The Near-Term Outlook for Chain Abstraction: Part 1

Key Insights

• Chain abstraction addresses user pain points in cross-chain interactions by aggregating fragmented liquidity, creating a unified user experience, and removing the need for users to choose specific chains or applications.
• User activity is focused on a few chains and protocols, leading us to believe that abstracting user decisions about chains and apps is premature.
• Based on this view, we propose a 2-3 year outlook for the development of the Chain Abstraction ecosystem.

This is part one of a two-part report on our near-term views on chain abstraction. Part 1 explores the development of chain abstraction, concentrating on how it addresses key user challenges like fragmented liquidity and the complexities of cross-chain interactions. By analyzing components such as messaging protocols and solver networks, this segment provides insights into the evolving landscape. Additionally, it presents a 2-3 year outlook on the ecosystem's trajectory, suggesting that fully abstracting away user decision-making regarding chain and application choices is likely premature. The second part of this report will apply these perspectives to a valuation of the intent-based bridge, deBridge.

Primer to Chain-Abstraction

The purpose of this report is not to revisit the debates around defining chain abstraction, but rather to offer a near-term perspective on how the chain abstraction landscape will evolve and to integrate that view into a valuation framework. However, for readers seeking a refresher on the core concepts, we have included a brief primer below. For a more comprehensive analysis, please refer to our earlier report, Chain Abstraction - Solving Crypto's Biggest Problem.