Simple Summary

• Atomic swap technology with Dutch auctions built on 1inch Fusion

• Enable secure and trustless cross-chain token swaps with improved UX

• Implement resolver-driven operations for efficient swap execution

• DAO governance over key protocol parameters

Abstract

This 1IP proposes the implementation of the Fusion+ Intent-based Atomic Cross-Chain Swaps – an upgrade to 1inch Fusion that incorporates atomic swap technology with Dutch auctions for cross-chain transactions. Fusion+ allows users to swap tokens across different blockchains while retaining full custody of their assets. The protocol utilizes smart contracts with hashlocks, timelocks, and signature-driven operations to ensure transactions are either fully completed or fully refunded, eliminating counterparty risk and improving user experience.

Motivation

Cross-chain interoperability is crucial for DeFi growth, but existing solutions often compromise on security, decentralization, or user experience. Fusion+ addresses these issues by:

• Eliminating reliance on centralized bridges or exchanges

• Reducing exposure to maximal extractable value (MEV)

• Expanding liquidity access across multiple blockchains

• Simplifying user experience for cross-chain transactions

• Enhancing overall security and trustlessness in cross-chain swaps

• Introducing competitive pricing through Dutch auctions

Specification

Fusion+ will be implemented as specified in the Fusion+ Intent-based Atomic Cross-chain Swap whitpaper. The whitepaper provides comprehensive details on the protocol's architecture, including:

• Smart contract design and functionality

• Resolver integration and responsibilities

• Secret handling and encryption mechanisms

• Timelock system implementation

• Partial fill mechanisms

• Protocol settings and governance

• User experience enhancements

• Security measures and considerations

The implementation will follow the specifications outlined in the whitepaper, ensuring a secure, efficient, and user-friendly cross-chain swap experience.

Rationale

Fusion+ builds upon the success of 1inch Fusion by extending its benefits to cross-chain transactions. The atomic swap approach with Dutch auctions was chosen because:

• It maintains the trustless nature of decentralized exchanges

• It eliminates the need for centralized intermediaries

• It provides a secure mechanism for cross-chain value transfer

• It improves user experience by automating complex processes

• It introduces competitive pricing through auctions

• It aligns with 1inch's commitment to user asset security and optimal rates

Alternative solutions like centralized bridges or liquidity networks were rejected due to increased centralization risks and potential security vulnerabilities.

Considerations

Security:

• Smart contract audits have be conducted by multiple reputable firms

• Timelocks were carefully calibrated to prevent exploitation

• Monitoring systems should be implemented to detect unusual activity

• Emergency pause functionality should be available for critical issues

• Resolver KYC/KYB processes must be rigorous to ensure regulatory compliance

Governance:

The DAO directly controls the following settings:

• DAO must be prepared to adjust maximum swap amounts as the protocol matures

• Resolver fees: A fee is incurred by resolvers in the protocol. The fee is a customizable parameter that can be set to 0 in order to disable fee collection.

Economic:

• Safety deposit mechanics may impact resolver profitability

• Dutch auction parameters must be carefully tuned to balance user benefits and resolver incentives

• Partial fill mechanisms may affect liquidity distribution across orders

The 1inch Labs team, with their extensive experience in DeFi protocol development and security, is well-qualified to implement this proposal. However, collaboration with chain-specific experts may be necessary for optimal integration with each supported blockchain.