What is Transaction Bundling?

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Author

Linda
August 19, 2024

Archetype makes DeFi easy with transaction bundling, but what does it do exactly?

Transaction bundling is a transaction management system native to smart accounts that batches multiple transactions together and executes them at the same time.

Archetype leverages transaction bundling to solve key DeFi issues, unlock Price Protection, and make the user experience faster and cheaper. How? Why? Let’s take a look!

Transaction Bundling in DeFi

Interacting with DeFi is often complex and time-consuming for the average user. Not only that, high gas fees can also make DeFi products difficult to access and sometimes entirely impractical to use. Shoutout to $500 ETH gas fees in 2021.

Transaction bundling offers a solution to these problems by providing:

  1. Price Protection: Swap with protection to automatically purchase a safeguard against volatile price movements. That’s a four-in-one deal for transactions!

  2. Enhanced User Experience: Instead of manually executing multiple transactions, users can achieve the same result with a single, bundled transaction. This reduces the risk of errors and simplifies the process.

  3. Reduced Transaction Costs: Bundling multiple transactions together lowers gas costs by minimizing the number of interactions with the blockchain.

  4. Improved Efficiency: Instead of processing multiple individual transactions, the network only needs to process a single bundled transaction, which can improve throughput and reduce congestion.

With these benefits, transaction bundling is the natural progression for DeFi as a whole. We believe it needs to become the standard (and we’re working hard to make that happen!).

Transaction Bundling on Archetype

While developing Archetype, we wanted to greatly emphasize the user experience, so including transaction bundling was pretty much a given. It’s the next step for DeFi and we ain’t shying away from it.

Archetype unlocks things like transaction bundling by natively integrating Safe’s smart accounts (thanks frens!).

Transaction bundling is the foundation of Price Protection—an optional feature available on Archetype that protects your assets from losing value for a selected period of time.

When you use Price Protection, you purchase a put option that gets bundled with the swap, ensuring your downside is cushioned, even if the price goes down.

Users will be able to purchase upside price protection soon. For example, one could swap ETH for USDC and get protection against ETH mooning. Call that FOMO Protection!

To learn more about Price Protection, check out this article.

How Does Transaction Bundling Unlock Price Protection?

Users on Archetype can protect their swaps to stay winning no matter the outcome. But, you may ask, how does it work under the admittedly sleek front end?

Archetype bundles the swap transaction together with an option purchase on Premia. Sounds like a 2-in-1 deal, though in reality it’s more like a 4-in-1 or even a 6-in-1. 

It's 4 if the token you are swapping from on Archetype happens to be the same token needed to pay for the option on Premia, and 6 if there’s an additional swap needed. 

Here’s an example of swapping USDC.e -> ETH and buying downside protection for ETH:

  1. Approve USDC.e on Archetype

  2. Swap USDC.e for ETH

  3. Approve USDC.e on Premia

  4. Purchase put option with USDC.e

If you make a regular protected swap, such as USDC -> WETH or WBTC -> WETH, then:

  1. Approve the token swap

  2. Swap USDC for wETH

  3. Approve USDC to swap again

  4. Swap USDC -> premiums token (USDC.e in this case)

  5. Approve premiums token (USDC.e)

  6. Purchase put option with USDC.e

In the case of upside Price Protection, the premium will be in the sent asset – WETH when swapping from WETH to USDC, and so on – while the purchased option would be a call option.

Remember, it’s all-in-one. The user (that’s you) only needs to approve one transaction on Archetype when using a smart account.

Features In Development

We’re not done exploring the possibilities of transaction bundling! 

As we mentioned, upside Price Protection will be available very soon. We’re also working on a Consolidation feature, which will allow you to consolidate multiple token balances into the same token in one transaction. More on these features in future articles.

Enter the future of Defi with Archetype!

Archetype is set to revolutionize the way you, me, and everyone’s grandma trades on-chain. We’ve got all the buzzwords — intents, account abstraction, and core DeFi primitives. Go try it out! (currently in its beta phase)

We’d love to hear your feedback! Join the Premia community here, shoot us a question on X, whichever you prefer.

Archetype has been built for you, and we’re far from finished.