How Nomial Works with Intent-Based Bridging
An overview of how the Nomial Open Liquidity Network makes funds available to intent-based bridges, allowing bridging to scale for the modular future.
Last updated
An overview of how the Nomial Open Liquidity Network makes funds available to intent-based bridges, allowing bridging to scale for the modular future.
Last updated
Intent-based bridges are the latest and greatest bridging architecture, offering an optimal UX via fast and cheap cross-chain routes. With intent-based bridges, solvers (aka “relayers” or “fillers”) need to front funds on the destination chain in order to fill a user’s intent to bridge. The Nomial Open Liquidity Network makes funds available to solvers via short-term loans, helping intent-based bridges scale to support more chains with less capital. This doc page illustrates how this works.
Intent-based bridges provide near-instant cross-chain swaps by incentivizing a network of solvers to fill user intents on a destination chain, and claim an escrowed payment on the origin chain after a settlement verification process is completed.
These are the steps involved (from Under the Hood of Intent-Based Bridges)
The user initiates the intent.
User funds are sent to an on-chain escrow.
Solvers bid to fulfill the intent through an auction.
The winning solver is selected and given a timeframe to perform the swap.
The solver fronts the liquidity on the destination chain.
The solver provides proof of completion through an oracle.
The bridge releases the user’s funds from the source chain and sends them to the solver.
Step #5 (solver fronts liquidity) presents a capital efficiency problem for solver networks and limits the scalability of intent-based bridges. In order to compete to fill fast, solvers need to manage substantial balances for every token on every chain they want to support. This poses a capital efficiency challenge for solvers.
At this time, intent-based bridges support only 6 Ethereum L1-based rollups (Arbitrum, Optimism, Base, zkSync, Linea, and Mode). As the number of rollups expands rapidly due to the ease of modular deployment, we will approach a state where Superchains composed of hundreds of thousands, if not millions, of rollups will be the primary layer of blockchain interaction. Liquidity for intent-based bridges that is capital efficient, easy, and fast for solvers to utilize will be critical for Chain Abstracted UX.
The incremental cost of supporting new rollups is currently very high for solvers, which leads to the lack of support for the “long-tail” of modular chains (all chains under $500M of TVL). Solvers need to bridge and hold inventory of assets on supported chains, and constantly rebalance these assets across chains when they use up their inventory for intent fills.
Meanwhile, there is latent capital held on rollups by users that do not participate as solvers. Nomial’s Open Liquidity Network allows these users to provide capital for intent solvers to borrow as needed for intent fills, rather than having to manage this capital themselves.
Nomial enhances the bridging flow by allowing solvers to borrow from a pre-existing pool of assets. Instead of providing assets from their own balances, a solver borrows on the destination chain to fulfill the user’s intent, and then repays on the origin chain after receiving the user’s escrowed input assets.
Figure 2 illustrates a user bridging IN token on Origin Chain to OUT token on Destination Chain (i.e., selling IN to buy OUT). The solver is using Nomial to borrow OUT from the OUT-ETH pool. Later, the solver repays using IN token on the IN-ETH pool. Since the ETH side of both pools is on the Nomial Rollup, the repayment on the IN-ETH pool can ultimately be used to repay the OUT-ETH pool.
Solver’s must post a bond in order to borrow from a Nomial Pool. Bonds can be long lasting and reused. In other words, solvers do not need to post a bond every time they want to borrow/fill cross-chain intent swaps. Instead, they can keep a static balance in the bond and request allowance proofs from a set of Nomial Bond Verifiers. The Verifiers are responsible for tracking outstanding allowances and providing/denying bond allowance proofs. The following figure illustrates this process.
Bonds can be long lasting since bonds are only slashed in the event that the Nomial Pool is not repaid. Each pool sets specific bond ratio, base fee, and time-based fee requirements (these are set by the pool creator).
Pools are asset pairs that span two chains, with the base asset (in this case, ETH) on the Nomial Rollup Chain.
Having all pools “meet in the middle” on the Nomial Rollup allows bonds to be used across all pools. This greatly simplifies solver asset management and repayment challenges, allowing for seamless bridging from the end-user perspective while at the same time condensing long term solver asset management to one asset on one chain.
