TL;DR
- Innovative Standard: Uniswap and Across Protocol propose ERC-7683, a new API standard designed to unify cross-chain trading and address liquidity fragmentation across Layer 1 and Layer 2 networks.
- Efficient Trading: ERC-7683 introduces a system where traders sign cross-chain orders, funds are secured in escrow, and liquidity providers compete to fulfill these orders, leading to secure and efficient trade execution.
- User & Filler Benefits: The standard aims to reduce gas fees, lower barriers for liquidity providers, and improve the overall user experience with faster and more accessible trade executions.
Uniswap, a leading decentralized exchange (DEX), has partnered with Across Protocol to introduce a groundbreaking API standard: ERC-7683. This standard aims to address the growing liquidity fragmentation caused by the proliferation of Layer 1 and Layer 2 networks. By creating a “universal filler network,” ERC-7683 facilitates seamless cross-chain swaps, benefiting both traders and liquidity providers.
Today’s intents-based systems are fragmented, each with their own set of fillers and no unified cross-chain standard
That’s why we’re teaming up with @AcrossProtocol to propose ERC-7683 👇
— Uniswap Labs 🦄 (@Uniswap) May 28, 2024
The Problem: Fragmented Liquidity
As the number of blockchains continues to expand, liquidity becomes increasingly fragmented. On-chain liquidity is dispersed across various web3 networks, hindering efficient cross-chain trading. To tackle this challenge, Uniswap and Across Protocol have collaborated on ERC-7683.
How ERC-7683 Works
- Cross-Chain Orders: Traders use ERC-7683 to sign cross-chain orders. These orders specify the desired asset swap between different chains.
- Escrow and Settlement: Once an order is signed, the trader’s funds are escrowed into a settlement contract. This ensures that the transaction is secure and irreversible.
- Fillers Compete: Liquidity providers, known as “fillers,” compete to facilitate trade settlement. They aim to execute the order at the best possible price.
- Execution and Release: The winning filler executes the trade, and the escrowed funds are released to complete the cross-chain swap.
Benefits of ERC-7683
- Reduced Gas Fees: Traders benefit from reduced gas fees due to the streamlined process enabled by ERC-7683.
- Lower Barriers for Fillers: By establishing a universal standard, fillers no longer need to navigate fragmented ecosystems. This lowers the entry barrier for liquidity providers.
- Improved User Experience (UX):
- Wider Network: Applications can route cross-chain intents to a broader network, enhancing accessibility.
- Faster Fills: Users experience faster trade execution with lower gas costs.
The Growing Blockchain Landscape
L2beat, an on-chain data provider, currently tracks 55 active Layer 2 chains and lists 43 upcoming projects. This represents a nearly 50% increase since the beginning of 2024. Bobby Ong, co-founder of CoinGecko, predicts that CoinGecko will track over 1,000 networks by 2024, up from the current 158.
In this rapidly evolving environment, ERC-7683’s standardized approach bridges liquidity gaps and fosters interoperability among cross-chain intent systems. As more chains emerge, Uniswap and Across Protocol’s collaboration ensures a smoother trading experience for all participants.
