Everclear - DeFi's 1st Clearing Layer: What You Need to Know
Intents-powered Crosschain Transfers, Nettable Liquidity, & More
Liquidity Fragmentation is an issue we’ve discussed many, many times. Those simply drawing attention to this issue are beating a dead horse at this point; now there are teams that are avidly working to address this barrier. The root cause of liquidity fragmentation is unlikely to go away anytime soon, as incentive-fueled ‘rotations’ are less important than they were in cycles past. Many teams have realized that they can’t simply rely on an underlying chain’s effort to support their protocol. Tools like Arbitrum Orbit, EigenLayer AVSs, Celestia, and more make spinning up a unique appchain, L3, etc. easier than ever. This is the core of the modular thesis, that the offerings of a blockchain can instead be delegated to other infrastructure providers, with more chains created as a result, and liquidity fragmented as a byproduct. All of these factors combine to create a world where there are less tradeoffs than there was before for projects choosing a chain across the pond, or building a more sovereign and customizable chain of their own.
Liquidity isn’t the only thing that may be fragmented; users are being spread thin as well. The fragmentation of users leads to user experience (UX) complexity, expensiveness, and slowness. Everclear (previously Connext) was the first project to propose a new design pattern and toolkit for applications to solve both user and liquidity fragmentation. Enter Chain Abstraction, the core concept being that users should never need to know what chain they are on.
In today’s edition, we’ll be discussing Everclear. Everclear has made waves recently with its introduction of the Clearing Layer, the first of its kind within crypto. We’ll discuss how Everclear’s Clearing Layer works, how intents are leveraged to achieve the goal of chain abstraction, and more.
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Listen to Ep.1 of our new Podcast: DeFi Revelations, ft. Arjun of Everclear!
Background on Everclear
Everclear (formerly Connext), a modular interoperability protocol, was founded in 2017 as an L2 R&D team, it built the first intent-based bridge in 2021, and introduced the Chain Abstraction vision last year.
As a modular protocol, it facilitates the secure transfer of funds and data between chains, allowing developers to build cross-chain applications (xApps) or Web3 applications that interact with multiple domains (blockchains and/or rollups) simultaneously.
Over time, it has expanded its support to a total of 10 chains. As of now, it has over $1B in TVL and powers Renzoʼs L2 Restaking, the largest Chain Abstracted application on the market, through its “Restake From Anywhere” module.
The transition from the Connext brand to Everclear reflects the experience gained over the years and a commitment to addressing the liquidity fragmentation issue that limits user experience and broader adoption of the cross-chain ecosystem. Everclear will be the new brand, with a core focus on the Clearing Layer, a new component of the modular stack designed to coordinate the global netting and settlement of capital flows between chains.
Inspiration for Everclear’s offerings stem from an analysis based on the DeFi Llama Bridged data (from Jan ‘24 to May ‘24, excluded CeFi) shows that over 80% of inter-chain transfers in a typical 24-hour period are nettable (the effect of one order can be offset by the effect of another). As an example, this means that out of every $1 flowing into Arbitrum on a typical day, $0.80 flows out.
Building on this insight, Everclear identified an opportunity to address the rebalancing challenge that results in liquidity fragmentation and centralization within the solver ecosystem. It aims to fill this gap by introducing a novel primitive: the Clearing Layer, a decentralized network designed to coordinate the global netting and settlement of capital flows between chains.
The existing Connext bridge UI and intent protocol will become a flagship example of Everclear and will be rebranded as part of the mainnet launch. As of 3rd June, the Everclear testnet is live and ready for integration with solvers, market makers, and intent protocols. The system is built as an Arbitrum Orbit rollup in partnership with Gelato RaaS, and uses Hyperlane & Eigenlayer to power secure connections to other chains. The alpha mainnet launch of Everclear is scheduled for early Q3. To ensure user safety and adopt a progressive approach to decentralization, the alpha release will include certain limitations and guardrails. The native token of Everclear will be $NEXT, and the protocol will be governed by the Everclear DAO.
Key takeaways
The modular blockchain thesis is proving to be a viable alternative to the monolithic approach. The separation of core blockchain functions (execution, settlement, consensus, and data availability) across specialized layers or networks improves efficiency and scalability, evidenced by the increasing number of L2s and AppChains.
The modular approach leads to two significant issues in the interchain space: fragmentation of liquidity across different chains and fragmentation of users, resulting in complex, expensive, and slow user experiences (UX).
Chain Abstraction simplifies user interactions by hiding the complexities of the underlying blockchain infrastructure, allowing seamless interaction with decentralized applications (dApps) across multiple chains.
Intents-based systems play a crucial role in achieving Chain Abstraction, as these systems enable users to specify desired outcomes without detailing the exact computational paths. Solvers, specialized third parties, execute these intents by managing and rebalancing liquidity across chains.
However, liquidity fragmentation and interchain transaction challenges remain significant as solvers face high operational costs and complexities in rebalancing liquidity, limiting entry and competition within the ecosystem.
Everclear introduces the first Clearing Layer to coordinate global netting and settlement of capital flows between chains. This decentralized network reduces operational costs and complexity, facilitating easier liquidity management for solvers, market makers, and centralized exchanges.
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