Disclaimer: I have a small bag of $CLEAR.

What if there was a protocol equivalent to Visa, seamlessly connecting all chains and assets? That’s the bold vision of Everclear, a protocol poised to revolutionize how liquidity flows across blockchains. But in a space where technological paradigms shift rapidly, the question remains: will Everclear’s clearing layer become the essential infrastructure of the future, or just another bridge too far?

To answer these questions, we must first understand what bridges are in the context of the blockchain.

What are Bridges?

In the blockchain world, a bridge is a category of protocols that enables the transfer of assets and data between different blockchains. The need for bridges arises from the fragmented nature of the blockchain ecosystem, where liquidity is siloed across multiple networks. This fragmentation leads to inefficiencies and complexities for users who must move assets between chains to access different applications or take advantage of better opportunities.

What is Everclear?

Everclear, formerly known as Connext, is a protocol that operates as a “clearing layer” for the blockchain ecosystem. Its primary function is to coordinate settlement and net out bidirectional cross-chain transactions, thereby significantly reducing the costs associated with rebalancing liquidity across chains. 

Everclear aims to solve the fragmentation problem in blockchain interoperability by creating a shared communication layer for market actors such as solvers, intent protocols (including bridges), liquidity providers (LPs), and market makers. By coordinating these actors, Everclear reduces the need for frequent and costly rebalancing operations. The team describes itself as “UberPool for liquidity,” matching and netting cross-chain transactions to minimize the actual movement of tokens.

What’s an intent, you might wonder? Intents allow users to declare actions—such as token swaps, DeFi deposits, or governance votes—within or across different chains. There are several intent standards, and the most famous one is ERC-7683, adopted by Across and Uniswap.

Everclear utilizes various technologies to achieve its objectives, including:

• Arbitrum Orbit: This provides the underlying compute framework for the Everclear rollup.
• Gelato RaaS: This helps with the orchestration and operation of the system.
• Hyperlane: This ensures permissionless interoperability, enabling Everclear to connect to any chain.
• EigenLayer: This enhances security through restaked ETH.
• The Graph: This enables permissionless data access for the system.

Everclear’s mainnet went live in September 2024, and the netted volume has gradually increased without any incentives.

Additionally, the average settlement time trend toward 1.25h, while the percentage of settled intents within 6 hours is over 90%.

Everclear will transition from its native token $NEXT to $CLEAR on Dec 6, 2024. This transition will also enable a vote-bonding system ($vbCLEAR) for governance and reward distribution. This scheme allows stakeholders to influence the distribution of incentives to specific chains and solvers, further enhancing the protocol’s efficiency and fostering ecosystem growth.

Visa and Everclear: A Network Effect Analogy

Both Visa and Everclear benefit from network effects, which means their value increases as more participants join the network.

Visa’s network effect is evident in its widespread acceptance. Merchants are more likely to accept Visa if many consumers use it, and consumers are more likely to use Visa if merchants widely accept it.

Everclear aims to create a similar network effect in the blockchain space. As more chains, solvers, and intent protocols integrate with Everclear, the platform becomes more efficient and cost-effective for everyone involved.

Here’s a closer look at how this network effect works for Everclear:

• Netting of Transactions:
  Everclear acts as a neutral clearinghouse, matching and netting out cross-chain transactions. This reduces the need for actual asset transfers, minimizes fees, and increases efficiency. As more participants join, the netting opportunities grow, further improving cost-effectiveness.
• Permissionless Liquidity:
  Everclear enables permissionless liquidity for new chains. Chains can incentivize solvers to support their ecosystem by locking $CLEAR and voting for their chain, or just bribe the existing $vbClEAR à la ve(3,3) style. This attracts liquidity before user volume picks up, solving the chicken-and-egg problem for new chains. 
• Reduced Rebalancing Costs:
  Solvers, who fulfill cross-chain intents, often face high costs and complexity when rebalancing their liquidity across different chains. Everclear solves this by providing a shared liquidity pool that reduces the need for frequent and expensive rebalancing. As more solvers join, the shared liquidity pool grows, reducing rebalancing costs for everyone involved.

Just like Visa, Everclear’s success depends on building a robust network. As the network grows, the benefits for individual participants increase, creating a powerful flywheel effect that drives further adoption. If this vision is realized, Everclear could become the “Visa of blockchain,” facilitating seamless and efficient value transfer across a vast network of interconnected chains.

Threats

As an $CLEAR investor, some threats could potentially invalidate the thesis: 

The Emergence of Cross-chain Token Frameworks

The emergence of cross-chain token frameworks like OFT and xERC20, poses a potential threat to Everclear. These frameworks enable native multi-chain tokens that can be transferred across chains. 

If these frameworks gain widespread adoption and successfully eliminate the need for wrapped assets and traditional bridging mechanisms, the demand for Everclear’s services could decrease.

The Domination of Superchain

Nowadays, if you want to build an L2, there are multiple frameworks you can choose from, such as Optimism’s OP Stack, Arbitrum’s Orbit, or Polygon CDK. While the combined TVL from Arbitrum-based chains is still higher than that from the OP Stack-based ones, the difference is getting small. 

The increasing popularity of Superchain, chains based on the OP Stack, raises concerns about the need for external bridging solutions in the future. Now, users still need to use bridges like Across or Hop to transfer tokens between two OP Stack-based chains, say, between Base and OP Mainnet. Soon, users can transfer their assets freely within Superchain. Once that becomes a reality, the reliance on external bridges might diminish.

The Adoption of ZK Proofs for L2s

The dominant L2s, such as Base, Arbitrum, and OP Mainnet, are categorized as optimistic rollups. One major drawback of an optimistic rollup is that each withdrawal from L2 requires a 7-day challenge period, which is a significant reason why people use bridges. By using bridges, people can bypass that duration and get their assets faster. 

Adopting ZK proofs from these leading L2s could eliminate one of the bridges’ selling points, as ZK proofs offer faster finality (like withdrawal in hours vs after 7 days) and improved security.

Closing Thoughts

While Everclear’s initial performance with its mainnet beta has shown promise, its long-term success remains to be determined. The competition from alternative solutions like Across, deBridge, Particle Network, and Omni Network adds to the uncertainty. 

The future of Everclear will likely depend on factors such as:

• The ability to attract and retain stakeholders:
  Everclear’s success depends on the participation of key market actors who utilize its clearing layer for efficient liquidity management.
• The adoption rate of cross-chain token frameworks:
  If these frameworks successfully eliminate the need for traditional bridges, Everclear’s relevance might decline.
• The dominance of Superchain:
  The success of superchains in creating seamless internal interoperability could limit the need for external bridges.
• The development and adoption of new technologies:
  Further innovations in blockchain interoperability might introduce alternative solutions that outperform or supersede Everclear’s approach.

Overall, Everclear presents a novel solution to the fragmentation problem in the blockchain space. The network effect will form a strong moat to fend off potential competitors if it successfully attracts and maintains stakeholders in its ecosystem. However, the evolving nature of blockchain technology and the emergence of alternative solutions create challenges and uncertainties for its long-term success.