🌐The Importance Of Decentralisation

Understanding the trust assumptions users have to make with existing solutions

BalloonDogs' DeFi Abstraction Layer is a decentralised network connecting users on all EVM-compatible chains. The decentralisation of this layer is integral to its functioning, and is necessary to promote an open and sustainable system. There are broadly two harmful elements in existing intents systems that arise due to the lack of sufficient decentralisation.

Trust Assumptions

In status quo, user's are required to make certain trust assumptions to interact with intents protocols. This implies that there is no guarantee that the transaction path to satisfy the user's intent is optimised in favour of the user. Any system that can sustainably scale with intents needs to understand this incentive for solvers.

There are two trust assumptions with existing intents systems that are done away with in the BalloonDogs system.

Trusting the systems

All existing solutions require delegation of control over user funds so as to satisfy user intents. This means that a third-party has authority over a user's funds and can manipulate them as needed. This is a major trust assumption that may pose a security risk to funds. However, this trust assumption's impact is mitigated by decentralisation and on-chain validation.

Trusting the solvers

The only limitations to the solver market is competition and market price of underlying assets. As discussed earlier, competition in this market does not help deter centralising behaviour. Additionally, there is no way to verify that a solution has been optimised for a user. This means that users are required to trust that solvers are not providing solutions than are detrimental to them.

Use Case Dependent Fulfilment

In the current state, the winning solver of an auction essentially is granted the right to extract MEV from that user. Eventually, this will incentivise solvers to ignore intents that do not directly grow their MEV collection.

Decentralizion as a Solution

These problems have the potential to snowball into significant UX degradation as the intents ecosystem matures. To ensure that incentives are aligned between actors in the space, BalloonDogs's DeFi Abstraction Layer is decentralised. These are some of the benefits this has over existing solutions:

  • BalloonDogs is entirely non-custodial. Users can seamlessly move assets across chains, protocols and tokens. This enables a fully trustless intents system, where the user maintains full control over their funds.

  • BalloonDogs' transparent and decentralised network ensures the solutions that are provided are optimised in favour of the end user.

  • Changing the incentivasion open it to deal with any use case and not just MEV related

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