Hey Ecommunity,
I want to provide an update and preview the upcoming Eco Protocol design proposal. If you haven’t read my post from April, I’d encourage you to do that first. Based on positive feedback from this community, token holders and other potential partners, we’ve continued R&D and prototyping work to reposition and relaunch the Eco Protocol anew. Below are details about our current progress against that proposal.
Background
Recall that I previously proposed the following:
- We reposition the Eco Protocol as a cross-chain transaction system, with a focus on payments rather than currencies, for the foreseeable future.
- We migrate the protocol from a two-token currency system to a single-token payment protocol, with the token serving as the governance token and having a role to secure the transaction volume in the protocol.
- We accomplish this migration in two steps, by (1) suspending monetary governance and removing the Trustees; and (2) creating a mechanism for existing token hodlers (…) to fairly migrate as part of the overall relaunch. We have already accomplished the first step, with the second (much bigger) step still ahead.
I presented this as a full protocol transition and reinvention to “Era 2,” saying:
“Era 2 would position Eco as a payment protocol rather than a currency system. We would accomplish this by building a cross-chain transaction protocol and a dedicated rollup to secure it, seeking to make Eco the default protocol for projects building the best crypto payment applications.”
Here I want to share some updated thinking about how we might position the Protocol — informed by prototyping and talking with many potential partners in the months since my first post — as well as some details about the potential system design.
Positioning Update: Planting our Flag
We want apps and services built on Eco to be the easiest way for people to send or spend onchain, starting with stables. For crypto to truly break through, our thesis is that we must obsess over how simply and quickly we can get someone onchain, defaulting to stables, then let them go from there — and it’s gotta be basically one click wherever you want to go and whatever you want to do. The bar for devs across the broader crypto ecosystem to make something people want is artificially high if the process of getting to their app is any more complex than that. If we position Eco accordingly, we can provide critical infrastructure for the fastest-growing use cases onchain.
When I wrote the original proposal and in the months that preceded it, the “interop” cross-chain transaction space was less crowded, especially with respect to intent-based technology. Now it feels saturated. Concepts like “chain abstraction” and “interoperability” are overabundant and, on their own, fail to tell anyone much about how a protocol works or what makes it special. These themes are still important development goals and are highly valued in this market cycle, but to stand out, I believe we need to stand for something more relatable: owning a particular user experience or use case category.
This shift plays into our hand with Eco, for a couple reasons: We’ve always been focused on a specific category (stables and the onchain payment stack), and the proposed new Eco Protocol design is more than a “cross chain system” anyway. While cross-chain transactions are a core part of our system — and we have some novel ideas about what we can offer in that space — for us they’re really a means to a user experience end: dead simple, one click stablesends, wherever you’re trying to go and whatever you’re trying to do onchain. Similar to how the Dollar is the most interoperable currency in the world, stablecoins are the most interoperable assets onchain. So our system will optimize for them, all the way down.
Dead simple user experience is what I believe the new protocol needs to stand for, enabled by stables, with the native features we build in and through the apps that integrate it. A technical or crypto-aware person can read the docs and understand that a “rollup” and “intents” and “cross-L2 execution calls” play a role, but the protocol’s first impression needs to be focused on the use cases and user experience that the underlying tech enables. The space does not need another general purpose EVM solution; we need to call our shot and own our category.
System Design
To own the “stable stack” so to speak, we contemplate a new Eco Protocol with two major components:
- A dedicated rollup, optimized for hyper-cheap and lighting-quick stablecoin transactions, with native functionality which makes it easy for app developers to integrate and provide more intuitive UX to end users. If well matched to the growing demand for stablecoin usage, our rollup can generate real demand for blockspace as the default home for apps constructing the onchain payments stack or otherwise defaulting to stablecoins for their use case.
- A cross-chain transaction system, natively integrated with the rollup, which provides developers with secure stablesend/swap pathways between any rollup settling on Ethereum (L2 or L3). This system should enable developers or their end users to opt into speed or trust tradeoffs which best fit their needs.
Together, these components enable the transaction UX we want. Below, for readers who may be more technical, I will say a little more about how each might be designed (albeit still at a high level).
As I state above, the space does not need another general purpose “fast and cheap” rollup that further fragments liquidity. Rollups can be hyper-optimized to a valuable use case, designed to unify liquidity for that use case. I believe that is our opportunity.
A rollup optimized for stablecoin execution would satisfy a few design requirements:
- hyper-cheap (read: completely negligible) transaction fees for simple sends;
- abstracted, stable-denominated gas;
- enshrined liquidity pools/AMM for supported stablecoins;
- natively integrated cross-chain transaction pathways with efficient settlement for solvers;
- natively supported interfaces and account functionality which enable more intuitive end user experience.
In a future version, this rollup should support additional functionality (e.g., transaction parallelization, proof batching, precompiles and predeploys) to drive costs down further and improve capital efficiency for all actors. The surviving token may serve as a governance token and/or a staking token for transaction activity originating and settling to this rollup.
For cross-chain transactions, intent-based systems are the emerging standard, offering fast transaction settlement and abstracting away complex execution logic for both developers and end users. I believe our cross-chain system should be designed similarly, but with alternative transaction pathways that enable users or app developers to opt into trust assumptions and functionality which fit the requirements for their use case.
This is achievable by exposing one variant which adds no new trust assumptions, relying only on Ethereum/L2 world state and storage proofs (Eco, Inc. has a reference implementation here); as well as a variant which settles more quickly but adds a new messaging trust layer in-between. When optimized for stablecoins in particular, and integrated with the rollup, this system can also be much more capital efficient and performant than existing alternatives — because it does not need to price in long-tail asset pair pricing or multiple swaps, and the rollup can enshrine functionality which makes state proofs cheaper for solvers to generate.
Together this rollup and cross-chain system can be the default stack for apps building the onchain payment and commerce stacks — or simply for apps that want to source stablecoin liquidity for their users or use case.
What’s Next + Token Migration
It’s time to attract more attention to this Era 2 proposal and design. Tomorrow, we will update eco.com with our system design proposal, and a brand update to reinforce that this is a fresh start. I will also publish a blog post to speak to it all in light of the Eco mission and vision. I think it’s imperative that we stake our position, open our technical ideas up for feedback, and begin developing in the open among the Eco Inc. team and other new contributors. We’ll publish our design proposal to source technical feedback and contribution in particular.
It would be my goal and proposal that we seek to finalize the system design and migration roadmap within September, and launch a “betanet” version — probably permissioned with training wheels at first — during Q4.
With much more progress made on R&D this summer, it’s time to finish charting this course and put it into code. Since my initial post and temp-check on this direction, my sense of opportunity, urgency and conviction have only deepened. Now is the time to start attracting more attention and putting the broader market on notice that Eco is coming…
I invite your commentary below. Please also watch @eco twitter and eco.com tomorrow, and help us amplify the message!
