As the blockchain industry continues to expand, some believe chain abstraction will play a pivotal role in reducing complexities within the industry and driving new user adoption. Developers have realized the importance of chain abstraction and are hard at work providing new solutions for users.
One project working to solve chain abstraction is Arcana Network, a modular Layer 1 with a proven track record of abstracting complexities in the Web3 space, including simple user onboarding with Web2 logins, crypto transfers to anyone via email, and frictionless gas fees. The team is currently working on a chain abstraction protocol that enables users to seamlessly utilize their entire balance across chains in seconds without the need for bridging.
In this interview, Arcana’s Co-Founder and CEO Mayur Relekar dives deep on the technology behind Arcana’s upcoming chain abstraction protocol, key features for users, and what’s next for Arcana and the chain abstraction sector.
Q1: Arcana recently introduced its Chain Abstraction Protocol. Can you explain what Chain Abstraction is and why it’s important?
With the proliferation of chains (L1s, L2s, L3s, Rollups, Appchains, Sidechains…), user experience and liquidity are fragmented. Chain abstraction essentially makes it easier for users to spend across chains without having to go through cumbersome bridging exercises.
Let us explain with a simple use-case where a user wants to use Aave for lending, borrowing or earning interest on their crypto assets. User holds funds across multiple chains like Arbitrum, Optimism and Ethereum. With Arcana’s chain abstraction protocol, user will be able to use the entire unified balance on a single chain like Arbitrum instantly without having to bridge any assets. This makes the entire user journey simple, fast and efficient.
Q2: What are Arcana’s Chain Abstraction Protocol’s key features for users as well as developers?
We have designed our chain abstraction protocol to effectively cater to developers and end users.
For Users: Our standalone wallet presents the user with a unified aggregated balance that can be spent instantly across any chain. It abstracts away the need to bridge, switch chains, add chains, and buy gas tokens. The most unique ability is that it supports all types of wallets like EOA, SCW, etc.
For Developers: An SDK to integrate within apps enables developers to choose chains based on tech and business requirements. Developers do not need to chase liquidity and users on different chains because users can use the app without needing to bridge.
Q3: How does Arcana’s Chain Abstraction implementation differ from other similar solutions?
Most other solutions opt for the smart contract wallets (SCWs) route, the most widely used account system to implement chain abstraction. Thus creates a lot of friction in the process by requiring the users to create a new address, move all their assets across various chains to this new address, and deploy this wallet across their desired chains before using the address. Arcana does not follow this route.
Our chain abstraction requires zero or very simple integrations. Users are not dependent on developers to integrate Chain Abstraction SDKs, resulting in a broken user experience arising out of fragmented liquidity across chains and the need to use multiple bridges to connect them.
Q4: How does Arcana’s Chain Abstraction enhance user experience, notably transaction costs and speed?
WRT cost, Arcana’s chain abstraction works with normal EOAs and does not mandate the use of SCWs. This reduces gas spending by ~10x. More importantly, though, depending on how fragmented your liquidity is, not needing to do many bridge transactions helps further reduce the cost for the user.
On the speed side is the greatest gain when you compare it with the status quo of needing to bridge assets from multiple chains. With the Arcana Chain Abstraction protocol in place, users who would normally need to switch context multiple times, click several buttons, and would typically need to wait minutes or hours can now achieve their intended goal with 0 context switch, literally one click, leading to a reduction in time spent by multiple orders of magnitude.
Q5: Can you describe a typical user experience using Arcana’s Chain Abstraction, such as depositing USDC in a liquidity pool on a different chain?
Take, for instance, the use case where a user wants to deposit USDC in a liquidity pool on the Arbitrum chain.
The user will first connect to Aave with their Arcana wallet, which contains funds on Optimism. Once connected, the user will see their funds on Optimism as a unified balance, ready to be spent on Arbitrum.
Next, the user will enter and confirm the desired amount of USDC they want to deposit. The wallet will display the total amount they are looking to spend, including gas fees and protocol fees.
Once the user confirms the transaction, an intent is sent out to the solver network to fulfill the user’s liquidity needs on Arbitrum. The solver then transfers USDC to the user on the Arbitrum chain to complete the transaction on Aave.
Although the last two steps might sound like a lot, they happen within a single transaction confirmation step.
Q6: How does Arcana’s Chain Abstraction technology facilitate unified liquidity across multiple blockchain networks without the need for traditional bridging solutions? Could you elaborate on the roles of vaults and solvers within the technical architecture?
To enable instant spending across any chain, the liquidity needs are taken care of by the liquidity providers. Upon receiving transaction confirmation on any chain, an intent is sent to the solver network to fulfill the user’s liquidity needs on that chain, and the solver transfers the required assets to the user on that chain.
It would be pertinent to mention here that the Arcana Network solvers comprise a network of third-party liquidity providers who compete on fees to fulfill the liquidity requirements of different assets across different vaults on each chain.
Our architecture also includes vaults — smart contracts deployed on individual chains—that can hold liquidity of tokens supported by the Arcana Network and the gas token of the specific chain and supply the liquidity to the client in need based on instructions from the Arcana Network of nodes. The vaults are capable of verifying the instruction signature to ensure the transaction request originated from the user.
Q7: What’s next for Arcana following the Chain Abstraction demo? When can we expect your Testnet and Mainnet to come out?
We will release more demo videos of chain abstraction enabled on other popular DeFi and consumer apps in web3, along with a waitlist for signing up for its private beta. We are all set to build a robust network of solvers in the days to come.
Additionally, we will release a mobile wallet and more developer SDKs for wallets and apps to cater to a more diverse ecosystem. Testnet and Mainnet releases are planned for later this year, along with some of the leading Layer 1s, Layer 2s, and apps in the web3 ecosystem.
Q8: What message would you want to convey to the Arcana community and wider blockchain ecosystem about the future of Chain Abstraction and Arcana’s vision?
The community we cater to has immense trust in us and our vision to make web3 effortless. They believe in the intensity and rigor with which we commit to every new update. We have already solved the inherent frictions of the SCW account system, which is not universal.
Additionally, we have also optimized costs and made integration hassle-free. In the near future, our chain abstraction will become more feature rich and universally inclusive.
