Intent System: A New Direction for Simplifying Decentralized Finance Operations

Before the collapse of Luna, I helped a friend run a stablecoin yield strategy to obtain the unusually high yields at that time. This friend was not familiar with cryptocurrencies, and our collaboration involved weekly video conferences where I guided him in detail on how to operate.

We will diversify funds across multiple Decentralized Finance protocols on various chains. During a session lasting several hours, we will carry out a large number of approvals, transfers, swaps, deposits, withdrawals, and other operations. Funds are spread across various customized liquidity pools, voting locks, and other projects to obtain incentives. We have utilized almost all mainstream cross-chain bridges, exchanges, and yield aggregators to maximize returns.

This process is extremely cumbersome. I need to explain each step in detail, while my friend has to execute these instructions in the complex DeFi interface. For example, to swap USDC for FRAX/DAI LP on Polygon, 12 transactions need to be executed, involving multiple platforms and steps.

Looking back at this process, we were actually just mimicking some of the functionalities of yield farming applications, but the manual operations turned out to be exceptionally complex. From a higher perspective, our goal is actually quite simple - to convert USDC on Ethereum into FRAX/DAI LP on Polygon and stake it. However, to achieve this goal, we have to carry out a series of cumbersome steps.

If there is a powerful routing algorithm to handle these transactions, the entire process can be simplified to 1-2 steps. Users only need to state their final goal, and the algorithm can provide the best path or even handle the transaction directly. This path mapping structure is called "intention" and is an important direction for the future development of middleware in Ethereum.

The core of "intention" is declarative, meaning that the user states the desired outcome, and a third-party "solver" provides the means to achieve it. Unlike specific transactions, intentions require a third party to map the paths. There are also some constraints to limit the possible set of paths.

This "intention"-based architecture has been applied in some DEXs. When you trade on platforms like Curve, the system automatically finds the best routing. The user interface provides an estimated price impact and offers options to limit slippage.

Some aggregators like 1inch and DeFiLlama have further developed this intent system. After users provide trading parameters, the system presents multiple possible execution options for selection. In addition to trade aggregation, there are several other types of "intents" on Ethereum, such as limit orders, order auctions, gas sponsorships, etc.

A core feature of the intent system is data exposure. Users indicate their willingness to exchange convenience for MEV( maximum extractable value) by signing intent messages. These intents are stored in a private off-chain "Interpool," which can be permissioned, permissionless, or a hybrid model.

Currently, the most popular Interpool is centralized and permissioned. This poses risks of monopoly and rent-seeking. Some critics compare the intent system to the controversial "order flow payment" model in the stock market, which may lead to conflicts of interest.

To address these risks, some protocols are developing infrastructure for hybrid systems. Although a consensus has not yet been reached, the intent system is a new middleware layer emerging in the crypto space, aimed at enhancing user-friendliness. In the future, it may be applicable to a wider range of data and application scenarios, bringing new possibilities to the Decentralized Finance ecosystem.