Decentralized applications, which refer to blockchain-native products and services, have existed since the onset of smart contracts and Ethereum. However, their user adoption has grown at a notably slow rate, especially relative to Web2 apps and services. When considering Netflix’s success, they overtook Blockbuster by capitalizing on the superior convenience and choice through the shift from physical DVD rentals to the world of digital services and streaming. The convenience of having the world at one’s fingertips with smartphones led to the adoption of mobile apps, which transformed the way people would interact with the internet much to the benefit of social networks. ChatGPT, which surpassed Instagram and Tiktok as the fastest growing app, introduced a simple and powerful way for almost anyone to harness AI with a simplified chatbot UX utilizing natural language processing (NLP).

The recurring theme among these breakout products and services and their success is that they provided a better user experience relative to any incumbents or competitors they went up against. In order for decentralized applications to achieve similar success, the onchain user experience must be as seamless and convenient as possible, far from the world of seed phrases and fragmented chains that is common today.

Transforming the Onchain User Experience

The end-game for the onchain user experience requires no knowledge of any underlying blockchain infrastructure on the user’s behalf; where anyone can do anything on any blockchain without needing to go through arduous onboarding and bridging processes. To better understand the significance of this design, however, it helps to consider the state of accounts today: an onchain account is ultimately the bridge between a user and the blockchain, storing balances onchain and defining all activities and interactions with any blockchain-native program. Throughout their history, most blockchains have utilized the externally owned account (EOA) model, which functions as a subset of two parts: a public key serving as an identity and reference point for receiving assets (wallet address) and a private key serving as a master password for access (seed phrase). Wallets technically function as account abstraction services, in that they simplify the management of one or more onchain accounts.

Though EOAs are known for their simplicity and granting the power of self-custody to anyone, they have also significantly hindered the onchain user experience thus far. The most common drawbacks to EOAs are that anyone who gains access to the seed phrase can access the wallet (this threat arises for those storing seed phrases on a cloud-based service like iCloud) and that anyone who loses access to their seed phrase and/or forgets it can no longer access their funds onchain.

Key to enabling such an onchain user experience is the emergence of abstraction primitives, which are the many products and services built around abstracting away as many friction-inducing pain points in the onchain user experience as possible. These may come as toolkits and frameworks for developers to implement into their own network or apps, or direct user-facing products and services. As development in this area heats up and the number of teams launching their own abstraction primitives starts to grow, achieving a seamless onchain user experience may come sooner than most people think, as Vitalik suggests. But what exactly will enable this breakthrough?

Account abstraction refers to the separation of management of an onchain account from the end-user. The concept was initially floated around as early as 2017, but mostly struggled to gain any traction before ERC-4337 was proposed in 2021. The initial culmination of efforts around account abstraction led to the development of the smart contract-wallet, commonly referred to as a smart account. In this model, an onchain account is managed by a smart contract, and can therefore be more programmable and optimized for user needs. This unlocks new possibilities, such as being able to sign up for an account using familiar social logins, paying for gas fees with the same asset across different chains, being able to perform multiple cross-chain transactions in one click, and more.

Key to enabling account abstraction is the development of execution abstraction services, where the execution of an onchain transaction is outsourced to specialized service providers called solvers (also referred to as fillers or executors) for the best possible performance and delivery on the signer’s behalf. Here, users sign off-chain messages called intents containing instructions for performing onchain actions, i.e. transaction fulfillment requests. By separating the execution of a transaction from its signature, users can express desired outcomes more easily, and back-end solutions such as private mempools or competitive solver networks help deliver the best possible settlement and value for the user.

The Endgame: Chain Abstraction

Another critical component for enabling the ultimate onchain user experience is the ability to communicate and interact across different blockchain environments. Historically, users have relied on bridges for filling this need, which have proven over time to be a great source of risk and insecurity. Chain abstraction iterates on the developments around account and execution abstraction while introducing new infrastructure at the network layer, thereby removing the complexities of communicating and interacting across different blockchain environments. See Shoal’s chain abstraction deep dive for a comprehensive overview of the concept’s fundamentals and the broader chain abstraction landscape.

Chain abstraction is the culmination of efforts around one common goal: to provide a seamless user experience in which the user can perform onchain actions without being required to know which blockchain they are using at a given time. This report explores how Particle Network is approaching the development of the ultimate onchain user experience through its new chain abstraction stack.

Case Study with Particle Network

Protocol Background

Led by co-founders Pengyu Wang and Tao Pan, Particle debuted in 2022 as a Wallet Abstraction service provider, launching a stack for developers to create non-custodial, dApp-embedded wallets that could leverage social logins via MPC-TSS technology. With the onset of ERC-4337 account abstraction the protocol shifted to include an AA stack into their existing WA stack, utilizing smart contract wallets for enhanced account structures. This set up the launch of BTC Connect, which brought AA services to the BTC ecosystem via native Bitcoin signatures. Now, Particle is launching their Layer 1 blockchain as part of their comprehensive, multi-faceted chain abstraction stack.

Particle Network is being developed by a globally distributed team of 30+ full-time employees, and has established partnerships with the likes of Berachain, Avalanche, Arbitrum, zkSync and more. The protocol has raised officially $25 Million over the course of several seed rounds led by Spartan Group and Gumi Crypto, and recently secured an investment from Binance Labs as well.

Protocol Overview

Particle Network is a modular Layer 1 built on the Cosmos SDK, which will function as a coordination and settlement layer for cross-chain transactions within a high-performance EVM-compatible execution environment.

The Particle L1 is one component of Particle’s broader chain abstraction stack, which consists of Universal Accounts providing a simple interface for unifying token balances across different chains, Universal Liquidity enabling UAs on the backend, and Universal Gas allowing users to pay gas fees in any token they hold.

The end-goal for Particle Network is to unify users across all chains at the account-level, facilitating seamless cross-chain interactions with a single balance and account on any L1,L2, or L3, and allowing anyone to easily pay gas fees in any token they wish. Let’s take a closer look at the various key components working to help meet that goal.

Universal Accounts

Universal Accounts refer to the new account structure that will be powered by the Particle L1, and are key to Particle’s chain abstraction stack. At their core, UAs are ERC-4337 smart accounts attached to a pre-existing EOA (externally owned address), unifying token balances across multiple chains by automatically routing and executing atomic cross-chain transactions. For the end-user, UAs provide a single interface for managing funds and transacting across various dApps, abstracting away the friction-inducing pain points involved in setting up and funding a new account on a new chain, which often requires purchasing the gas token of that native chain as well.

This interface is built on top of existing wallets and leverages Particle’s liquidity layer-Universal Liquidity- to execute atomic cross-chain transactions and route funds from a user’s balance across different chains as needed. Transactions are processed by Particle’s globally distributed network of nodes, which manage the associated bundling, relaying, and verification tasks.

To better illustrate, consider the steps involved in fulfilling a user’s simple request to purchase Dogcoin on an external chain (chain X):

1. User connects to their UA through an existing wallet or social login.
2. User submits their transaction request to the Particle L1, expressed as an ERC-4337 UserOp to purchase Dogcoin on chain X.
3. Bundler nodes within Particle’s decentralized node network handle the associated UserOp and executes it accordingly.
4. Particle’s Relayer Nodes then monitor and synchronize the execution status on the associated chains. Once the transaction has been confirmed to be executed, the status is routed back from the chain to the Relayer Nodes, who communicate the status back to the UA and end-user.
5. Our user now has the token they wished to purchase in their UA balance, without ever interacting with the chain that token lives on.

Evidently, there are more in-house components at work here that warrant further inspection. Think of UAs as Particle’s user-facing product. Key to enabling the seamless experience they provide are the Universal Liquidity and Universal Gas features.

Universal Liquidity

Universal Liquidity refers to the layer of the Particle Network responsible for the automatic execution of transactions submitted via UAs. This feature is powered by Particle’s distributed network of Bundler nodes, specialized services initiating the necessary steps for the execution of a UserOp, such as swapping or pulling liquidity from pools. In addition, a distributed network of Relayer nodes, referred to as the Decentralized Messaging Network (DMN), is responsible for monitoring transaction status on external chains (i.e. destination chains) and communicating their settlement status back to the Particle L1.

The key purpose of Universal Liquidity is to enable users to interact with different chains via cross-chain transactions without needing to purchase and hold any tokens on the associated chains. To better understand, consider the following flow for a user wishing to purchase 100 USDC of Dogcoin on Chain D while they hold 25 USDC on chains A, B, C, and D each.

1. User signs UserOp to purchase 100 USDC of Dogcoin on Chain D, effectively bundling their balances across four chains (Chain A, B, C, D) into a single signature processed by the Particle L1.
2. Upon executing the signature, the USDC the user holds on Chains A, B, and C is sent to a Liquidity Provider (otherwise understood as a filler).
3. The LP releases the full USDC amount on Chain D.
4. The USDC on Chain D is swapped for Dogcoin using a local DEX.
5. The resulting Dogcoin balance is now reflected in the user’s UA.

Universal Gas

Universal Gas is the third pillar of Particle’s chain abstraction stack, key to enabling gas abstraction, wherein the friction-inducing pain point of acquiring and holding multiple gas tokens is abstracted away from the end-user, who can now pay gas fees in any token on any chain. Alice can pay for gas on a swap on Solana using her USDC on Base, while Bob pays gas for purchasing an NFT on Ethereum using his OP token on Optimism.

When a user wishes to execute a transaction through a Particle UA, an interface will prompt the user to select their gas token of choice, which is then automatically routed through Particle’s native Paymaster contract. All gas payments are settled to their respective source and destination chains, while a portion of the fee is swapped into Particle’s native $PARTI token to be settled on the Particle L1.

Protocol Architecture & Design

The Particle L1 utilizes a high-performance EVM-compatible execution environment and a dual-token staking model for security, consisting of BTC and the native PARTI token. Consensus and data availability are outsourced to a distributed network of nodes referred to as Modular Nodes. Particle employs an aggregated data availability model (AggDA) which plugs into a combination of providers including Celestia, Avail, and Near DA, and is powered by a decentralized system of Aggregated DA node operators.

On the backend, Particle’s chain abstraction stack is powered by three key modules: the Master Keystore Hub, Decentralized Messaging Network (DMN), and Decentralized Bundler. The Master Keystore Hub serves as the central source of truth across the Particle L1, coordinating smart contract deployments across all chains, synchronizing settings between each UA instance, and maintaining synchronized state across all chains. The DMN is responsible for communicating transaction execution status across different chains that a user is transacting on, and then communicating the status for the userOp to be settled on the Particle L1. This feature is powered by a network of Relayer Nodes. Lastly, Particle utilizes a decentralized bundler network, wherein a network of bundler node operators are responsible for initiating and executing incoming userOps. The network is built around a distributed, permissionless network of Modular Nodes, among which tasks are delegated and outsourced.

Modular Nodes

The use of Modular Nodes will allow for anyone to participate in running nodes specialized for facilitating critical operations on the L1. These nodes can be categorized by their respective function: bundler nodes are responsible for the execution of cross-chain UserOps, relayer nodes are responsible for monitoring and communicating the status of transactions (i.e. executed, failed) back to the Particle L1 to be settled, watchtower nodes are responsible for monitoring the status of nodes and their respective tasks in the bundler and relayer networks, as well as providing execution and fraud proofs for each block per epoch.

Aggregated Data Availability Model

In the context of blockchains, data availability (DA) refers to the ability to verify data that has been published to a blockchain. Typically, blockchains will employ a single solution for DA, which can be in-house under an integrated architecture, or conversely outsourced to partners or third-party providers under a modular architecture. Particle is constructing its DA model to mitigate single points of failure across its architecture by adopting an aggregated model, outsourcing DA to Celestia, Avail, and Near DA collectively. Particle utilizes two different approaches to DA: selective publishing which allocates each block to a separate DA provider, and redundant publishing in which each individual block is sent across each DA provider.

It will be interesting to see if Particle expands to other DA providers (i.e. EigenDA) in the future as the sector expands.

Dual Staking

Blockchains which use a Proof-of-Stake model assign validators to propose and validate new blocks based on the number of native tokens they have staked to the network, rewarding them proportionally to the number of blocks they vote on. One key risk with these networks in early stages is the risk of price volatility in the native token impacting network security and stability. Particle aims to mitigate this risk through a dual staking model which will utilize BTC via the Babylon staking protocol and the native PARTI token, with validator pools assigned for each respective token.

Onboarding Process with Universal SDK

Particle’s Universal SDK lets application developers create a seamless onboarding process to UAs, by enabling users to attach their existing wallets through the implementation of an EIP-1193 provider. This allows for users to be able to immediately be able to transact from their UAs upon signing in.

The onboarding process within an application leveraging Particle Network’s Universal SDK is visualized below.

State of Particle Network

Prior to the development of the Particle L1, Particle saw over 17m wallet activations, 10m UserOps, and over 900 integrations with various decentralized applications, according to the team.

On May 2, 2024, Particle Network’s incentivized L1 testnet launched, offering point rewards through the Particle Pioneer platform. Particle Network’s incentivized public testnet allows users to test out its flagship Universal Accounts and Universal Gas features to earn points for allocation of the upcoming $PARTI token.

According to the Particle Testnet V2 explorer, there have been over 7.3m total transactions across 1.3m blocks, averaging above 400k daily transactions regularly. As per the Particle Pioneer campaign website, the testnet has seen over 182m transactions, and there are currently over 1.49m users earning 27.3B points in total, at an average of 18.3k points per user. The Particle L1 is currently slated to launch on mainnet sometime in H2 2024.

Competitive Landscape

Chain abstraction is poised to become the next major framework for interoperability platforms to build around, and there are a number of developments on the horizon which will compete with Particle to become the standard toolkit or stack for building chain abstraction services on.

Near Network

Near is a sharded Proof-of-Stake Layer 1 blockchain that provides a full-stack application domain for developers building decentralized products and services. Near is building out its chain abstraction stack this Account Aggregation - a multi-faceted structure funneling users’ cross-chain interactions to be run through a single account.

Accounts on Near use two types of keys: Full-Access Keys, which function as private keys (i.e. can sign any transaction and should be kept private), and Function-Call Keys, which are granted permissions to sign calls exclusively to a specific contract or set of contracts. Near also utilizes its FastAuth login service to allow users to sign up for an account with an email and use biometrics instead of passwords.

Key to enabling this structure are multi-chain signatures, which allow any Near account to interact with addresses on other chains. This is achieved through the NEAR MPC network, which enables key resharing and maintains the same public key even as nodes and key shares change. MPC signer nodes within the Near network allow smart contracts to initiate the signing process, creating numerous remote addresses on any chain. Near also introduced meta transactions through NEP-366, enabling users to transact across multiple chains without holding the native gas token. This is facilitated by Relayers, third-party providers that attach the necessary tokens for gas fees to the signed transactions they relay to the network.

Polygon AggLayer

Polygon is developing AggLayer, a unified bridge for L2s built using the Polygon CDK which will aggregate zk-proofs and uniformly submit them to Ethereum for settlement. In this model, all chains share a bridge contract with other supported AggLayer chains, thereby maintaining sovereignty while benefiting from a global liquidity hub that makes it easier to bootstrap early networks.

The AggLayer will use ZK proofs to create an aggregated environment that “feels like a single chain” while allowing for supported chains to maintain their sovereignty. Application developers could potentially benefit from being able to reach more users, as users from different chains will be able to interact with their product or service as well. For the end-user, the goal is the same as in chain abstraction: to provide a UX that resembles the Internet – a single environment that doesn’t require cumbersome and frequent bridging and other complex processes. Thus far, the live components of the AggLayer that Polygon zkEVM has connected to are 1) a unified bridge to Ethereum for enabling cross-chain transactions, and 2) A bridgeAndCall() library of solidity contracts to help craft these transactions.

Honorable Mentions

Everclear - Formerly Connext, Everclear is developing a new chain abstraction stack. As the name suggests, Everclear is launching “the first clearing layer” to provide global settlement of cross-chain transactions. Everclear will function as an Arbitrum Orbit L2, powered by Gelato RaaS, and will use Hyperlane and Eigenlayer to connect to other chains. The protocol ultimately acts as a shared computer for coordinate cross-chain transactions, with settlements represented as invoices and cleared via a dutch auction. This will revolve around the use of Clearing Layers, “a decentralized network that coordinates global netting and settlement of capital flows between chains’’. Everclear aims to cut costs for market participants, is programmable and can be plugged into any settlement rail for any tx, and enable permissionless liquidity for new chains and assets from day one.

Socket - Socket 2.0 marks a shift for the Socket protocol from cross-chain to chain abstraction services, highlighted by its flagship Modular Order Flow Auction (MOFA) mechanism, which aims to enable a competitive mechanism for efficient chain abstracted markets. Traditional OFAs involve a network of various actors performing specialized tasks that compete to deliver the best possible outcome for an end-user request. Similarly, MOFA is designed to provide an open marketplace for execution agents, called Transmitters, and user intents. Within the MOFA, Transmitters compete to create and fulfill chain abstracted bundles, or ordered sequences of user-requests which require transfer of data and value across multiple blockchains.

Future Outlook

The chain abstraction opportunity is an exciting one. However, there are some important considerations to make as more teams set out to launch their own solutions, VCs start allocating more capital into anything that mentions ‘chain abstraction’, and users start scratching their heads around which solution is best.

The Case for Abstraction Primitives

Zee Prime Capital pointed out several important considerations with regards to the abstraction primitives landscape in a recent post.

“Without a product, chain abstraction is not a real solution to the real problem”.

It’s certainly true that while user experience remains a critical hurdle for the crypto industry to overcome, it is likely not the ultimate bottleneck in bringing more users onchain. Indeed, developments in infrastructure grew as a response to poor UX imposed by high fees and slow settlement. Now that the infrastructure is here (over 200 L1s/L2s), there is an overall lack of successful products and services being built on top of this infrastructure. This aligns with a perspective Mert shared recently, who claimed not enough people are considering that barriers to building strong crypto apps are not crypto-native (i.e. infrastructure, UX) but instead revolve around regulatory unclarity and misaligned incentive structures across the broader industry.

One example is the adoption (or lack thereof) of smart wallets.

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Despite the innovations they bring, smart wallets have largely failed to gain meaningful adoption thus far. Incumbents like Phantom set record number of downloads with the onset of the memecoin mania back in Q4 2023/Q1 2024, demonstrating people are willing to deal with seed phrases and clunky UIs for now, as long as they can get their hands on the latest dog token.

To push back, developing successful products and services with new technology takes time. It took years of trial and error for the first class of successful web-based application to emerge. As the demand for blockspace on base layers grows, it’s likely there will be more rollups and app-specific chains coming over the years. With the onset of RaaS providers and modular infrastructure solutions like Celestia, it’s only going to become easier to launch new chains and environments, and these environments will need to be able to seamlessly communicate with one another. The need to abstract chains away from the end-user comes from building a popular app that will entice users from other chains to want to use it, prompting the need for services for enabling a seamless experience to do so. Chain abstraction intends to solve the fundamental issue of a lack of seamless cross-chain functionality, something which a current lack of available products and services does not invalidate.

With this in mind, one critical challenge abstraction primitives will have to contend with is ensuring the successful coordination across solver/node networks regarding state attestation, solver execution, transaction status, block confirmation, and other cross-chain guarantees, all of which require consensus. The nature of capital markets sees that another faster, cheaper solution will always be on the horizon, meaning chain abstraction service providers must account for a number of complex backend processes and their implications, where things like timing games and order flow capture start to play a bigger role over time..

Important Considerations for Particle Network

A key question that arises with Particle’s network of distributed nodes is just how decentralized this network will be. Will there only be a select few entities participating in operating nodes, or will Particle be able to gain enough traction to maintain a sufficiently-decentralized node network? And how can Particle successfully incentivize enough node operators to become sufficiently decentralized in the first place?

For this, we suggest two things:

1) Minimizing barriers to entry and participation as a node operator

2) Providing a public dashboard for monitoring and observing the decentralization of the node network via the Particle explorer.

Particle is building a settlement and coordination layer for atomic cross-chain transactions, where Universal Accounts replace the need to use multiple wallets, purchase multiple gas tokens, and bridging tokens to use dApps on other ecosystems. This brings up the question of value accrual; what economic impact will the successful adoption of Universal Accounts and the Particle L1 have on other blockchains and ecosystems? Will they benefit from a greater number of users accessing their applications?

The Case for Chain Abstraction and Particle Network

The need to transform the state of the user experience on blockchain-native applications is not a new idea, and developers have worked on this problem for some time now. Chain abstraction stands to benefit the end-user by creating easier-to-navigate onchain experiences, the application developer by unlocking new user bases for their apps, and the L1/L2/L3 by allowing for cheaper and more efficient cross-chain communication and routing.

Particle is building account-level chain abstraction to aid in this endeavor. By unifying cross-chain interactions into a single interface with Universal Accounts, allowing users to transact on any chain with Universal Liquidity and to pay for gas in any token with Universal Gas, the Particle Network L1 is well-poised to be a leader in moving the future of chain abstraction forward.

Vitalik claims there is “lots of energy and will” to make the seamless onchain user experience a reality. Improved user experience alone won’t bring millions of users onchain, but it is one of the most important steps to take in order to do so.

References

Masmoudi, M. (2022, February 14). An overview of Multi-Party Computation (MPC), Threshold Signatures (TSS), and MPC-TSS Wallets. Medium. Retrieved from https://mmasmoudi.medium.com/an-overview-of-multi-party-computation-mpc-threshold-signatures-tss-and-mpc-tss-wallets-4253adacd1b2

Ethereum Foundation. (n.d.). ERC-4337: Account Abstraction using Alt Mempool. Retrieved from https://eips.ethereum.org/EIPS/eip-4337

Wang, P. (2022, October 10). Pengyu Wang reveals the secrets to Particle Network’s rapid success. Hackernoon. Retrieved from https://hackernoon.com/pengyu-wang-reveals-the-secrets-to-particle-networks-rapid-success

Particle Network. (2024, June 20). Particle Network secures $25 million in funding. Particle Network Blog. Retrieved from https://blog.particle.network/25-million-funding/

Particle Network Developers. (2023). Documentation. Particle Network. Retrieved from https://developers.particle.network/docs/particle-chain

Polygon Technology. (n.d.). Aggregated Blockchains: A New Thesis. Retrieved from https://polygon.technology/blog/aggregated-blockchains-a-new-thesis

NEAR Protocol. (n.d.). Unlocking Web3 Usability with Account Aggregation. Retrieved from https://pages.near.org/blog/unlocking-web3-usability-with-account-aggregation/

Everclear Organization. (n.d.). Retrieved from https://x.com/EverclearOrg/status/1797645283977028021

Socket Protocol. (n.d.). Retrieved from https://mirror.xyz/0x6FD2bd90D50eDEe139103454116F252f6F5eC928/zePFPVi6oPI2o_Q6jDrGYn6SBVOGMybnFKQJ-DDVKqc

Not financial or tax advice. The purpose of this newsletter is purely educational and should not be considered as investment advice, legal advice, a request to buy or sell any assets, or a suggestion to make any financial decisions. It is not a substitute for tax advice. Please consult with your accountant and conduct your own research.

Disclosures. All posts are the author’s own, not the views of their employer. This post has been sponsored by Particle Network. While Shoal Research has received funding for this initiative, sponsors do not influence the analytical content. At Shoal Research, we aim to ensure all content is objective and independent. Our internal review processes uphold the highest standards of integrity, and all potential conflicts of interest are disclosed and rigorously managed to maintain the credibility and impartiality of our research.

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