Intro

As the blockchain landscape has grown increasingly complex with the introduction of numerous Layer 1s, Layer 2s, and Layer 3s, navigating this diverse ecosystem has become a formidable challenge for users. The segmentation across multiple chains complicates transactions, asset management, and user interaction, often resulting in a disjointed and inefficient experience. This report explores these challenges, focusing on the innovative solutions developed by NEAR Protocol. NEAR’s approach to chain abstraction seeks to simplify user interactions across different blockchains by creating a unified, seamless interface that abstracts away underlying complexities. By emphasizing NEAR’s efforts and their potential to enhance the Web3 user experience, we aim to highlight how such advancements could significantly ease the multi-chain burden and foster a more accessible and user-friendly blockchain environment.

The Challenge of Multi-chain UX in Web3

The evolution of the crypto space and scaling wars over the last ~seven years has ushered in the “new normal,” which now consists of hundreds of L1s, L2s, and even L3s. These advancements have democratized access to cheap block space (with varying security tradeoffs) yet introduce complexities in user experience due to the necessity of navigating multiple chains, managing gas fees, and using bridges/wrapped assets. Put plainly, the current user experience in interacting with dApps across multiple chains is cumbersome, costly, and unintuitive.

In today’s multi-chain world, users are basically forced to navigate multiple interfaces and undergo repetitive transactions to manage assets across protocols. This segmentation not only complicates the user experience but also introduces economic inefficiencies and a burden upon the user.

For example, a significant portion of crypto wallet users operate through Externally Owned Accounts (EOAs), identified by a unique 42-character alphanumeric string prefixed with “0x”. This string acts as a private key, which is essential for accessing and managing the account. The primary challenge for users is the management of these keys since the (general) security model of blockchain technology does not allow for password recovery like traditional web platforms. If a user loses or forgets their private key, they lose access to their account and the assets within, without recourse. Now, if a user looks to transact across two, four, or ten different incompatible chains, they are required to manage the private keys for all of those addresses.

Every interaction on the blockchain, whether buying assets or minting NFTs, requires a separate transaction. This process is time-consuming and incurs additional gas fees, likely triggers a taxable event and can be a significant deterrent in a fast-paced digital environment. Although advancements in blockchain technology aim to streamline these processes, the practical implementation of such solutions is still limited.

Bridges

Blockchain bridges emerged as the initial solution to this blockchain fragmentation problem, facilitating interoperability between disparate blockchains. These bridges work by using pairs of smart contracts on each blockchain to manage assets and ensure the integrity of transferred data through cryptographic messages. Essentially, they allow for the virtual movement of assets by mirroring the state changes between accounts on different blockchains without the physical transfer of tokens. This enables cross-chain asset transfers and enhances dapp functionality across multiple blockchains, thereby expanding the design space for innovation and liquidity.

Despite these advantages, the use of blockchain bridges comes with significant drawbacks. The bridge infrastructure inherently introduces various risks, including smart contract vulnerabilities, technological failures, and the potential for malicious attacks. These risks are compounded by the necessity of trust in centralized operators in many bridge designs, which can lead to issues of censorship, theft, and custodial risks.

Moreover, the history of blockchain bridges has been marred by notable security breaches, such as the Poly Network, Ronin, and Nomad hacks, which resulted in enormous financial losses. Such incidents underscore the persistent vulnerabilities associated with bridge technologies, from bugs in code to compromised oracles and colluding validators. These risks threaten the security of user funds and impact the overall user experience by introducing delays and uncertainties in transactions, particularly when adequate liquidity is not available.

Ultimately, this fragmented ecosystem connected by a few expensive and insecure bridges represents a significant barrier to broader adoption, especially for users who are not deeply versed in the intricacies of blockchain technology. Numerous solutions have been proposed, including generalized interoperability layers like LayerZero, compatible L2 architecture like OP Super Chains, shared/aggregated liquidity across compatible projects with Polygon’s AggLayer, and more. While all of these provide some degree of improvement, the solutions are still incompatible with one another, and the issue of fragmentation across solutions remains. However, one such solution approaches the problem from a new angle and seemingly removes any of the fragmentation and friction for the end user: chain abstraction.

Chain Abstraction

As the Web3 ecosystem continues to evolve, scalability remains a significant challenge. The current modular approach to scalability involves separating out the different functional layers of a blockchain, such as settlement, data availability, and execution.

While this approach has led to the development of various modularity solutions, such as L2s, optimistic and ZK rollups, data availability layers, sidechains, and state channels, it has also resulted in a fragmented landscape with a degraded user experience.

Long gone are the days of “one chain to rule them all.”

Chain abstraction is an innovative approach that aims to defragment the increasingly fractured modular landscape of Web3. By abstracting away the complexities of blockchain technology, chain abstraction enables seamless interaction without the need to distinguish between different blockchains. This approach has the potential to significantly improve the user experience, as it simplifies the process of engaging with different blockchains and reduces the complexity of managing multiple accounts and assets. This design pattern, inspired by Account Abstraction, minimizes the need for users to concern themselves with the specifics of one particular underlying blockchain and, instead, focuses on completing the user task in the most optimal manner, even if it involves a completely different chain or chains. In this context, understanding blockchain(s) and their nuances becomes optional, not mandatory, significantly lowering the entry barrier for average users.

Account Abstraction (AA) is an approach in blockchains (specifically, Ethereum) that integrates user accounts (EOAs) with smart contracts into a unified account type, enhancing flexibility and customizability in transaction validation. By allowing programmable validity conditions through smart contracts, this framework supports not only specific applications such as automatic payments but also broadens overall transaction efficiency on Ethereum and other chains. Along those same lines, chain abstraction looks to create a simpler and more powerful user experience for on-chain users.

Key Features of Chain Abstraction

• Seamless Chain Interaction: Chain Abstraction enables dApps to execute logic across any chain without requiring users to switch networks or manage multiple wallets.
• Unified User Interface: Users can interact with dApps using any supported token from any chain, all within a single, consistent user interface, thus eliminating the need to navigate away to perform essential functions.
• Gas and Transaction Management: By abstracting the chain-specific details, users no longer have to deal with acquiring or spending gas on secondary chains, as these operations are managed within the abstraction layer.

Chain Abstraction and ZK Technology

At its essence, chain abstraction addresses fragmentation issues by enhancing both user experience and network security. One noteworthy innovation supporting this approach is the deployment of Zero-Knowledge (ZK) technology and proofs.

Zero-knowledge proofs (ZKPs) are a type of cryptographic technology used to verify transactions. They work by allowing someone (the prover) to prove they have specific information without revealing the details of that information to someone else (the verifier). This capability offers significant privacy advantages and reduces the computational and storage resources needed for transaction validation by keeping the actual data hidden.

ZKPs are built on three key principles:

1. Completeness: If the prover has a valid proof, a truthful verifier will accept it as correct, confirming the transaction.
2. Soundness: This principle prevents a prover from creating a false proof that looks valid, thereby ensuring the proof’s integrity.
3. Zero-knowledge: The verifier learns nothing more than the fact that the proof is valid without gaining any other information about the underlying data.

These characteristics make ZKPs a powerful tool for enhancing security and efficiency in blockchain technology, ensuring that only necessary information is verified, while keeping all other details confidential.

ZKPs increase security in the realm of chain abstraction by allowing concise proofs to validate transactions across multiple chains, thereby supporting a secure, unified ledger system. This approach provides mesh security as all proofs continuously get aggregated, allowing the safe movement of assets between such chains. This cross-settlement model secures transactions and ensures that assets can be safely transferred between disparate blockchain networks.

NEAR Protocol’s Approach

NEAR Protocol is at the forefront of the chain abstraction movement, actively developing various solutions to enhance user experience. These solutions include security aggregation, account aggregation, Data Availability layers (DA), intent brokers, decentralized frontends, and super wallet development. By streamlining user and application interactions across various chains, NEAR Protocol enables users to seamlessly engage with platforms like Ethereum, Avalanche, and others using a single NEAR account.

NEAR Protocol epitomizes these advancements, especially through its implementation of chain signatures (discussed in more detail in future sections) and several other key features. One critical feature of NEAR’s infrastructure is its security aggregation stack, which includes several innovative technologies:

• NEAR Data Availability (DA): Data availability ensures that all transaction data is recorded in blocks and accessible to all network nodes, which is crucial for maintaining the network’s credibility and integrity. For instance, NEAR Protocol’s approach to data availability enables Ethereum rollups to process transactions more efficiently and securely by leveraging NEAR’s infrastructure.
• zkWASM x Polygon Labs: WebAssembly (WASM) standards act as a sort of intermediary language that takes user inputs and reliably executes state transitions in crypto-native programming languages. This makes developers’ lives easier when writing code in various languages and having it executed in Virtual Machines. zkWASM leverages Zero-Knowledge proofs to enhance privacy and security in smart contracts, making them more efficient and scalable.
• Identity Management: Another cornerstone of chain abstraction is identity management, which allows users to maintain identities across multiple blockchain networks, thereby easing the process of asset management and transfer. This system, often referred to as account aggregation, streamlines user interactions with various blockchain ecosystems.
• Decentralized Frontends: NEAR has also introduced decentralized frontends, highlighted by initiatives like the Blockchain Operating System (BOS), which offers a unified user experience across diverse blockchain applications. These platforms provide a cohesive interface for accessing a variety of blockchain applications, further simplifying the user experience and encouraging wider adoption.
• Account Aggregation: Account aggregation enables users to have a single address on all possible chains and move assets between them freely. This approach simplifies the user experience by providing a single account where they can interact with apps on different chains, manage their on-chain identities across chains, and assets either get bridged or swapped automatically.
• “Super” wallets: NEAR’s wallets simplify user interactions across Web3 networks by eliminating the need for network switching and managing different gas tokens. These wallets streamline the process of engaging with multiple blockchains, significantly enhancing user convenience and efficiency.

Chain Signatures

As the blockchain ecosystem continuously evolves to enhance interoperability among various blockchain networks, chain signatures on the NEAR protocol look to become a critical piece of the infrastructure. Chain signatures enable NEAR accounts, including smart contracts, to execute transactions across different blockchains as well as allow users to cover gas fees using the Multichain Gas Relayer (MGR). This innovation alleviates the cumbersome process traditionally involved in acquiring and managing different native tokens for transaction fees across various chains.

Key Benefits of the Multichain Gas Relayer:

• Simplified Transactions: Users no longer need to purchase and manage multiple types of gas tokens, which streamlines the process of engaging in cross-chain activities.
• Enhanced Accessibility: By reducing the barriers to entry, more users may feel encouraged to explore and participate in cross-chain transactions.
• Support for Non-EVM Chains: Extending beyond EVM-compatible chains, this relayer broadens the scope of accessible networks, enhancing the utility and reach of NEAR tokens.

Chain Signatures also introduce a form of multichain account abstraction, allowing a single NEAR account to manage numerous accounts across a variety of chains. This feature provides functionality similar to ERC-4337 but extends it to include non-EVM and non-smart contract chains, further enhancing the flexibility and power of NEAR accounts. Users can manage their assets across various chains through a single NEAR account and can cover transaction fees on various chains using USDC, facilitating smoother and more predictable financial transactions.

Initially, chain signatures will work across Bitcoin, Ethereum, Cosmos, Dogecoin, and Ripple. However, NEAR is aiming to roll out compatibility soon to support Solana, Polkadot, TON Network, and more. Currently operational on the testnet, Chain Signatures are slated for a mainnet release in early May.

Core Mechanism

Chain Signatures utilize a decentralized Multi-Party Computation (MPC) network that allows NEAR accounts to interact with and control addresses on multiple chains. This technology enables a NEAR account, which could also be a smart contract, to request that NEAR validators or MPC nodes sign a payload—such as a transaction intended for another blockchain. The signed payload can then be sent to the destination chain, facilitating seamless transactions across diverse blockchain networks.

Source

MPC

Multi-party computation (MPC) is a technique for keeping data private among several participants. It allows multiple parties, each with their own private data, to participate in a computation and verify the result without revealing their private information to others. In practice, each participant holds a segment of a cryptographic key, which is used collectively to perform secure transactions or operations.

In an MPC setup, a private key is divided into several parts and distributed among participants. When a transaction needs to be authorized, a specified number of these participants, or nodes, must provide their segment of the key to sign the transaction. This process ensures that no single participant can control the transaction on their own. The final digital signature is then validated using a public key, which can confirm the transaction’s authenticity without revealing the individual key segments.

MPC is particularly useful for cross-chain transactions where multiple approvals are required before any action is taken. It provides strong security benefits, including no single point of failure, flexible signing processes, and detailed control over who can access and sign off on transactions. Recovery from problems is also easier with MPC compared to other methods.

Unlike traditional MPC networks, which often rely on deposit-based or bridge-based models, Chain Signatures operates on an account-based pattern. This approach reduces users’ complexity by eliminating the need to manage multiple blockchain addresses or navigate through cumbersome bridging processes. The Chain Signatures MPC network acts as a decentralized signer, handling requests and managing cross-chain addresses on behalf of NEAR accounts and smart contracts.

However, MPC also has drawbacks. The coordination required to manage signing policies and approve transactions happens off the blockchain, which can introduce risks related to centralization. Moreover, MPC is not compatible with many conventional wallets and lacks standardization, which means it cannot be easily implemented on widely used secure devices like smartphones or hardware security modules. Currently, MPC solutions are often custom-designed for specific needs and use proprietary technology.

Finally, the Chain Signatures MPC network is launching in collaboration with Eigenlayer, a key partner in the project. EigenLayer is an innovative protocol designed to enhance the security of the Ethereum network and expand its functionality using a novel mechanism known as restaking. At its heart, EigenLayer allows Ethereum validators to restake their ETH. In this process, validators commit their staked ETH—traditionally locked to maintain blockchain integrity—to support additional services and applications. By doing so, validators can amplify the security provided to the Ethereum network and the applications built upon it, effectively utilizing their staked capital in a more dynamic and versatile manner.

The security for the network is initially provided by a Proof of Authority model managed by Eigenlayer ETH restakers and NEAR stakers. The network aims to transition to a permissionless model with a broader set of node operators, enhancing its security and decentralization.

Implications for DeFi and Blockchain Development

Chain Signatures open up a plethora of new possibilities for DeFi applications by allowing assets from one chain to be used in another. For example, users can leverage BTC as collateral to borrow USDC or trade their XRP tokens easily for ETH. This flexibility is crucial for the growth of DeFi, providing users with enhanced liquidity options and more diverse financial products.

Revolutionary Use Cases Unlocked by Chain Signatures:

• Cross-Chain DeFi Applications: NEAR smart contracts can now operate DeFi protocols using the native assets of non-smart contract chains, opening up a whole new liquidity pool that was previously inaccessible.
• Bridgeless Transactions: By enabling direct custody and management of assets across chains, NEAR smart contracts eliminate the need for bridges and traditional message-passing layers, thus simplifying operations and reducing potential security risks.
• Instant Multichain Accessibility for Apps: Developers can now launch applications that are immediately accessible across multiple blockchains, significantly expanding their potential user base and market reach.

However, unlocking chain abstraction does require some new developer work and tooling. To successfully integrate Chain Abstraction, developers must adopt a toolkit that supports this design pattern. This toolkit should include:

• Cross-Chain Logic Handlers: Components that can interpret and execute dApp logic across different blockchain infrastructures.
• Token Management Systems: Tools to handle various token types across chains, facilitating seamless asset transfer and interaction within the dApp.
• User Experience Optimization: Features designed to make the user interface intuitive and consistent across different blockchain operations.

Until these become more mainstream, integrations into the chain abstraction world may be limited.

Conclusion

While the current multi-chain environment offers a plethora of opportunities for innovation and diversification within the blockchain space, it also poses significant challenges for users in terms of usability and security. The introduction of chain abstraction by NEAR represents a pivotal step towards simplifying this landscape, aiming to enhance the user experience by streamlining interactions across diverse blockchains. As the Web3 ecosystem continues to evolve, it is crucial that advancements not only focus on technological innovation but also prioritize user-centric solutions that reduce complexity and foster an inclusive and secure blockchain environment. This notion is at the center of NEAR’s latest innovations, as is evident from NearDA to chain abstraction and the BOS. Ultimately, NEAR is positioning itself to become the most easy-to-use, highly performant L1 ready for Web2-scale adoption.

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