Quick Take

• Everclear, previously known as Connext, is an Ethereum layer 2 that facilitates settlement netting.
• Netting reduces solvers’ frequency of settlements and rebalancing in an intent-based system, thereby mitigating friction caused by liquidity fragmentation.
• Everclear’s usage skyrocketed in March following its partnership with Renzo that enabled staked ETH derivatives from any blockchain to be restaked on EigenLayer in a user-friendly manner.
• This Research Piece is unlocked by Everclear.

Many protocols in the crypto industry are adopting an intent-centric design. Instead of directly submitting transactions containing the full methodology of “how” an operation should be executed, users can express “what” their desired result should be.

This enhances user experience via chain abstraction and market efficiency as users can simply declare their preferred outcome while outsourcing the logic of achieving it to sophisticated actors. Notable examples of intent-based protocols include swap aggregators (e.g., limit orders on CowSwap and UniswapX) and cross-chain liquidity bridges.

Intent-centric Design

Connext, now rebranded as Everclear, has employed intents to facilitate cross-chain token swaps. Rather than dealing with the intricacies of pathfinding, bridging, and gas fee payment, users can simply pay a solver to handle these tasks for them.

For a brief overview of Connext’s intent-centric design, see this research piece.

Under the intent-centric framework, as illustrated in Figure 1, when users express their intent to perform a cross-chain swap, Connext solvers are incentivized by user-paid fees to monitor these intents. Solvers compete in an auction to execute these swaps at the most competitive price.

The winning solver fronts liquidity and releases funds to users on the destination chain. Once funds are settled on the destination chain, the solver unlocks the repayment on the origin chain.

Figure 1. Schematic of how Connext handles a cross-chain swap.

In this framework, users can have their cross-chain swaps fulfilled at the most competitive market rate that the solver network can offer. Nevertheless, this mechanism assumes solvers are always effective at execution, which might not always be a valid assumption.

As crypto activity becomes multi-chain and multi-asset, solvers have to support an increasing number of chains and tokens to keep up, which requires them to deploy more capital to maintain competitiveness. The rising capital requirement raises the entry barrier and hinders the decentralization of the solver network.

On the other hand, when there is a large net directional flow in cross-chain transfers (e.g., Ethereum to Arbitrum), solvers’ inventories gradually flow from in-demand chains (Arbitrum) to those with the least demand (Ethereum). This phenomenon depletes solvers’ immediate liquidity, requiring solvers to rebalance their liquidity amongst chains.

Liquidity rebalancing is not frictionless, as it often necessitates integration with different liquidity venues (e.g., centralized exchanges). Such infrastructure can be costly to maintain and operate, and it will become increasingly so as more blockchains and assets are incorporated into the bridging protocol.

The rebalancing cost can be amortized by maintaining large inventories on multiple chains to balance bidirectional flows and reduce the frequency of rebalancing. However, this is only feasible for the largest solvers with a lot of capital, resulting in an oligopoly in the solvers market, which goes against the ethos of decentralization.

Everclear’s Clearing Layer

Everclear is an Ethereum layer 2 (L2) that allows solvers to net off settlements against other solvers and users.

Instead of settling every cross-chain transfer on the associated blockchains, Everclear provides a universal platform for solvers to accumulate and net off outstanding credits, as demonstrated in Figure 2. This reduces the frequency of settlements and rebalancing. For reference, over 80% of cross-chain transfers in a 24-hour period are nettable.

Figure 2. An example of netting.

Apart from netting, Everclear also acts as an execution layer for implementing optimal netting strategies and hosting decentralization applications (dApps). One example of dApps is a lending protocol that enables solvers to borrow against unsettled credits for immediate liquidity to fulfill user intents in a timely manner.

The introduction of an L2 also necessitates the modularization of the bridging protocol, which is illustrated in Figure 3. An intent layer is deployed on every supported chain in the form of smart contracts, enabling users to declare intents and solvers to listen to them.

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Everclear is the clearing/execution layer for clearing cross-chain transfers, netting off unsettled balances, and executing arbitrary transaction logic.

A consensus layer is a component that verifies message authenticity. Everclear will leverage EigenLayer for security, as EigenLayer enables native and liquid stakers of ETH to provide economic guarantees to third-party infrastructure on an opt-in basis.

A transport layer handles the actual message delivery from one infrastructure to another. Everclear will utilize Hyperlane at launch as its transport layer, though the modular nature of the architecture allows for open integration with other relayer infrastructure with little additional burden to the protocol, such as the Inter-blockchain Communication (IBC) protocol for connecting Cosmos-based sidechains.

Figure 3. Conceptual visualization of the modularization of Everclear.

In practice, intent layers (connected chains) communicate with the clearing layer (Everclear) through the consensus layer (EigenLayer) to ensure the messages are legitimate, with the actual transport of the messages handled by the transport layer (Hyperlane), as shown in Figure 4.

Figure 4. Schematic of communication amongst layers.

The modularization approach allows Everclear to focus on perfecting the execution layer catered to their needs, i.e., clearing and netting, while delegating other aspects of the protocol, such as transport and consensus, to external specialized infrastructures.

A wide range of dApps can permissionlessly adopt this universal clearing layer in a multi-chain intent-based ecosystem. Integrating with Everclear allows them to easily source liquidity and effortlessly expand their offerings to various blockchains with little overhead, thereby creating a network effort and reducing the total amount of settlements required.

Metrics

The total value locked (TVL) in Everclear remained modest in the first two months of 2024, averaging $8.5 million. Since then, it skyrocketed to a peak of $940 million in late April, likely driven by Everclear’s “Restake From Anywhere” (RFA) initiative and its partnership with Renzo, one of the fastest-growing liquid EigenLayer-staking protocols.

For context, RFA leverages Everclear as the backend that enables staked ETH derivatives from any blockchain to be restaked on EigenLayer with one click. This offering massively expands Everclear’s total addressable market, which has led to sustainable adoption from retakers. As of this writing, Everclear has a TVL of $1.13 billion.

Figure 5. Value locked in Everclear.

Weekly transfer volume on Everclear averaged at $7 million before rising significantly in March, coinciding with the aforementioned RFA launch and the Renzo partnership. Volume peaked at $280 million in late March and gradually declined afterward as new interest in RFA subsided.

While most volumes originated from Ethereum, there were also sizeable activities from Arbitrum, Linea, and Mode. This trend suggests that Everclear is constantly utilized on veteran and new Ethereum L2s.

Figure 6. Weekly transfer volume on Everclear.

These observations point toward the early success of the RFA campaign. Therefore, Everclear is well-positioned to capture a larger share of the cross-chain infrastructure market, maximizing the efficacy of an intent-based ecosystem through the introduction of a universal clearing layer, thereby mitigating the friction caused by liquidity fragmentation in a multi-chain world.

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