Chain abstraction explained: What it is and the problems it solves

What is chain abstraction?

Chain abstraction is a concept that simplifies the user experience of blockchain technology and unifies transactions across multiple networks. 

Web3 is still a fragmented industry leading to a complex and technical user experience. It’s a barrier to entry for the mainstream public, who must create multiple crypto wallets, store seed phrases and switch between blockchains to use various applications. 

It’s like going out for a pizza but going to a different restaurant for each part of the meal — one place for the dough, another for the pepperoni and somewhere else for the mozzarella. Plus, you have to use a different currency for each. It wouldn’t be an enjoyable experience. 

Blockchain chain abstraction aims to solve this issue by hiding or “abstracting” technology away from the user. This means people would not know they are using blockchain or which blockchain they are using.

The idea is to remove technical details like token bridging, gas fees, consensus mechanisms and native tokens for the user. Instead, it allows them to use Web3 from one wallet and one cryptocurrency. All the technical stuff happens behind the scenes.

Did you know? There are now over 1,000 different blockchains in existence, each with its own functionality and use case. While they all use the core principles of cryptography and distributed ledger technology, many are standalone projects. This creates a broken ecosystem in which it’s hard to move assets between networks.

How does chain abstraction work?

Chain abstraction in blockchain works by providing a single interface that enables users and developers to interact with multiple blockchains without needing to manage the complexities of each individual chain. 

Chain abstraction solutions are still in development, with numerous companies working to solve the problem. Right now, how it all works is not an exact science, but multichain solutions are likely to allow users to start using Web3 seamlessly from one account. 

It could look like this:

Users start by logging in with an email to create a zero-fund account. There is no need for private keys or seed phrases to remember.

Next, the user can fund their account with a single “master” currency, which is used to pay for their Web3 activities. Then, the user will be able to find and use Web3 applications, no matter which blockchain it operates on. Any interactions will be relayed and signed on the applicable network, with fees paid automatically. Currency bridging or swaps will be done out of the user’s sight via smart contracts.

For example, you could collect NFTs minted on different blockchains without needing separate wallets, swapping cryptocurrencies or storing recovery seed phrases.

Did you know? The idea of chain abstraction isn’t new. It draws inspiration from traditional software engineering. Developers have used the concept for decades to simplify complex systems for users. In truth, the end-user doesn’t need to know how things work internally — they need to achieve their end goal as simply as possible.

Benefits of chain abstraction

Both users and developers benefit from chain abstraction as it removes the complexities of using blockchains, allowing seamless multichain interoperability.

Here are the key advantages of chain abstraction:

• Unified interface: Chain abstraction reduces fragmentation and complexity for users. It enables them to manage assets and access decentralized applications (DApps) across different blockchains from a single interface, wallet or platform. 
• No learning curve: Currently, Web3 has a huge learning curve, with users needing to understand wallet usage, private key storage, asset bridging, decentralized applications and more. Chain abstraction phases out this struggle, allowing people to use Web3 quickly and easily. 
• Simplified transactions: It eliminates the manual processes currently needed to use multiple blockchains. Users can seamlessly transact across multiple blockchains without painstakingly swapping and bridging tokens. There’s no need to understand the underlying Web3 technology to cover gas fees, leverage DApps or manage assets across multiple chains.
• Liquidity: Abstraction could deliver almost unlimited liquidity across the ecosystem as assets are aggregated across different chains. Coins and tokens can move freely and pool from multiple sources without friction. This makes it easier for traders and investors to access a larger liquidity pool while helping to reduce market slippage and increase efficiency. 
• DApp development: For developers, the complexities of building for multiple blockchains can also be simplified. It becomes quicker and easier to create applications to operate across multiple chains without writing separate code for each network.

Applications of chain abstraction

With improved transaction efficiency, access to DApps and development processes, it could revolutionize blockchain scalability, including decentralized finance (DeFi), supply chain management, gaming, NFTs and Software-as-a-Service (SaaS) industries.

Several projects are working to solve chain abstraction problems:

Particle Network aims to unify all chains with universal accounts. The company has raised $40 million from multiple VCs and the Alibaba Group to continue development. Their goal is to make using Web3 simpler so users only have to use one account for any chain. 

Near is a smart contract platform offering chain abstraction to address these blockchain ecosystem problems. With one account, users can sign transactions on multiple blockchains, such as the BNB Smart Chain and Ethereum. This includes multiple chain abstraction use cases, such as minting an NFT collection across several chains or operating a DAO application that accepts proposals and votes via multiple chains.

Xion enables developers to build consumer-ready platforms and sweep away the complexities of Web3. It claims to be the first walletless blockchain ready for mainstream adoption. With a single account, users can manage their whole Web3 experience, from signing transactions to enjoying social media networks.

Did you know? Some popular DeFi platforms already use chain abstraction to help aggregate liquidity and offer an enhanced trading experience for users. Platforms like ThorChain and AnySwap allow trading to swap tokens across different blockchains without using separate bridges or exchanges.

Future outlook of chain abstraction

Chain abstraction technology offers a promising future as it seeks to fix the biggest pain points in the adoption of Web3. Currently, things need to be more cohesive, with blockchain projects often working to try and dominate the industry rather than building a user-friendly ecosystem.

With the crypto infrastructure now in its second decade, long-term users are littered with various wallets and keys. Despite wallet providers working to offer multi-asset storage, bridging the asset gaps across chains and applications remains an issue. For the average mainstream consumer, Web3 is technically overwhelming, whereas Web2 is a smooth copilot in everyday life. 

To make a similar impact in the world, Web3 will need to rely heavily onchain abstraction. The process is technically complex as it needs to ensure seamless blockchain interoperability while maintaining security across a vast array of networks. This requires the widespread cooperation of developers working on layer-1 and layer-2 projects. 

Regulatory uncertainty could pose another problem, as it does in such innovative spaces. Ensuring compliance across jurisdictions and industries, especially finance, is another area that is expected to take years to navigate fully.