On The Other Side ep 91 - Intents as protocol moats w/ Andrew Hong
Primer: What are Intents? How do they contribute to the moat of the protocol? In this episode of On The Other Side, Andrew Hong of Dune shares his piece on the Modular Stack and how Intents serve as a growth loop in Web3.
Background
Fell down the crypto rabbit hole during DeFi summer
Was at a banking job and was looking into the crypto space more
Got into the space more as a developer rather than as an investor
Has spent time at ConsenSys and Mirror
Currently the Headmaster at Dune
His Piece On The Modular Stack
The modular stack has fallen into a branding issue
It’s not about which chain is more important (e.g. Arbitrum vs. Optimism vs. Cosmos, etc.)
It starts with account abstraction, which does not depend on the chain
With account abstraction, you can build more logic off-chain
What Is Account Abstraction?
A Gnosis safe is a wallet that multiple people can sign to approve a transaction
The first part of abstraction is that the signature does not always have to be a wallet. It could be some sort of approval from someone
For example, a Visa debit card could be tied to a smart account
When you swipe your card, you are given the approval and Visa goes through their API to send an approval
Hence, there are 2 signatures that approve you to go and pay someone else
The Paradigm Of Intents
We are moving from account abstraction to intents
When you submit a transaction, there is a set of variables that you have to sign on
For example, if you want to do something custom like sending a Uniswap order when the price moves by 5%, Uniswap V2 has no idea what you mean
This is where off-chain logic comes about and where consumers can express their preferences
When information gets built up in intents, it still has to be decentralized and orderly
Intents: 5 Years From Now
Two main angles will get enabled
One angle is that intents should become composable between DApps
Another angle is scoring
During the NFT auction hype, people were bidding up the gas cost to ensure that their transaction happens
With scoring, priority could be given to people who have been active in Discord, people who have not actively flipped NFTs, etc.
Off-Chain Impacting On-Chain Objectivity?
It makes things easier and more intuitive for users but makes things extremely complicated and unintuitive if you are an info provider or a developer
Does Off-Chain Mean That Things Are Centralized?
Have been talking to teams about this
Some apps like Uniswap and Cowswap are going to build a node network where you can get data and participate in it
There is some risk to it
Whitelists and airdrop lists are centralized ways of how things are done. The centralizing aspect of intents is not new
This is not a one-way path. If we want to return to a contract-based way of doing things, this is also possible
Why Do People Dislike Discussion On Intents?
It goes back to the extra complexity that we have to deal with
Intents are also too closely branded with MEV
Intents And Moats
People are not talking about it as it is taboo
However, people are making moves for it, even in the NFT space
Does not know where the moat forms
Right now, the moat is just liquidity
Think that Uniswap is building V4 to fight for liquidity while UniswapX to fight for the front-end side
The other example is DeFiLlama working really hard to make the latency low for checking prices across all the different APIs
This makes data a moat
Intent As A Growth Loop In Web3
Even if liquidity is mainly provided on Uniswap, users could still swap through various mediums
In contrast, in Web2, you can only go to the same place to interact with it (e.g. a particular bank)
Crypto apps will get a lot more distribution — which they haven’t had to deal with yet
In Web2, apps wanted to own the distribution of their own content
Web3’s Composability and Modularity
Farcaster is the best example of having a level of aggregation for discovery and distribution
It started with the Warpcast app and people have built on top of it
Farcord is a reskin of Farcaster but as Discord
Technically, Farcaster still owns the distribution
Brief Introduction To Everything Else In The Modular Stack
Data availability (or data publishing) — the idea that blocks right now are ~1 megabyte in size and they could be made bigger, cheaper, and faster
This could be done using zero-knowledge proofs. zk proofs could be used to automate risk and manage DeFi protocols
Machine learning could become much more powerful on-chain3
Excited to see how the modular stack starts to impact actual consumer experiences
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