💡IntentX Solution & Architecture Overview

PreviousCurrent On-Chain Derivatives Landscape NextComparison and Advantages of IntentX

Last updated 6 months ago

💡IntentX Solution & Architecture Overview

The IntentX Solution: Bridging Liquidity On-Chain

With the market context and background of existing on-chain derivatives solutions outlined, we can now explore the unique benefits of IntentX and its innovative intent-based approach.

To summarize the bigger picture of the derivatives market: CEXs have liquidity but no security, and DEXs have security but no liquidity.

IntentX, with its intent-based architecture, solves the liquidity dilemma and can effectively “bridge” CEX liquidity on-chain through the solver network.

This approach gives traders the best of CEX trading:

Deep Liquidity
Seamless Execution
Tight Spreads
Low Fees

While execution on-chain provides traders the best of DEX trading:

No Trust Assumptions
Immutable Positions
Counterparty Insolvency De-risked
Permissionless access

In this way, IntentX solves for both liquidity and security with no compromise.

IntentX's Intent-Based Architecture and Order Flow

The traditional Request for Quote (RFQ) process begins when a trader expresses their intention to long or short a particular derivative contract at a specific price and size. Market makers then respond with customized quotes tailored to the trader's request. The trader can review the quotes and choose the one that best suits their needs. This personalized approach allows for a more tailored trading experience and can significantly improve price discovery.

IntentX innovates on this process by continuously streaming quotations in advance to display the best available quote at any given point in time. Thus, users are automatically displayed the best available price quotation and can make informed trades. This circumvents the time-consuming and complex process observed in traditional RFQ systems to enable a fast and efficient trading experience for users.

With this crucial innovation, IntentX is an entirely new type of intent-based exchange: an “automatic market for quotations” (AMFQ) exchange.

A trader arrives at IntentX and inputs the details (intent) of their desired trade (ie. long 1 BTC at 10x leverage).
The solver (market maker) provides an offer through IntentX on conditions for the trade (price, slippage, fees, funding rates, collateral, etc.). This step happens automatically and in real time. No capital is committed by the solver at this time.
The trader then has all the pre-agreed conditions needed to open a trade streamed to them as an “quote” and can then choose to execute the trade. This solves a necessary and complex step in an RFQ process to receive and evaluate bids to select the best one. IntentX does this automatically, providing the user with the best quote immediately. Hence, IntentX is not a traditional RFQ exchange but rather an AMFQ exchange.

Note: Steps 1 - 3 happen off-chain through the IntentX exchange.

Once satisfied with the conditions of the trade, the trader sends a “Request to Trade” to the solver, including locking his required collateral.
The solver then observes the request and chooses to accept it, depositing their equal collateral into the contract.
This forms a “bilateral agreement” between the solver and the trader. It is an isolated and perfectly symmetrical contract, and depending on the price movement of the position, one party is obligated to pay the other party as PnL. This bilateral agreement exists in perpetuity until either (1) the trader closes the position, or (2) one of the parties is liquidated (automatically executed by a neutral third party based on margin health).

Note: Steps 4 - 6 happen on-chain where the quotation and bilateral agreement live.

The solver can then “hedge” his position exposure (in this example, it would be long 1 BTC) on any number of sources, including a CEX, another DEX, an OTC desk, non-linear options, or even spot holdings. The solver can also net his positions with other positions or with other solvers in the network (future implementation).

Note: Steps 7 takes place off-chain and the solver is solely responsible for managing their hedging strategy. Because collateral is locked into the Bilateral Agreement and completely isolated from external factors, users do not have to make any trust assumptions regarding the solvency of the solver on-chain.

This innovative architecture completely changes how on-chain derivatives work, offering many unique benefits and solutions to existing problems as detailed in The Advantages of IntentX.

PreviousCurrent On-Chain Derivatives Landscape NextComparison and Advantages of IntentX

Last updated 6 months ago

The IntentX Solution: Bridging Liquidity On-Chain

With the market context and background of existing on-chain derivatives solutions outlined, we can now explore the unique benefits of IntentX and its innovative intent-based approach.

To summarize the bigger picture of the derivatives market: CEXs have liquidity but no security, and DEXs have security but no liquidity.

IntentX, with its intent-based architecture, solves the liquidity dilemma and can effectively “bridge” CEX liquidity on-chain through the solver network.

This approach gives traders the best of CEX trading:

Deep Liquidity
Seamless Execution
Tight Spreads
Low Fees

While execution on-chain provides traders the best of DEX trading:

No Trust Assumptions
Immutable Positions
Counterparty Insolvency De-risked
Permissionless access

In this way, IntentX solves for both liquidity and security with no compromise.

IntentX's Intent-Based Architecture and Order Flow

With this crucial innovation, IntentX is an entirely new type of intent-based exchange: an “automatic market for quotations” (AMFQ) exchange.

A trader arrives at IntentX and inputs the details (intent) of their desired trade (ie. long 1 BTC at 10x leverage).
The solver (market maker) provides an offer through IntentX on conditions for the trade (price, slippage, fees, funding rates, collateral, etc.). This step happens automatically and in real time. No capital is committed by the solver at this time.
The trader then has all the pre-agreed conditions needed to open a trade streamed to them as an “quote” and can then choose to execute the trade. This solves a necessary and complex step in an RFQ process to receive and evaluate bids to select the best one. IntentX does this automatically, providing the user with the best quote immediately. Hence, IntentX is not a traditional RFQ exchange but rather an AMFQ exchange.

Note: Steps 1 - 3 happen off-chain through the IntentX exchange.

Once satisfied with the conditions of the trade, the trader sends a “Request to Trade” to the solver, including locking his required collateral.
The solver then observes the request and chooses to accept it, depositing their equal collateral into the contract.
This forms a “bilateral agreement” between the solver and the trader. It is an isolated and perfectly symmetrical contract, and depending on the price movement of the position, one party is obligated to pay the other party as PnL. This bilateral agreement exists in perpetuity until either (1) the trader closes the position, or (2) one of the parties is liquidated (automatically executed by a neutral third party based on margin health).

Note: Steps 4 - 6 happen on-chain where the quotation and bilateral agreement live.

The solver can then “hedge” his position exposure (in this example, it would be long 1 BTC) on any number of sources, including a CEX, another DEX, an OTC desk, non-linear options, or even spot holdings. The solver can also net his positions with other positions or with other solvers in the network (future implementation).

This innovative architecture completely changes how on-chain derivatives work, offering many unique benefits and solutions to existing problems as detailed in The Advantages of IntentX.