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Holy Moly... I just listened to a podcast that introduced the UniSwapX Protocol that I think was announced recently at EthCC, and it is quite a huge technical leap forward for Ethereum (and by extension other chains which will emulate the protocol).

So, before we go into UniSwapX, we sort of need to take a look at how AMM DEXs (Automated Market Maker DEcetralised eXchanges) work at the moment. Essentially, there are liquidity providers ("poolers") who dump tokens into a smart contract Liquidity Pool with a pairing (or more) that is governed by some balancing mechanism. In the case of the original UniSwap protocol it is x * y = constant where x and y are the prices of the paired assets. A "swapper" (or router hop) between the two assets will submit a transaction alter the balance of the two assets with an input asset and desired output asset, then adjust the pricing (x,y) to keep the constant.... constant.

This is problematic for all parties in that the "pooler" has their liquidity spread over a large (initially infinite) range (V3 sort of fixed this in a way with concentrated liquidity, but it hasn't always been the most beneficial thing when the prices go out of bound) and that liquidity is locked and subject to impermanent loss if the prices deviate from the initial deposit prices (and they will...). For the "swapper", they are broadcasting their intent to swap and their maximum slippage to the whole network, which means that MEV bots can attack them to make sure that they pay the maximum prices allowable.

All of this has been necessary to lay the groundwork for a functioning AMM-DEX in the earlier days of Ethereum DeFi... but with newer instructions available, a better way has been proposed for UniSwapX (which isn't the first to do this, but one of the better known!).

As I understand it, the UniSwapX Protocol will have the "swapper" submit a signing (no gas) that is a permit (to spend the input asset) to purchase an output asset at initial price that rises over time. The role of the "filler" takes the place of the "pooler", who (when the price is profitable for them) will submit the transaction (they pay the network fee) to the network to complete the trade (using the signing from the "swapper")! This means that the "fillers" (including the existing V1/2/3 Uniswap pools) are completing against each other to provide the best price to the swappers whilst extracting the best profit for themselves in the Dutch-auction for the right to complete the trade!

Given enough "fillers", this could prove to be much more efficient than the pool model at the moment... and it is a better use of capital as it doesn't need to be locked up in a passive paired pool and allows for "just-in-time" usage of assets. Plus, it removes the honeypots of large liquidity pools with lots of assets attracting bad-actors to test their defences!

So, extrapolating this out to cross-chain bridges... currently, cross-chain bridges involve pools of liquidity on multiple chains... with assets being only native to one chain, and other chains having wrapped representations of locked up assets (on a different chain!). This means that we have had situations where (after hack or draining of a pool..), people are left worthless unbacked wrapped representations of tokens on the wrong chain!

Now, with an extension of UniSwapX, we could have a "bridger" making a request for a bridge and escrowing their input assets... and then have the "filler" completing the bridge and signing a cryptographic proof of the completion, thus unlocking the escrowed input assets! This removes the need for honeypot bridging pools and wrapped representations of tokens!

Exciting times... and it further entrenches the idea that a great deal of ground-breaking and novel development is taking place in the Ethereum ecosystem first!

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