where does value come from?
• Future outlook: The universalization of intent and how the boundaries between applications become increasingly blurred in an intent-centered world.

Theme 4: Solver Centralization

• The evolution of DEXs (decentralized exchanges) towards intent-based architectures, with a deep dive into UniswapX.
• Fifty Shades of Grey in Solver Decentralization: Competition, decentralization, and demands of solvers.
• Solvers will dominate intent-based DEX trading volume.

Theme 5: THORChain & Chainflip -- Scaling is Bitcoin's Decentralized Highway

• A comprehensive overview of THORChain and its development, Synths, and protocol-owned liquidity.
• What are the benefits of Synths?
• Future outlook: What’s next for Thorchain in 2024?
• An in-depth study of Chainflip: Evaluating JIT AMM, MEV in Chainflip, and other differentiators of THORChain.

Theme 6: Ethereum Roadmap

• Future hard forks -- examining the two upcoming major hard forks: Deneb-Cancun hard fork and Prague-Electra hard fork.
• EIP-4844 and its impact on data publication -- a case study of one of the most anticipated Ethereum upgrades since EIP-1559 and the Ethereum merge.

A key point: "The future of cross-chain is intent-based, and value will flow to solvers."

CCTP and standardized bridges have clear advantages and disadvantages. Firstly, they address most liquidity/user experience fragmentation issues by increasing the share of standardized priced assets. On the other hand, due to their conservativeness, their speed is slow. Rollup bridge validation can take hours or weeks, while CCTP may take tens of minutes to several hours.

However, users want faster speeds. Therefore, adopting backend services that may come from user-facing applications, which compete with each other in terms of speed, capital efficiency, and gas costs. Thus, we believe that intent-based designs will have a competitive advantage.

Across stands out as the most mature intent-based bridge. It is particularly active in the connectivity between Ethereum and Ethereum rollups, and with the increasing adoption of rollups, Across has gained a significant market share.

Our main point is that the future of cross-chain will be intent-based, exemplified by Across.

The uniqueness of the intent-based liquidity network lies in its ability to leverage off-chain liquidity through an open, permissionless solver market.

The concept is: users outsource bridging risks to solvers. Solvers compete to fulfill cross-chain transfer intents and earn value through fees.

The cross-chain transfer process through Across can be simplified into the following three steps:

Step 1, Generate Intent: Users deposit assets into a custodial account to express their cross-chain transfer intent, and upon intent completion, the relayer will earn a fee.

Step 2, Intent Fulfillment: Relayers compete to identify and fulfill user intents on the target chain to earn fees, using off-chain liquidity paid from their own pockets.

Step 3, Settlement: Completed transactions on the target chain are sent back to the source chain for verification. The winning relayer unlocks the assets in custody and verifies through Across's UMA optimistic oracle to reduce on-chain gas costs.

Key aspect: Users' cross-chain transfer intents are served instantly by relayers, who will be compensated afterward. This ensures that users receive the fastest processing speed while allowing relayers to minimize operational costs.

Transaction-based bridging transfer times are limited by the finality of the source and target chains. Intent-based bridging overcomes this issue by using relayers. Relayers can even fulfill user intents on the target chain before transactions are completed on the source chain. This speeds up transaction times as competition among relayers increases.

Across's settlement is optimized for minimizing gas fees, with regular (every 2-4 hours) batch payments to reduce gas amortization costs. Across uses UMA's optimistic oracle for verification, further lowering gas costs.

Reliability is crucial for liquidity networks like Across. To ensure continuous availability of liquidity on the target chain, the protocol also helps relayers rebalance their liquidity. This is achieved through Across leveraging on-chain liquidity pooled by passive LPs (liquidity providers), adopting a hub-and-spoke model, where there is a central pool on the Ethereum mainnet and several smaller spoke pools on the target chains.

The protocol actively manages rebalancing by regularly adjusting liquidity between the spoke pools and the central pool. This flexibility allows relayers to receive payments on the chains of their choice, regardless of the user's deposit location. These pools can also serve as backups for off-chain liquidity in case relayers miss serving user intents.

Future outlook: Across currently uses standardized bridging and plans to transition to a Universal Bridge Adapter (UBA) for liquidity rebalancing. UBA will involve off-chain relayers, incentivizing balanced pools and penalizing relayers that exit from underbalanced spoke pools.

After UBS, Across will not be tied to a specific bridging method, allowing relayers to choose any bridge and compatible chain without using standardized bridges.