Chain Abstraction On NEAR Protocol
Everything You Need To Know About ‘Chain Abstraction’ On NEAR Protocol
What is Chain Abstraction?
Chain Abstraction - also referenced as ‘Chain Aggregation’ is a concept pioneered by the team at NEAR Protocol since early 2024. It refers to enabling a user of a blockchain based application (dApp) to use that application without having to rely on pre-requisite activities or knowledge for using the blockchain: 1) Gas fees in the blockchains native token, 2) moving assets onto the network in question, 3) Needing to open up or manage a wallet or seed phrase, for a specific account on a given blockchain network.
NEAR proposes a pathway from which a given user can access an application on a blockchain without such prerequisites, simply by leveraging a NEAR Account to manage and swap assets between chains, and seamlessly connect with an application on any blockchain (a game on BNB chain, a meme coin index on Solana, or a money market on Ethereum).
How does this differ from traditional bridging?
Traditional bridging refers to the movement of assets and data between two different blockchain networks. This, if anything, increases the complexity for a user to navigate different networks because beyond needing to handle accounts and fees on multiple chains, the user must also manually transact that value between the chains.
Chain Abstraction, proposes to hide away all of such complexity, such that a user can simply interact with a NEAR Account on any blockchain and with any blockchain based application. Sounds to good to be true? Let’s dive into how it works!
How does it work?
The key to account aggregation on NEAR centers on the NEAR Account Model. NEAR Accounts are defined by a number of crucial characteristics: 1) Any NEAR Account can have multiple keys, each with their own set of permissions. Full access keys enable control over the account, function-call access keys however, designate the account to only call specific methods on a smart contract. 2) NEAR Accounts have in-built human readable ID’s attached to them. 3) NEAR Accounts have mutable storage - meaning the storage can change when the user or the accounts contract transacts.
All of this is preliminary, in explanation Account Aggregation: Account Aggregation is a smart contract architecture, by which any NEAR Account can create a remote account on another blockchain, signed and managed by a number of Multi-Party Computation Nodes on the NEAR Network (in simple terms, NEAR Validators).
The simplest version of Account Aggregation, enables a user to manage multiple accounts on other blockchains, through a single NEAR Account (assuming they have sufficient funds to cover gas fees on the respective chains in the chains native token).
The more advanced version of Account Aggregation deals with what is known as a ‘Relayer Contract’, in which an application or ‘paymaster’ can charge a NEAR Account in USDC or a currency of their choosing, to automatically broker the gas costs on other blockchains, in the blockchain’s native token. This more advanced version of Account Aggregation would enable ANY user to operate on ANY Chain, without needing to worry about separate network tokens, and separate accounts: A NEAR Account and a single currency could interact with applications on ANY blockchain.
Why is this revolutionary for crypto?
Usability and easy access to blockchain based applications, remains the holy grail for many L1 ecosystems both in terms of market discovery and product market fit. As the theory goes: Only when blockchain becomes easily accessible with some type of value creation available on its application layer, will it be ready for its first billion users. NEAR’s Account Aggregation Architecture, paves the way for making this possible in ANY blockchain ecosystem using the NEAR Account model.
Can You Give Me An Example?
There are two great examples of Account Aggregation demonstrated by Sweatcoin Founder Oleg Fomenko, and Proximity Labs CEO Kendall Cole.
Let’s start with Sweatcoin’s demo at ETH Denver.
The example presented by Oleg details how a transaction is done on Binance Smart Chain (BNB), via a NEAR Account, with fees covered using $SWEAT (on NEAR).
The full demo is included below as a Tweet:
You can also view as a YouTube Short: https://www.youtube.com/shorts/QkrgMbDrVRg
Under the surface, the NEAR Account manages a remote account with transactions signed by MPC nodes on NEAR, and the Sweat Application runs a Relayer ‘Paymaster’ account that accepts the transaction fee in $SWEAT and then under the surface covers the fee in BNB on Binance.
Let’s move on to Example #2: Kendall’s Demo on Cross-Chain Transactions.
Kendall Cole, CEO of Proximity Labs, presents the NEAR Account Aggregation Architecture before diving into an example involving the purchase of a Bitcoin Ordinal using a Multi-Chain marketplace.
In the example, a NEAR Account could buy a Bitcoin Ordinal ON Bitcoin, and manage that Ordinal through a Bitcoin Account controlled by the users NEAR Account.
As the graphic below breaks down the steps to making this possible, the ultimate success of the architecture involves a rotation of access keys between the selling account and the buying account: The Buyer simply gains access to the selling account, while the seller is paid out the amount of value the Ordinal is bought for.
For a full overview of the solution check out Kendall’s talk here.
What Areas Are Still In Need of Refining?
While Account Aggregation remains young, there remains an equal number of questions dealing with the financial model:
What will the role of the $NEAR token be in this multi-chain architecture? Clearly NEAR Accounts will be used to interact and manage assets on other blockchains, but the cost, fees, and exchange rates between different gas tokens is one area of missing information.
How will fees and transactions between paymaster (relayer) accounts manage downtime on other blockchains, slow transaction times, or expensive fees? While it’s one thing to send a fee on BNB Chain from NEAR, it's another to pay for a fee on Ethereum in USDC, and then have the paymaster account send an equal amount of ETH to the transacting account (2 transactions in total instead of one).
Our conclusion from this data, and from speaking to members of both the NEAR Foundation and Proximity Labs, is that it is likely that the early versions of Account Aggregation will be more expensive and potentially slower than manual operations on different chains.
What Are The Most Exciting Use Cases of Account Aggregation?
The original NEAR Blog announcing Account Aggregation detailed some of the most exciting use cases for the solution. We will cover some of them here:
Gaming User Base Growth: In our opinion, going into a cycle with hundreds of Web3 Games launching, the opportunity to use NEAR’s Account Aggregation model to onboard gamers is one of the ripest opportunities to pioneer the Account Aggregation Stack. Whether the game is on Avalanche, an ETH L2, Solana, or BNB Chain - most games rely on fast finality, and want to hide as much of the complexity as possible from users.
Multi-Chain DeFi Swaps: Tapping into liquidity on 1 chain, without having to bridge assets means that if a paymaster relay is in place, a user could hypothetically trade Solana Meme coins via a NEAR Account, and then swap quickly over to an Arbitrum Liquidity pool or take out a loan without needing to manually bridge. DeFi concepts like flash loans or on-chain derivative trading stand to have new opportunities emerge, although the full potential or danger of such solutions remains to be discovered.
Multi-Chain Non-Fungible Value and RWA Markets: Equally trending this cycle are the notion of ‘Real World’ Assets and Non-Fungible Value. NEAR’s Account Aggregation technology is a HUGE level up for swapping everything from NFTs to Carbon Credits - as the assets don’t actually have to move chains (something they actually cannot do).
From these three opportunities alone, there are billions of dollars of value that stand to be created from a variety of different use-cases, or middle-ware infrastructure solutions.
From these three concepts alone, we are extremely excited about the future of $NEAR.
When Can We Expect This To Launch?
The rumor mill around the NEAR Ecosystem has some of the first concepts being dropped on Mainnet in Late March or Early April of 2024. Suffice is to say, this will be ready to test and implement during the incoming 2024 cycle. Prepare Accordingly.
Disclosure: None of this article should be construed as financial advice. Please consult a qualified financial advisor or professional before buying or engaging with cryptocurrencies.
