Recently, after Hyperliquid's airdrop, the wealth effect has ignited the market, and everyone is starting to pay attention to the potential star DEXs that may emerge in this cycle.
What will the next generation of DEX look like?
The new generation of DEX must be products that have significant advantages in user experience and liquidity.
One direction I believe is chain abstraction: DEX + chain abstraction = CEX user experience.
1. Benefits of Combining DEX with Chain Abstraction
Chain abstraction allows DEXs to provide a CEX-like user experience, reducing the complexity and costs of cross-chain transactions while enhancing liquidity. This is particularly attractive for users who need to trade assets across multiple blockchains.
(1) Lower operational threshold: Chain abstraction allows users to use DEXs without understanding the underlying chain technology. This means users do not need to manage multiple blockchain accounts or learn how to transfer between different chains, making operations simpler.
(2) Enhanced liquidity: By encapsulating underlying cross-chain technology, DEXs can integrate liquidity from multiple blockchains, providing richer trading pairs and higher liquidity. This is especially beneficial for small transactions, reducing slippage.
2. How DEX Specifically Combines with Chain Abstraction
(1) First, to establish unified liquidity, use cross-chain bridging technologies like Polkadot, Cosmos, or Chainlink, allowing assets to flow between different blockchains. This enables DEXs to access liquidity from multiple chains and distribute trading orders across different chains for execution.
(2) Through smart contracts, DEXs can automatically manage the exchange of assets and liquidity pools across different chains. AMMs can optimize price discovery and liquidity provision across chains.
(3) Provide a unified user interface, allowing users to trade without switching wallets or understanding chain details. All cross-chain operations are handled in the background through chain abstraction technology. Ultimately, users only need to express their trading intent (e.g., "I want to exchange ETH for BTC") without specifying a particular chain or path. The system automatically finds the best cross-chain path to complete the transaction. By combining these technologies, DEXs can not only provide a better user experience but also significantly improve the overall efficiency of the decentralized finance (DeFi) ecosystem. In this way, DEXs can come closer to the convenience offered by traditional centralized exchanges (CEXs) while maintaining the essence of decentralization.
3. User Example After DEX Combines with Chain Abstraction
Goal: Bob wants to purchase some USDC on the Polygon network to place bets on the prediction platform Polymarket.
Usage process: Bob enters the trading interface of the chain abstraction DEX, selects "Exchange ETH for USDC," and the system automatically provides the optimal trading path. Bob confirms the transaction and only needs to pay a fee once with any token.
Background processing: The DEX automatically handles the following operations in the background:
(1) Extract ETH from the Ethereum network.
(2) Cross-chain the ETH to BSC.
(3) Exchange ETH for USDT on BSC.
(4) Bridge USDT to Polygon.
(5) Finally, exchange USDT for USDC on Polygon. The entire process is transparent to Bob; he only needs to confirm the transaction once.
4. Conclusion
The reason DEX applications are suitable for combining with chain abstraction is mainly that they both involve cross-chain operations and asset management, requiring simplification of the user experience to enhance convenience and liquidity.
Chain abstraction technology makes these applications more user-friendly by abstracting the details of cross-chain operations, reducing users' learning and operational costs while improving the overall system's efficiency and interoperability.
We are waiting for new products that combine DEX and chain abstraction to emerge.
Among them, it is worth noting Particle Network, which is a leader in the chain abstraction space.
Recently, Particle announced that it will launch a new type of trading product on December 3, which will likely integrate chain abstraction solutions. Particle Network has made significant strides in wallet infrastructure and has not yet issued a token, so could Particle Network be the next golden dog?
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