DEX and Chain Abstraction Combined: Exploring the Development Direction of the New Generation Decentralized Exchanges

Recently, with the successful airdrop event of a certain exchange platform, the market has developed a strong interest in the potential emergence of star DEXs in the future. So, what form will the new generation of DEX take?

It is widely believed in the industry that the new generation of DEX must achieve significant advantages in terms of user experience and liquidity. One noteworthy direction is the combination of DEX with chain abstraction, which is expected to provide a user experience close to that of Centralized Exchanges (CEX).

Advantages of DEX Combined with Chain Abstraction

1. Lowering the operational threshold: Chain abstraction technology allows users to use DEX without needing to deeply understand the underlying blockchain technology, simplifying the complexity of multi-chain account management and cross-chain transfers.

2. Enhance Liquidity: By integrating liquidity pools from multiple blockchains, DEX can provide a richer variety of trading pairs and higher liquidity, which is particularly beneficial in reducing slippage for small trades.

3. Simplify cross-chain operations: Reduce the complexity and cost issues users encounter when trading assets across multiple blockchains.

The Specific Combination of DEX and Chain Abstraction

1. Establish unified liquidity: Utilize cross-chain bridging technologies, such as Polkadot, Cosmos, or Chainlink, to enable asset flow between different blockchains, thereby aggregating multi-chain liquidity.

2. Smart Contract Management: Automatically manage multi-chain asset swaps and liquidity pools through smart contracts to achieve cross-chain AMM optimization.

3. Unified User Interface: Provide a unified operating interface, allowing users to complete transactions without switching wallets or understanding the specifics of different chains, while the backend handles all cross-chain operations through chain abstraction technology.

4. Automatic Routing Optimization: The system can automatically find the best cross-chain path based on the user's trading intentions, optimizing trading efficiency.

User Experience Example

Assuming user Bob wants to buy USDC on the Polygon network for betting on a prediction platform. Using the integrated chain abstraction DEX, Bob only needs to select "Exchange ETH for USDC" and confirm the transaction. The system will automatically complete the following steps:

1. Extract ETH from the Ethereum network
2. Cross-chain ETH to BSC
3. Exchange ETH for USDT on BSC
4. Bridge USDT to Polygon
5. Exchange USDT for USDC on Polygon

The entire process is transparent to Bob, and complex cross-chain transactions can be completed with just one confirmation.

Summary and Outlook

The combination of DEX and chain abstraction mainly addresses the complexity of cross-chain operations and asset management, aiming to simplify the user experience and enhance convenience and liquidity. This combination not only reduces the learning and operational costs for users but also improves the overall efficiency and interoperability of the system.

Industry insiders generally see a bright future for the combination of DEX and chain abstraction, hoping for more innovative products to emerge. Notably, as a leading company in the field of chain abstraction, a certain company recently announced that it will launch new trading products on December 3, which will likely integrate chain abstraction solutions. This company has been deeply involved in wallet infrastructure for many years and has not yet issued a token, leading to high market expectations for its future development.