Intent-based Trading Models and Their Potential Impact on Decentralization Trading Markets

In the decentralized trading market, there are currently two main trading modes: automated market maker ( AMM ) and request for quote ( RFQ ). The AMM mode allows users to trade at any time, but has lower capital utilization and issues such as impermanent loss. The RFQ mode is more user-friendly but imposes higher requirements on market makers.

Recently, a new trading concept - Intent-based trading model has gradually emerged. In this model, users only need to clarify their trading intentions without focusing on specific execution details. Professional "solvers" (Solver) are responsible for supplementing the information required for transactions and ensuring that user needs are met.

Intent-based trading has several advantages: users do not need to pay gas fees; it improves the efficiency of order on-chain; it avoids user distress regarding gas settings; it has good composability, allowing for more flexibility in meeting user needs. However, this model also has some areas for improvement, such as requiring users to cancel transactions on-chain if they change their minds; it does not support directly selling ETH; order tracking is relatively difficult; and it is challenging to simulate trading results in advance.

In fact, RFQ and limit orders can be seen as simple applications based on Intent trading. There are already several related products in the market, such as the fusion model of a certain trading platform, CoW Swap, the listing function of a certain NFT trading platform, and the new features of a certain DEX, etc.

Intent-based trading can not only optimize existing trading models but may also give rise to new trading models and applications. For example, it can serve as a form of proxy authorization, allowing professional market makers to operate certain assets under specific conditions, thereby implementing advanced trading strategies such as grid trading, large batch purchases, and time-weighted average price trading.

As this innovative concept continues to evolve, we can expect that decentralized trading markets will usher in more flexible and efficient trading methods, providing users with a higher quality trading experience.