The First Project Report: Detailed Explanation of Account Abstraction Multi-chain Relay Protocol Biconomy

In 2016, Vitalik first proposed the concept of Account Abstraction, hoping to enhance the functionality and flexibility of wallet accounts through smart contracts. Account Abstraction, or AA, aims to improve the flexibility and functionality of smart contract accounts. Traditionally, accounts on blockchain networks are divided into Externally Owned Accounts (EOAs) and contract accounts. EOAs are directly controlled by users through private key signatures, while contract accounts are controlled by code through smart contract logic. The goal of Account Abstraction is to blur the boundaries between these two, giving contract accounts more functionality while also providing EOAs with the flexibility of smart contracts. In 2022, the first Layer 2-based Account Abstraction standard, EIP-4337, was proposed, attempting to implement Account Abstraction functionality without changing the Ethereum Layer 1 protocol. This goal was successfully implemented and deployed on the Ethereum mainnet in 2023, and since then, an increasing number of dApp developers have begun to adopt Account Abstraction technology, bringing more flexible and convenient operating experiences to users.

I. What is Biconomy?

Nowadays, Web3 applications face significant barriers in terms of user experience, namely extremely high user onboarding and poor transaction experiences. Almost every interaction with a dApp is a complex transaction for users. Compared to the intuitive Web2 products people are accustomed to, current dApps are still very inconvenient in terms of operational practicality. Biconomy aims to take on the responsibility of improving the user experience of blockchain and decentralized applications (dApps). By solving the usability issues of blockchain, Biconomy provides users with seamless cross-chain transaction solutions and offers developers simplified interfaces to build and optimize the transaction experience of their applications. Biconomy's signature feature is its multi-chain support and integration with smart contracts, allowing users to transact across multiple blockchain platforms, reducing complexity and improving transaction efficiency.

As a leading developer tool provider, Biconomy is focused on simplifying the Web3 experience, providing users with more convenient and efficient on-chain interactions. Through cross-chain interaction support, gas-less transaction mechanisms, and solutions that allow the use of other ERC-20 tokens to pay gas fees, Biconomy is lowering the usage threshold for dApps and providing seamless on-chain experiences for end-users. Biconomy's core goal is to make Web 3.0 more usable, interoperable, and composable. Users can expect a simple, intuitive multi-chain experience, whether it's connecting a wallet on any dApp or transferring assets between different chains or Layer 2 networks (L2/rollup), all with no gas fees for efficient operations. This technology significantly lowers the barrier for ordinary users to participate in DeFi or other on-chain activities. Biconomy's cross-chain transaction infrastructure Hyphen mainnet provides developers with a user-friendly API set. Hyphen maintains token liquidity across different chains to enable fast, low-cost cross-chain transfers. When users deposit tokens on one chain, Hyphen immediately completes the transfer on another chain and automatically balances the one-way liquidity imbalance. This mechanism not only improves cross-chain transaction efficiency but also provides additional earning opportunities for liquidity providers. Biconomy supports networks including Ethereum, Matic (Polygon), xDAI, Binance Smart Chain (BSC), Moonriver, Edgeware, and also provides tool support for well-known DeFi projects such as Curve Finance, Idle Finance, Perpetual Protocol, Decentral Games. In the future, Biconomy will continue to expand to more public chains and cross-chain applications, further reducing user transaction costs and usage thresholds. Through its innovative infrastructure and developer tools, Biconomy is bringing simpler and lower-cost experiences to the Web3 world, opening up a wider gateway to blockchain technology for users and developers.

II. Biconomy's Operating Model

Biconomy provides a set of infrastructure aimed at simplifying the user experience, enhancing interoperability, and lowering the Web3 usage threshold. Its architecture consists of three main products: Meta-Transactions, Hyphen Transactions, and Modular Smart Accounts, with the core mission of helping developers simplify the development process of decentralized applications (dApps) through providing ready-to-use APIs and SDKs, allowing users to enjoy a more seamless, unobstructed on-chain experience.

1. Meta Transactions: Enabling Gas-Less User Experience

Biconomy's meta-transaction mechanism allows dApp developers to pay users' gas fees on their behalf, enabling users to complete on-chain transactions without holding native tokens (such as ETH). Users only need to focus on the dApp's functionality, without worrying about paying gas fees. This feature significantly improves the adoption rate of dApps.

• User Experience: Simple front-end operation, users do not need to understand or handle complex gas mechanisms.
• Developer Advantages: dApp developers can enhance the user experience and improve user retention and engagement by subsidizing gas fees.

1. Hyphen: Enhancing Cross-Chain Interoperability

Biconomy's Hyphen cross-chain infrastructure provides fast and secure cross-chain asset transfers, allowing users to seamlessly operate between multiple blockchains without the need to switch networks.

• ERC-20 Token Gas Payment: Users can use any ERC-20 token to pay gas fees, instead of the specific chain's native token (such as ETH or BNB), greatly simplifying cross-chain interactions.
• Automatic Liquidity Balancing: Hyphen maintains token liquidity across different chains and automatically balances one-way outflows, ensuring smooth execution of cross-chain transactions.

1. The Role and Value of the BICO Token

Biconomy's native token BICO plays an important role in the entire ecosystem:

• Network Incentives: BICO incentivizes node operators, liquidity providers, and other ecosystem participants to provide support for the network.
• Governance Function: BICO holders can participate in network governance, proposing or voting on key decisions regarding protocol upgrades or other network development.
• Staking and Rewards: Users can stake BICO to earn network rewards, while also supporting the security and decentralization of the Biconomy network.

III. Biconomy's Technical Core

Currently, Biconomy's development focus is mainly on the following three areas:

1. Cross-Chain Applications: Supporting fast and seamless asset transfers between different blockchains.

Biconomy integrates with multiple Layer 2 solutions (such as Polygon, Optimism) to leverage these scaling solutions to improve transaction speed and reduce transaction costs. These integrations also promote the application of Account Abstraction on different blockchain platforms.

1. ERC-20 Token Gas Payment: Allowing users to pay gas fees using any ERC-20 token, improving the user experience.

Biconomy's Relay Protocol not only provides users with convenient on-chain operations, but also brings new possibilities for dApp developers and third parties:

• Enhancing User Retention: The gas-less experience reduces user churn, especially for new users.
• Flexible Business Models: Developers can attract more users by subsidizing gas fees or collaborating with third parties to inject more vitality into the ecosystem.

Through Biconomy's innovative technology, the usage threshold for Web3 has been significantly lowered, creating a broader user base for on-chain operations. In the future, as more projects integrate the Relay Protocol, this gas-less transaction experience will become the new standard in the Web3 world.

1. Zero Gas Transfer Application: Provides users with a truly zero-fee on-chain transaction experience.

For many new users, Gas fees are the first barrier to participating in on-chain operations. In traditional on-chain interactions, users must hold ETH or the native token of the chain to pay transaction fees, which undoubtedly increases the complexity of using DeFi, NFT and other applications, especially for Web3 newcomers. Biconomy has achieved true Gas-free transactions through its Relay Protocol, providing users with a more friendly and seamless on-chain experience. When using DApps, users do not need to have ETH for Gas fees. Instead, Biconomy greatly simplifies the payment process through the following mechanisms.

By providing Gas-free transactions and cross-chain interoperability, Biconomy solves the user pain points in traditional blockchains, making the development and use of dApps more efficient and convenient. At the same time, the introduction of the BICO token provides sustainable economic incentives for network participants, ensuring the long-term growth and prosperity of the ecosystem.

IV. Biconomy Team and Financing Information

The Biconomy network was created by an experienced team from the crypto and technology fields. The founding team includes Ahmed Al-Balaghi and Nitin Gaur, who are committed to providing easy-to-use and powerful infrastructure tools for decentralized application developers. Biconomy attracted the support of multiple investors and partners in its early days, laying the foundation for the platform's rapid development. Biconomy raised $1.5 million in early 2021, followed by $9 million in July 2021, and then $11.5 million in a public offering on Coinlist in October. In March 2024, Biconomy completed another round of strategic financing, although the amount was not disclosed, the investor lineup is strong, including Jump Capital, Borderless Capital, ConsenSys Ventures, Taisu Ventures, Manifold Trading, Side Door Ventures and Blockchain Founders Fund. This financing provides Biconomy with the momentum to further expand its cross-chain transaction infrastructure and Gas-free transaction solutions, and also demonstrates its growing importance in the Web3 ecosystem.

V. BICO Token Economics

BICO is the native utility token of the Biconomy ecosystem. The total supply is 1 billion, of which 667 million (66.7%) are in circulation. As the native token of the Biconomy ecosystem, $BICO has multiple functions such as payment, incentives, governance and staking, providing the network with continuous development momentum and creating multi-dimensional participation and earning opportunities for users. Its main uses include the following four aspects:

1. Payment of Network Fees

Users need to pay a certain amount of BICO as a fee when using Biconomy's services such as cross-chain transfers and Gas-free transactions. By using BICO for payment, users can achieve fast and efficient interaction across multiple chains.

1. Incentive Mechanism

Used to incentivize various participants who provide support to the network, including ensuring the stability of the node network operation and providing liquidity for Biconomy's cross-chain functions like Hyphen, to ensure users can smoothly complete asset transfers.

1. Governance Participation

BICO holders can submit improvement proposals to drive protocol technical upgrades or operational adjustments. Participate in key decisions through the voting mechanism, such as protocol parameter adjustments or new feature launches.

1. Staking to Protect the Network

Node operators need to stake a certain amount of BICO to participate in network operations, and staking provides security assurance for the network. Regular users can also earn rewards by staking BICO, both protecting the network and enjoying additional returns. The BICO distribution is as follows: Community: 38.12% (381,200,000 BICO), Foundation: 10% (100,000,000 BICO), Team and Advisors: 22% (220,000,000 BICO), Private Round: 12% (120,000,000 BICO), Seed Round: 6.38% (63,800,000 BICO), Pre-Seed Round: 6% (60,000,000 BICO), Public Sale: 5% (50,000,000 BICO), Strategic Investors: 0.5% (5,000,000 BICO).

VI. Future Value Analysis of $BICO

As a key platform for decentralized finance (DeFi) and cross-chain transaction infrastructure, Biconomy has demonstrated its strong technical innovation capabilities and market prospects. By providing Gas-free transactions, supporting multi-chain interoperability, and simplifying the user experience, it has become an important infrastructure in the Web3 ecosystem, providing dApp developers and users with lower transaction costs and more efficient operation experiences. Although the crypto market is volatile, Biconomy, with its unique technological advantages and market positioning, is expected to achieve sustained growth. As the demand for decentralized applications increases and the importance of cross-chain interoperability becomes more apparent, $BICO is expected to become a leading asset in this field. Investors can benefit from the growth in market demand in the short term, and long-term holding may also yield considerable returns.