Puffer UniFi (Based Rollup) and mainstream Rollup, guards and vassals,

Core point: Puffer is using Restaking to build a more efficient Based Rollup solution, Decentralization sequencer and liberate cross-chain Liquidity interaction. Based Rollup will form a different Ethereum ecosystem from mainstream Rollup.

• Puffer LRT: ETH staking service based on Eigenlayer for Ethereum.
• Puffer UniFi: Based Rollup Solution with Pre-Confirmation Technology.
• Puffer UniFi AVS: Use UniFi AVS to build a highly synchronized AppChain ecosystem and reduce Liquidity fragmentation.
• The differences between Based Rollup and mainstream Rollup solutions come from continuous trade-offs in decentralization, efficiency, benefits, and many other aspects to adapt to different types of application scenarios.

Research Report

1/6 · Basic Concepts of Rollup

Rollup is a technology used to scale blockchain networks such as Ethereum to handle more transactions while maintaining lower fees. Simply put, it ‘bundles’ a large number of transactions together and processes them off-chain (compared to the Mainnet), shifting the computational and storage workload away from the Ethereum Mainnet (L1). This reduces the burden on the Mainnet, but the final results of the transactions are still submitted to and verified on the Ethereum Mainnet, ensuring data security and immutability.

Rollup is divided into two main types:

• Optimistic Rollup: Assuming that the majority of people are honest, all transactions are assumed to be correct and only verified when challenged. This method is fast but has a certain challenge period.
• ZK Rollup (Zero-Knowledge Proof): Use mathematical proofs to ensure the correctness of each transaction, ensuring their legality when packing transactions, so there is no need for additional challenge periods. This method is more secure but technologically more complex.

In general, the core idea of Rollup is to “do a lot of work off-chain and only put the results on-chain”, thereby making the processing speed of the blockchain faster and the fees lower.

So this process can be simply divided into two parts:

• Batch Processing - Increase volume/throughput
• Transaction Confirmation - Increase Confirmation Speed

2/6 · Based Rollup

Justin Drake, a researcher at the Ethereum Foundation, proposed the concept of Based Rollup in March 2023, which mainly targets the sequencer, an important role between L1 and L2.

The sorter is responsible for sorting and packaging transactions from L2 to L1. Its business scope also includes batch packaging and transaction confirmation mentioned above. However, the sorter scheme used by most L2s at present is a centralized scheme controlled by a single or a few entities. It does not show significant problems in the early stage of industry development. However, as the funds of each chain increase and the infrastructure becomes more mature, centralized sorters will become a “problem that needs to be solved sooner or later”.

There are currently two proposed solutions:

• Decentralization sorter based on L2
• Transfer to L1 Based Rollup

Metis is the main representative of Decentralization sorter based on L2, and the implementation is to establish a new powerful Consensus to make the sorter network more robust.

The solution of Based Rollup is that it removes the independent sorter network mechanism design, transfers the responsibility of transaction sorting from the original L2 to L1, and the verification Node of Ethereum L1 as the proposer is responsible for transaction sorting. This design does not require the establishment of Consensus, fully utilizes the existing Node resources of Ethereum, and avoids the risks brought by centralized sorters, grafting the security level of the sorter onto the Ethereum Mainnet.

However, the problems faced by Based Rollup are also constrained by the classic trilemma, as it has gained the security of the Mainnet, but it also means that it must rely on the Mainnet’s performance (block time is about 12 seconds), which will greatly lag behind in transaction confirmation time compared to conventional L2 scaling solutions.

3/6 · Analysis of Puffer UniFi Optimization Based Rollup Solution

To break through this trilemma, it is necessary to introduce new roles or mechanisms to achieve balance. UniFi proposed by Puffer aims to introduce ‘pre-confirmation’ to solve this problem.

In existing Rollup solutions, users typically obtain ‘soft confirmations’ from centralized sequencers. These sequencers can assure users that the transaction will be included in the Block chain after the user submits the transaction. This kind of soft confirmation is essentially based on trust in this centralized power, and once this power becomes corrupt, transaction sequencing/confirmation cannot be fairly guaranteed.

Puffer UniFi has the following two characteristics in pre-confirmation:

1. The ETH mainnet validators provide assurance: Before the block is packaged, the ETH mainnet validators make a commitment in advance to the pending Rollup transactions (Pre-conf) - these transactions will be included in the block they are about to propose.
2. Punishment mechanism: If validators fail to fulfill their pre-committed promises, i.e. fail to include the promised transactions in the Block, they will face punishment.

So UniFi bypasses the problem of being limited by the Mainnet block time in the Based Rollup mechanism through ‘pre-confirmation’, which means that in the transaction confirmation process, the ETH Mainnet node takes on ‘extra work’ to ensure the efficiency of transaction confirmation (~100ms).

With the pre-confirmation mechanism, it can greatly improve the efficiency of Mainnet transaction confirmation, so is there still a need for L2 to improve Mainnet performance?

“fast confirmation of transactions”, which is an expansion in both horizontal and vertical dimensions. Pre-confirmation solves the problem of fast and fair transaction confirmation, while transaction batching still needs to be completed through Layer 2 or off-chain, and then the packaged transactions are sent to the Mainnet via the sequencer for confirmation.

4/6 · Puffer UniFi AVS

The ETH Workshop Node has undertaken “additional work” in the “pre-confirmation” mechanism. How should the implementation of this additional work and the corresponding penalty mechanism be achieved?

Puffer proposes UniFi AVS, which is a solution based on EigenLayer, without introducing other mechanisms and Collateral, but using its ETH network “Restaking” to package UniFi into an AVS service. Any validators who stake again on EigenLayer can participate in UniFi AVS to provide pre-confirmation services, and corresponding penalty mechanisms are designed in the AVS.

Overall, with Restaking and AVS, ‘pre-confirmation’ has become more smooth to implement, making it one of the most fitting and practical AVS solutions at present, contributing to the Based Rollup scheme, which was not easy to achieve before.

5/6 · Core Value

Using UniFi AVS to build an application chain will be an upgrade option for Based Rollup, compared to other Rollups:

• Decentralization sorting based on L1
• Integrated pre-confirmation technology improves transaction confirmation speed
• Creating income for Restaking
• Synchronized composability

Sync composability is one of the core features UniFi uses to solve the fragmentation problem. In the current multi-Rollup environment of Ethereum, different Rollups operate independently, leading to the fragmentation of Liquidity and users. Asset and contract interactions between different Rollups need to be completed through tools such as cross-chain bridges, which not only increases complexity but also brings high costs and security risks.

Because UniFi is based on L1 Decentralization sorting, ETH Mainnet Node acts as the ‘ultimate sorter’, enabling interactions between different Rollups (based on UniFi) within the same Block without the need for cross-chain bridges. This allows users to seamlessly operate between different Rollups and AppChains in the UniFi ecosystem. In this way, UniFi provides users with a smooth experience similar to a single chain, effectively reducing the problem of Liquidity fragmentation. This is similar to the ultimate goal of the chain abstraction track, where the advantage lies in a more native and simple implementation without the need to introduce additional Consensus and restrictions (such as establishing a new Consensus layer to aggregate Liquidity and user demands).

6/6 · Summary

Overall, the entire UniFi business depends on whether Based Rollup is a necessary Rollup solution.

From the current L2 state, most solutions are actually more centralized than users think. However, this centralization issue will not affect user interests in the short term. Similarly, whether or not this issue is resolved in the short term will not bring wealth effects because it is far from the user end. The reason why this issue is not obvious is that no application is directly affected by the centralization degree of the sorter. Just like the inscription period of the BTC ecology, all the stories of getting rich are completed under a very centralized indexer background.

But if we take a long-term perspective and discuss the Decentralization sorter while considering Liquidity and fragmented user experience, it is imperative. So, let’s bring in some imagery to make a comparison: 01928374656574839201

Based Rollup is a solution that is currently more compatible with Ethereum Mainnet. It is more like an ‘affiliated’ Rollup of Ethereum Mainnet, or a description of Ethereum’s guards. It can be infantry, cavalry, or artillery. The dispatch and communication between the barracks are directly handled by Ethereum Mainnet and follow Ethereum’s most fair system. There is no need for intervention from a third party, eliminating the risk of miscommunication and intentional malice.

And the current mainstream Optimistic Rollup is a more “decentralized” Rollup of Ethereum, like the autonomy of the vassal kings, they are diverse, building their own favorite cities and systems, and the fairness of this system depends on the vassal kings themselves. At the same time, communication between vassal kings requires an additional department for scheduling and coordination, and this department is the “chain abstraction.” To control these vassal kings, this department of chain abstraction must be powerful enough, not only to control the vassal kings, but also to ensure that it is not corrupted itself.

The controversy between these two proposals is whether Rollup should return its value to Ethereum or should be autonomously diversified, with greater security advantages closer to Ethereum, saving a lot of decentralization costs, while naturally possessing synchronization and combination capabilities. Autonomy means that operators can capture great benefits, but at the same time, they need to spend a lot of costs to build security based on decentralization and rely on external combination.

The inclusiveness and freedom of blockchain determine that these two solutions will coexist simultaneously. The source is the continuous balance of various schemes in terms of Decentralization, efficiency, benefits, and many other aspects, to adapt to different types of application scenarios. This exploration will continue, and only through continuous technological adjustments can developers’ ideas hope to create a new future.

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