Author: Paul Timofeev Source: Shoal Research Translation: Shan Ouba, Golden Finance
Decentralized applications refer to blockchain-native products and services that have been around since the birth of smart contracts and Ethereum. However, user adoption of blockchain-based products and services has been significantly slow to grow, especially relative to Web2 applications and services. Consider the success of Netflix, they surpassed Blockbuster by shifting from physical DVD rentals to a world of digital services and streaming, leveraging superior convenience and choice. The convenience of having the world at the touch of a smartphone led to the adoption of mobile applications, which changed the way people interact with the Internet and greatly benefited social networks. ChatGPT surpassed Instagram and Tiktok to become the fastest growing application, which uses natural language processing (NLP) to simplify the chatbot user experience, providing a simple and powerful way for almost anyone to leverage artificial intelligence.
What these breakthrough products and services and their success have in common is that they provide a better user experience than any incumbent or competitor. In order for decentralized applications to achieve similar success, the on-chain user experience must be as seamless and convenient as possible, moving away from the world of seed phrases and fragmented chains that are common today.
The ultimate goal of the on-chain user experience is that users do not need to understand any underlying blockchain infrastructure; anyone can do anything on any blockchain without going through arduous onboarding and bridging processes. However, to better understand the importance of this design, it is necessary to understand the state of accounts today: on-chain accounts are ultimately the bridge between users and blockchains, storing on-chain balances and defining all activities and interactions with any blockchain-native program. Throughout their history, most blockchains have used an Externally Owned Account (EOA) model that consists of two parts: a public key that serves as an identity and reference point for receiving assets (wallet address) and a private key that serves as a master password for access (seed phrase). Wallets technically act as account abstraction services because they simplify the management of one or more on-chain accounts. While EOAs are known for their simplicity and empowering anyone to self-custody, they have also severely hampered the on-chain user experience to date. The most common drawback of EOAs is that anyone who gains access to the seed phrase will have access to the wallet (a threat that arises for those who store their seed phrase on a cloud-based service like iCloud), and anyone who loses access to the seed phrase and/or forgets the seed phrase will no longer be able to access their funds on-chain. The key to achieving this on-chain user experience is the emergence of abstract primitives, which are a number of products and services built around abstracting away as many of the friction-causing pain points in the on-chain user experience as possible. These may come in the form of toolkits and frameworks for developers to implement in their own web or app, or direct user-facing products and services. As development in the space heats up and the number of teams rolling out their own abstract primitives begins to grow, achieving a seamless on-chain user experience may be closer than most people think, as Vitalik suggests. But what exactly will enable this breakthrough?
Account abstraction refers to separating the management of on-chain accounts from the end user. The concept was first introduced as early as 2017, but it had struggled to gain any traction until the introduction of ERC-4337 in 2021. Efforts around account abstraction initially led to the development of smart contract wallets (often referred to as smart accounts). In this model, on-chain accounts are managed by smart contracts and can therefore be more programmable and optimized for user needs. This opens up new possibilities, such as being able to register accounts using familiar social logins, paying gas fees with the same assets on different chains, being able to execute multiple cross-chain transactions with one click, and more.
The key to achieving account abstraction is the development of execution abstraction services, where the execution of on-chain transactions is outsourced to specialized service providers called solvers (also known as shims or executors) to achieve optimal performance and delivery on behalf of signers. Here, users sign off-chain messages called intents, which contain instructions to perform on-chain actions, i.e., requests to fulfill transactions. By separating the execution of a transaction from its signature, users can more easily express desired outcomes, while back-end solutions such as private memory pools or competing solver networks help provide users with optimal settlement and value.
Another key component to achieving the ultimate on-chain user experience is the ability to communicate and interact across different blockchain environments. Historically, users have relied on bridges to meet this need, but over time, bridges have proven to be a large source of risk and insecurity. Chain abstraction iterates on the development of account and execution abstractions while introducing new infrastructure at the network layer that removes the complexity of communicating and interacting across different blockchain environments. See Shoal’s deep dive into chain abstraction for a comprehensive understanding of the basics of the concept and the broader chain abstraction landscape.
Chain abstraction is the culmination of efforts around a common goal: providing a seamless user experience that allows users to perform on-chain actions without having to know which blockchain they are using at a particular time. This report explores how Particle Network is enabling the development of the ultimate on-chain user experience through its new chain abstraction stack.
Protocol Background
Led by co-founders Pengyu Wang and Tao Pan, Particle debuted as a wallet abstraction service provider in 2022, launching a stack for developers to create non-custodial, dApp-embedded wallets that can leverage social logins through MPC-TSS technology. With the advent of ERC-4337 account abstraction, the protocol turned to incorporating the AA stack into its existing WA stack, leveraging smart contract wallets to enhance the account structure. This prepared for the launch of BTC Connect, which brought AA services to the BTC ecosystem through native Bitcoin signatures. Now, Particle is launching their layer 1 blockchain as part of their comprehensive, multi-faceted chain abstraction stack. Particle Network is developed by a globally distributed team of more than 30 full-time employees and has established partnerships with companies such as Berachain, Avalanche, Arbitrum, zkSync, etc. The protocol has officially raised $25 million in several seed rounds led by Spartan Group and Gumi Crypto, and recently received an investment from Binance Labs.
Particle Network is a modular Layer 1 built on the Cosmos SDK that will serve as a coordination and settlement layer for cross-chain transactions in a high-performance EVM-compatible execution environment.
Particle L1 is a component of Particle's broader chain abstraction stack, which consists of Universal Accounts (providing a simple interface to unify token balances between different chains), Universal Liquidity (enabling UA on the backend), and Universal Gas (allowing users to pay for gas with any token they hold).
The ultimate goal of Particle Network is to unify users on all chains at the account level, enable seamless cross-chain interactions through a single balance and account on any L1, L2, or L3, and allow anyone to easily pay for gas in any token they want. Let's take a closer look at the various key components that help achieve this goal.
To better illustrate, consider the steps involved in fulfilling a user’s simple request to buy Dogcoin on an external chain (Chain X):
The user connects to their UA via an existing wallet or social login.
The user submits their transaction request, expressed as an ERC-4337 UserOp, to Particle L1 to buy Dogecoin on Chain X.
The Bundler node in Particle’s decentralized node network processes the relevant UserOp and executes it accordingly.
Then, Particle’s relay nodes monitor and synchronize the execution status on the relevant chain. Once the transaction is confirmed to have executed, the state is routed from the chain back to the relay nodes, which communicate the state to the UA and end-user.
Our users now have the token they wish to purchase in their UA balance without having to interact with the chain that the token resides on.
Obviously, there are more internal components at work here that are worth further inspection. Think of the UA as Particle's user-facing product. Key to enabling the seamless experience it provides are the Universal Liquidity and Universal Gas features.
Universal Liquidity refers to the layer in the Particle Network responsible for automatically executing transactions submitted through the UA. This functionality is powered by Particle's distributed network of Bundler nodes, which provide specialized services to initiate the steps required to execute a UserOp, such as swapping or extracting liquidity from a pool. In addition, a distributed network of Relayer nodes, called the Decentralized Messaging Network (DMN), is responsible for monitoring the status of transactions on the external chain (i.e., the target chain) and communicating their settlement status back to Particle L1.
The main purpose of universal liquidity is to enable users to interact with different chains through cross-chain transactions without having to buy and hold any tokens on the relevant chains. For a better understanding, consider the following flow for a user who wants to buy 100 USDC of Dogcoin on chain D, while holding 25 USDC on chains A, B, C, and D respectively.
The user signs UserOp to buy 100 USDC of Dogcoin on chain D, effectively bundling their balances on four chains (chain A, B, C, D) into a single signature processed by particle L1.
Once the signature is executed, the USDC held by the user on chains A, B, and C is sent to the liquidity provider (otherwise understood as filler).
The LP releases the full USDC amount on chain D.
The USDC on chain D is exchanged for Dogcoin using the local DEX.
The final Dogecoin balance is now reflected in the user's UA.
Universal Gas is the third pillar of the Particle chain abstraction stack and is key to achieving gas abstraction, where the friction of acquiring and holding multiple gas tokens is abstracted away from the end user, who can now pay for gas with any token on any chain. Alice can use her USDC on Base to pay for gas on a Solana swap, while Bob can use his OP tokens on Optimism to pay for gas to buy an NFT on Ethereum. When a user wishes to execute a transaction through Particle UA, the interface will prompt the user to select their desired gas token, which will then be automatically routed through Particle's native Paymaster contract. All gas payments will be settled to the respective source and target chains, while a portion of the fees will be converted into Particle's native $PARTI token and settled on Particle L1.
Aggregate Data Availability Model
In blockchain, data availability (DA) refers to the ability to verify data that has been published to the blockchain. Typically, a blockchain will adopt a single DA solution, which can be done in-house under an integrated architecture or outsourced to a partner or third-party provider under a modular architecture. Particle is building its DA model by adopting an aggregate model to outsource DA to Celestia, Avail, and Near DA to mitigate single points of failure in its architecture. Particle adopts two different DA approaches: Selective Release, which assigns each block to a separate DA provider; Redundant Release, which sends each individual block to every DA provider.
Double Staking
Blockchains using a proof-of-stake model assign validators to propose and validate new blocks based on the amount of native tokens they stake in the network, and reward them proportionally based on the number of blocks they voted for. A key risk these networks face in their early stages is that price volatility of the native tokens can impact network security and stability. Particle aims to mitigate this risk through a dual staking model that will leverage BTC and native PARTI tokens through the Babylon staking protocol and assign validator pools to each respective token.
According to the team, before the development of Particle L1, Particle The wallet has been activated more than 17 million times, the user operation volume has exceeded 10 million times, and it has been integrated with various decentralized applications more than 900 times. On May 2, 2024, Particle Network's incentivized L1 testnet was launched, providing points rewards through the Particle Pioneer platform. Particle Network's incentivized public testnet allows users to test its flagship universal account and universal gas functions to earn points to allocate the upcoming $PARTI token. According to the Particle Testnet V2 browser, a total of more than 7.3 million transactions occurred in 1.3 million blocks, an average of more than 400,000 transactions per day. According to the Particle Pioneer event website, the testnet has seen more than 182 million transactions, and currently more than 1.49 million users have earned a total of 27.3 billion points, with an average of 183,000 points per user. Particle L1 is currently scheduled to launch on mainnet in the second half of 2024.
Chain abstraction is expected to become the next major framework for building interoperability platforms, and many upcoming developments will compete with Particle to become the standard toolkit or stack for building chain abstraction services.
Near is a sharded proof-of-stake layer 1 blockchain that provides a full-stack application domain for developers building decentralized products and services. Near is building its chain abstraction stack, an “account aggregation” - a multi-faceted structure that brings together users’ cross-chain interactions into a single account.
Near Near also leverages its FastAuth login service, which allows users to register accounts with email and use biometrics in place of passwords.
Key to enabling this structure is multi-chain signatures, which allow any Near account to interact with addresses on other chains. This is achieved through the NEAR MPC network, which supports key re-sharing, so that public keys remain the same even if nodes and key shares change. MPC signer nodes in the Near network allow smart contracts to initiate the signing process, creating a large number of remote addresses on any chain. Near also introduced meta transactions through NEP-366, which enables users to transact across multiple chains without holding native gas tokens. This is achieved by relayers (third-party providers) who attach the necessary gas fee tokens to the signed transactions they relay to the network.
Polygon is developing AggLayer, a unified L2 bridge built with Polygon CDK that will aggregate zk proofs and submit them uniformly to Ethereum for settlement. In this model, all chains share a bridge contract with other supported AggLayer chains, thereby maintaining sovereignty while benefiting from a global liquidity hub, making it easier to bootstrap early networks.
The chain abstraction opportunity is exciting. However, as more teams begin to roll out their own solutions, venture capital firms begin to pour more money into anything that mentions "chain abstraction," and users begin to rack their brains over which solution is best, there are some important considerations to consider.
Zee Prime Capital pointed out several important considerations about the promise of abstract primitives in a recent article.
"Chain abstraction is not a real solution to a real problem without a product." Admittedly, while UX remains a critical hurdle for the crypto industry to overcome, it may not be the ultimate bottleneck in attracting more users to the blockchain. In fact, infrastructure development was a response to poor UX caused by high fees and slow settlements. The infrastructure is there now (over 200 L1/L2 ), but there is an overall lack of successful products and services built on top of it. This is consistent with the views recently shared by Mert, who claimed that not enough people consider that the barriers to building strong crypto applications are not crypto-native (i.e. infrastructure, UX), but rather the unclear regulation and misaligned incentive structures surrounding the entire industry.
One example of this is the adoption (or lack thereof) of smart wallets.
With this in mind, a key challenge that abstraction primitives must address is ensuring successful coordination between solver/node networks in terms of state proofs, solver execution, transaction status, block confirmations, and other cross-chain guarantees, all of which require consensus. The nature of capital markets dictates that another faster, cheaper solution will always emerge, which means that chain abstraction service providers must consider many complex backend processes and their impacts, where things like timing games and order flow capture start to play a larger role over time.
A key question for Particle’s distributed node network is how decentralized this network really is. Will only a few entities participate in operating nodes, or will Particle be able to gain enough traction to maintain a sufficiently decentralized node network? How can Particle successfully incentivize enough node operators to become sufficiently decentralized in the first place?
To this end, we recommend two things:
1) Minimize the barriers to entry and participation for node operators
2) Provide a public dashboard through the Particle Explorer for monitoring and observing the degree of decentralization of the node network.
Particle is building a settlement and coordination layer for atomic cross-chain transactions, where universal accounts replace the need to use multiple wallets, purchase multiple gas tokens, and bridge tokens to use dApps in other ecosystems. This brings up the question of value accumulation; what economic impact will the successful adoption of universal accounts and Particle L1 have on other blockchains and ecosystems? Will they benefit from more users accessing their applications?
The need to change the state of user experience for blockchain-native applications is not a new idea, and developers have been working on this problem for some time. Chain abstraction will benefit end users by creating an on-chain experience that is easier to navigate, application developers by unlocking new user bases for their applications, and L1/L2/L3 by allowing cheaper and more efficient cross-chain communication and routing.
Particle is building account-level chain abstraction to assist in achieving this goal. By unifying cross-chain interactions into a single interface with universal accounts, allowing users to transact on any chain using universal liquidity, and paying for gas fees for any token using universal gas, Particle Network L1 is poised to be a leader in driving the future of chain abstraction.
Vitalik claimed that they have “put a lot of energy and willingness” into achieving a seamless on-chain user experience. Improving the user experience alone will not bring millions of on-chain users, but it is one of the most important steps to achieve this goal.
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