Using Taiko as an example to explain the concept of preconfirmation: How to make Ethereum transactions more efficient?

Original Title: “Preconfirmation (feat. Taiko): Make Ethereum Fast for the First Time!”

Author: Ingeun Kim : : FP

Key Summary

Taiko is a Layer2 network based on Based Rollup, aiming to achieve full interoperability with Ethereum while promoting Decentralization of the Sequencer. To solve the latency problem of transaction final confirmation in the Rollup mechanism, Taiko introduces the concept of ‘Preconfirmation’. By guaranteeing the inclusion and ordering of transactions to users in advance, Preconfirmation effectively alleviates the inefficiency of the transaction confirmation process in the Rollup mechanism, thereby significantly improving user experience.

In the Based Preconfirmation model, L1 validators provide users with a guarantee of transaction results. Pre-confirmers need to stakeMargin and comply with the slashing mechanism to ensure the reliability of the system. L2 projects such as Taiko establish reliable transaction finality by introducing pre-confirmation mechanisms, creating a more convenient operating environment for services that require real-time confirmation, such as Decentralized Finance.

Currently, multiple projects have participated in the construction of the pre-commitment ecosystem. This technological advancement is expected to improve the efficiency of the ETH L2 ecosystem, enhance interoperability with Ethereum, and drive further expansion of the entire ecosystem.

Taiko is steadily moving towards its ultimate goal as a Layer2 solution for Ethereum. To achieve this, Taiko prioritizes full interoperability with Ethereum, Decentralization sequencers, and support for developers. It is worth mentioning that Taiko achieves full interoperability with Ethereum through the architecture of Based Rollup, while allowing anyone to participate as a sequencer, thus achieving Decentralization of sequencers. However, despite the advantages of the Based Rollup model, there are still some inherent inefficiencies in its structure.

This article will take Taiko as an example to delve into the concept of Preconfirmation. As a key component of the Layer2 technology stack, Preconfirmation is an important step for Rollup to further develop.

Current L2 efficiency issues

With the expansion of the L2 ecosystem, numerous projects have emerged, bringing many new concepts and technology stacks. However, despite these significant advancements, L2 still faces some urgent efficiency issues, particularly in key areas that affect user experience, where improving efficiency has become especially important.

Inherent limitations of Rollup: inefficient transaction finality determination process

L2 achieves scalability through Rollup, relying on the data availability and transaction processing of L1 platforms such as Ethereum. However, Rollup has an inherent limitation: although it can independently complete transaction ordering and execution, all other processes still need to wait for the final confirmation of L1.

This architecture ensures security and data immutability by directly leveraging the Block generation and data availability of L1. However, relying on L1 for final confirmation results in slower transaction processing speed and limited real-time confirmation capability, which makes it difficult to meet real-time needs from the user’s perspective.

In addition, many L2 sequencers and validation nodes are currently centralized. This centralization can lead to inefficiencies such as longer transaction confirmation times and possible operational interruptions, affecting the transaction processing efficiency of certain Rollups and causing confirmation latency.

The concept of pre-confirmation

The concept of pre-confirmation was proposed to address the issue of low efficiency in transaction final confirmation in L2 networks. Pre-confirmation allows users to obtain transaction confirmation faster, thus alleviating the common latency and inefficiency in Rollup mechanisms.

What issues does pre-confirmation aim to address?

In the Rollup mechanism, there has always been an issue of inefficient confirmation process after users submit transactions to L2. Due to the centralized L2 sequencer’s inability to accurately guarantee when transactions will be confirmed on L1, users often have uncertainties about the order and outcome of transactions. For example, users may need to wait for a long time for transactions to be included on L1, and if there are errors in the transaction order or the results are unsatisfactory, it may result in financial losses caused by executed transactions.

In a highly fluctuating market environment, the issues of latency and order changes are more prominent, as users rely on arbitrage and decentralized finance services. In these cases, transaction latency or order changes can directly lead to missed opportunities. Even ordinary users conducting regular transactions may lack confidence in the confirmation time and order on L1, thereby raising doubts about the reliability and usability of the blockchain.

Therefore, the pre-confirmed design goal is to address these shortcomings, especially to provide a more convenient and reliable trading experience for users who are most affected by the inefficiency of Rollup.

How to resolve these issues in advance?

Pre-confirmation solves these problems by providing users with transaction inclusivity, ordering, and execution guarantees. It provides users with ‘soft confirmations’ through a centralized L2 sequencer and issues pre-confirmation certificates to ensure that transactions will ultimately be included on L1.

The main advantage of soft confirmation is to improve user experience. Users can immediately receive confirmation after submitting a transaction, ensuring that the transaction is included on L1 as expected and reducing uncertainty, especially in fast-reacting transactions such as Arbitrage. In addition, pre-confirmation also enhances users’ trust in the L2 system. As users’ confidence in transaction security processing increases, the overall usage of the L2 ecosystem will also increase. Therefore, pre-confirmation plays a key role in improving the efficiency and convenience of Rollup processing.

Is pre-confirmation the final solution?

Although soft confirmation from a centralized sequencer can improve the user experience through expected ordering and outcomes, it relies on trust in the sequencer. Without legal or technical enforcement, users can only rely on the reliability of the sequencer. This dependence brings a possibility that transactions may not be included in the correct order, or may not be included on L1 at all, failing to provide the expected guarantee of stability for users.

Using Taiko as an example to explain the concept and practice of Based Preconfirmation

Taiko has put a lot of effort into implementing Based Preconfirmation, as this method aligns well with the core features of Based Rollup. If Based Preconfirmation can be successfully introduced into the Taiko framework, it will not only significantly reduce the latency of transaction final confirmation, but also improve user experience. In addition, this improvement will activate various services that were previously restricted, enabling them to operate efficiently on the Taiko network.

Before diving into a deep understanding of Based Preconfirmation, it is necessary to review some key features of Taiko in order to have a more comprehensive understanding of the applicability and advantages of this method.

Taiko Case Analysis

Taiko fully demonstrates the core features of Based Rollup. It not only achieves full interoperability with the Ethereum infrastructure, but also is committed to fully aligning with Ethereum’s security mechanisms. Taiko adopts the architecture of Based Rollup, which means it does not rely on centralized sequencers, but relies on Ethereum validators to act as sequencers, responsible for transaction and block ordering.

In other words, Taiko’s sequencer is the same kind of role as the Block proposer of the ETH network. This design gives them special responsibilities and incentive mechanisms, such as maximizing the extraction value (MEV) rewards and other benefits derived from the sequencer identity. Therefore, when there are issues with Taiko’s L2 sequencing process, these sequencers naturally assume corresponding responsibilities due to their vested interests in the ETH network ecosystem. This mechanism sets Taiko apart significantly from other ETH L2 projects in terms of operational accountability.

In addition, it is worth noting that Taiko’s Based Rollup model is designed as a “Based Contestable Rollup” (BCR), a structure designed to incentivize healthy competition. Through an open and permissionless design, Taiko ensures the decentralization of the system and allows anyone to participate, making the system more fair and transparent.

Pre-confirmation based on Based Rollup

So, what is the pre-confirmation model designed specifically for Based Rollup? The answer is ‘Based Preconfirmation’. This model aims to replace traditional soft confirmation mechanisms by directly verifying confirmation on L1.

Based Preconfirmation provides a system where some L1 validators voluntarily participate and provide preconfirmation services. As sequencers, these validators offer users verifiable predictions of Rollup transaction results. This approach provides users with a trusted guarantee of transaction inclusion and ordering, directly based on L1, enhancing the trustworthiness and reliability of the Rollup process.

Justin Drake first proposed the concept of Based Preconfirmation, and put forward a specific role called ‘Preconfer’, which can provide users with signature guarantees, clarify the order of transactions and execution status. In order to ensure the reliability of commitments, each Preconfer needs to stake a certain amount of Margin. If they fail to fulfill their commitments regarding the order of transactions or execution status, they will face the punishment of the Slashing mechanism, that is, the loss of part or all of the Margin.

The Slashing mechanism has been widely used in the PoS stake of ETHereum, which effectively restrains malicious behavior. This mechanism not only strengthens the sense of responsibility of the validators, but also establishes a certain foundation of trust between users and validators.

There are two scenarios that will result in Pre-Validators being subject to Slashing penalties:

Liveness Faults: If a pre-validator fails to include a user’s pre-confirmed transaction on-chain for any reason, a liveness fault occurs. Since liveness faults are not always intentional, their punishments are relatively mild. Such faults may stem from network issues or disruptions in L1 or L2 blockchains, preventing transactions from being correctly included on-chain. To protect honest pre-validators from undue punishment, the penalty amount for liveness faults is usually determined by user and pre-validator negotiation.

Safety Faults: If a pre-confirmed transaction is included on-chain but the result is inconsistent with the user’s original request, a safety fault occurs. This inconsistency is entirely the responsibility of the pre-confirmation party, so the punishment for safety faults is usually more severe. The pre-confirmation party’s margin will be confiscated in full, whether or not the issue is intentional.

To become a pre-validator of the Based Preconfirmation model, a Node (usually the L1 Block proposer) must accept the conditions of these Slashing mechanisms and stake the required Margin. Once approved, the pre-validator can provide services to users and generate income by charging service fees.

This fee model provides users with significant convenience, allowing them to bypass the inherent latency in Rollup transaction final confirmation. For example, after users submit pre-confirmed transactions through personal wallets, they can immediately obtain confirmation certificates from pre-confirmed parties.

Participants of the Based Preconfirmation can not only earn additional income by charging fees, but also help optimize the transaction confirmation process of Rollup. This model not only improves user experience, but also provides a reliable and efficient transaction final confirmation solution for the entire L2 ecosystem, further enhancing its attractiveness and practicality.

Why are users willing to pay fees for pre-confirmation?

This is actually closely related to the core purpose of pre-confirmation. Users are willing to pay for pre-confirmation because it directly addresses the inefficiency of Rollup in the final confirmation process, bringing significant convenience to users.

For example, when a user submits a pre-confirmed transaction on L2 Blockon-chain through a personal Wallet, the standard transaction may need to wait for final confirmation, while the user requesting pre-confirmation can immediately obtain a guarantee from the pre-confirmers, completing the transaction without latency. At this point, the user may even see a green check mark in the Wallet interface, clearly indicating the successful transaction.

Taking Decentralized Finance services as an example, when users conduct Token exchanges on L2 Decentralized Finance platforms, pre-confirmation can provide additional protection for related transactions. In general, the quoted Exchange Rate or fees for transactions may be inconsistent with the actual completed transaction results due to latency. However, through pre-confirmation, users can enjoy a fast and efficient final transaction confirmation process, reducing the difference between expected conditions and actual results, and thus obtaining a more reliable service experience.

These use cases not only allow developers to provide more accurate services, but also bring users a smoother and more convenient user experience. This dynamic further supports the expansion of the L2 ecosystem, while also contributing to the rise of the broader L1 ecosystem. In addition, for the sequencer of Based Rollup, the additional income brought by pre-confirmation provides a considerable profit model. This design effectively addresses some of the traditional weaknesses of Based Rollup, making it an ideal choice for sequencers, with both reliability and appeal.

What are the challenges of Based Preconfirmation?

Based Preconfirmation is still a highly followed research area in the Rollup-driven Layer2 projects, represented by Taiko. Although this mechanism provides a clear solution to improve L2 performance and scalability while maintaining Decentralization, it still faces some urgent challenges in practical applications to achieve wider adoption.

First, when submitting a transaction to the Block in Preconfer, users may not have an absolute guarantee of transaction inclusiveness. Although pre-confirmers provide collateral for transactions through stakeMargin, this mechanism still cannot fully solve the problem of transactions not being included due to external interruptions. Especially when the transaction value exceeds the pre-confirmer’s stake amount, the pre-confirmer may abuse their authority, selectively including or excluding certain transactions, thereby bringing potential risks.

Another significant challenge is the profit model based on pre-confirmation. The main source of income for pre-confirmers is the pre-confirmation fee paid by users. However, if the number of pre-confirmers is insufficient or the participation is not high enough, it may lead to market centralization and monopoly tendencies. In this case, the pre-confirmation fee may be artificially increased, increasing the cost of users for fast and efficient transactions, thus posing a threat to the healthy development of the pre-confirmation ecosystem.

It is worth noting that the concept of Based Preconfirmation is relatively new, and was only proposed about a year ago. It will take some time of practice and improvement to make it a “key tool” to maximize the speed and efficiency of Rollup-driven L2 solutions. However, as Rollup has already firmly established itself as a core component of Ethereum’s scalability, further exploration of preconfirmation to enhance performance marks an important step in the development of L2 technology.

In particular, Taiko has made significant progress in promoting the implementation of Based Preconfirmation. At the same time, Taiko has collaborated with partners such as Taiko Gwyneth, Nethermind, Chainbound, Limechain, Primev, and Espresso to explore and develop application scenarios for Based Preconfirmation. These collaborations aim to further evolve the L2 ecosystem, and more details will be discussed in subsequent chapters.

Pre-confirmed ecological panoramic view: process chart interpretation and project exploration

In this chapter, we will explore which projects are actively researching and advancing the development of pre-commitment technology in the Rollup-driven L2 ecosystem. As this ecosystem is still in its early stages of development, we will use a flowchart to provide a more intuitive understanding of the specific process of pre-commitment.

Pre-confirmation process diagram

Pre-commitment is a complex process that requires close collaboration between L1 and L2, involving multiple roles, each with specific responsibilities. In order to facilitate a more intuitive understanding of this process, I have created a flowchart for a brief overview. It is important to note that this flowchart is intended to help explain the overall logic, and therefore does not strictly distinguish between the different characteristics of Rollup and Based Rollup, but focuses on the general process at a fundamental level.

Before we dive into the specific steps of the process diagram, let’s first get to know the roles and functions of the participants in the pre-confirmation process:

User: Individual users of the L1 or L2 network, responsible for creating and submitting transactions. If users wish to obtain pre-confirmation protection, they will send the completed transaction to the pre-confirmation party.

Preconferrer: During the pre-confirmation process, the preconferrer is responsible for reviewing and verifying transactions for their validity, and then providing users with pre-confirmation guarantees. Through pre-confirmation, users can quickly obtain transaction status assurance before the final Settlement. If Nodes do not have pre-confirmation qualifications, they act as Non-Preconf Actors, primarily handling regular transactions rather than pre-confirmed transactions, similar to standard validation Nodes.

L1 validators (L1 Validator): Responsible for the final verification of transactions and Blocks on the L1 network. Once the pre-validator submits the transaction data, L1 validators will verify it and record the final data in the L1 Blockchain to ensure the integrity of the transaction and compliance with Consensus rules.

Preconfirmation Challenge Manager: When disputes or issues arise during the preconfirmation process, this role is responsible for investigating the problem and taking appropriate measures to resolve the dispute. This role plays a key role in maintaining the fairness and reliability of the preconfirmation process.

Now, we will sort out the specific process of pre-confirmation according to the order of the flow chart.

Users send transaction requests to pre-confirmation participants known as pre-confirmers to initiate the pre-confirmation process.

Pre-validators audit transactions and send pre-confirmation receipts, committing to including the transaction in the L1 Block, providing users with preliminary final confirmation protection.

Precommitters will need to submit transaction data to L1 validators that needs to be included in the L1 Block. This data can be a single transaction or aggregated data processed by the L2 sequencer.

L1 validators verify the submitted transaction data or aggregated data and record it in the L1 Block to ensure that it complies with the Block chain Consensus rules.

After a period of time, the L1 Block containing transaction data or aggregated data reaches finality, and the transaction is officially confirmed.

Users can check the final result of the transaction through the L1 Node and, if necessary, raise any potential pre-confirmation disputes or challenges using relevant information.

If a transaction occurs that does not correctly include the commitment on L1, the pre-validator will face penalties from the pre-confirmation challenge manager, such as being slashed margin or having their stake assets frozen.

Exploration of related projects

The following will analyze in detail the main projects actively involved in the pre-confirmation ecosystem and their relevant roles in the process. Although these projects occupy specific roles in the process diagram, the responsibilities they actually fulfill may be slightly different. Therefore, this overview aims to provide a foundational understanding and can serve as general guidance. To maintain clarity, the projects in each category are arranged in alphabetical order.

Preconfer Validators

Astria: Astria is committed to replacing centralized sequencers with a Decentralization sequencer network and supporting multiple Rollups to share this network. This design provides Rollups with stronger anti-censorship capabilities, faster Block finality, and seamless cross-Rollup interaction. To achieve fast Block finality, Astria introduces pre-confirmation functionality, enabling Rollups to provide rapid transaction confirmation and enhance anti-censorship capabilities, thereby significantly improving user experience.

Bolt by Chainbound: Bolt is a pre-confirmation protocol developed by Chainbound, providing ETH users with near-instant transaction confirmation services. Its operation is based on a trustless participation mechanism and economic collateral, while being compatible with the existing MEV-Boost PBS pipeline, creating new revenue opportunities for proposers. The core function of Bolt is L1 pre-confirmation, providing immediate finality for basic transactions such as transfers and authorizations, thereby improving user experience. By shifting transaction inclusion responsibility from centralized block builders to proposers, Bolt enhances the system’s censorship resistance. At the same time, the collateral proposer registration mechanism ensures a trustless environment that flexibly supports various types of smart contracts.

Espresso: Espresso is a protocol dedicated to enhancing the interoperability of the blockchain ecosystem. It adopts the HotShot Byzantine fault tolerance (BFT) consensus protocol to achieve transaction ordering and data finality among multiple chains. Espresso consists of the Espresso Network and Espresso Marketplace, which work together to provide fast transaction finality and efficient interoperability, with the goal of improving the scalability and security of the blockchain ecosystem.

Ethgas: Ethgas is a market for trading block space, with transaction matching managed by a centralized system and on-chain processes executed through smart contracts. Ethgas provides two main functions: pre-confirmation (ensuring that transactions are included within a specified gas limit) and execution pre-confirmation (ensuring that transactions reach a specific state or result). Ethgas focuses on protecting transaction privacy in block space trading and is known for its neutral operational objectives.

Luban: Luban focuses on developing a Decentralized ordering layer to connect transaction data between the Ethereum network and Rollup. The ordering layer is designed as a Decentralized system that separates the roles of proposing and executing. Luban’s pre-confirmation feature significantly improves transaction reliability by ensuring the executability of transactions before they are included in the Ethereum network, while also helping to optimize key factors such as Money Laundering, gas prices, and MEV.

Primev: Primev is developing a proposer network integrated with MEV, combining pre-confirmation with MEV functionality to build an efficient and reliable peer-to-peer network. This network records the commitments of ETH block transaction execution and incentivizes proposers through reward or punishment mechanisms. Primev allows MEV participants to set specific execution conditions for their transactions, while block builders and validators can commit to meeting these conditions, ensuring pre-confirmation of transactions. Based on EIP-4337, Primev supports flexible pre-confirmation and gas fee options, improving transaction processing efficiency and further optimizing user experience.

Puffer Unifi: Puffer Unifi’s Actively Validated Services (AVS) are built on EigenLayer, focusing on addressing the pre-confirmation challenges in the Ethereum ecosystem, especially in the architecture of Based Rollup. Puffer Unifi AVS utilizes EigenLayer’s restake function to support the pre-confirmation participation mechanism, aiming to improve the efficiency of transaction final confirmation. With the development of Based Rollup, the demand for reliable pre-confirmation providers continues to rise, and the goal of Puffer Unifi AVS is to meet this demand. Its ultimate vision is to achieve efficient pre-confirmation without changing the core protocol, thereby promoting the sustainable rise of the Ethereum ecosystem.

Skate: Skate’s pre-confirmation AVS relies on the re-staked assets on EigenLayer to provide economic security for all Cross-Chain Interaction operations. This AVS verifies the bundled data and information required for Cross-Chain Interaction exchange, which is then signed and prepared for execution by Skate’s relay. Through this process, Skate AVS achieves pre-confirmation of data, significantly improving the reliability and efficiency of Cross-Chain Interaction transactions.

Spire: Spire’s Based Stack is a Rollup framework based on Ethereum, specifically designed to support the development of AppChains. This framework allows AppChains to interact directly with Ethereum and customize their sequencing methods, supporting functions such as Cross-Chain Interaction and exchange, while optimizing user experience through pre-confirmation. Based Stack supports multiple execution environments, ensuring sequencing revenue for AppChains and maintaining compatibility with traditional shared sequencers. As an open-source project, Based Stack provides developers with complete tools and resources needed to build and manage AppChains, promoting interoperability between AppChain development and the Ethereum ecosystem.

Taiko Gwyneth: Taiko Gwyneth is a Rollup design being developed by Taiko, classified as a based Rollup architecture. Its goal is to achieve full interoperability with the ETH network while directly managing transaction sequencing on the ETH network. This design fully leverages the security and decentralization features of the ETH network, while providing high throughput and fast final confirmation. Currently, Taiko is running a proposer mechanism to assist block creation and exploring pre-confirmation mechanisms to promote profitable block production within the community. This mechanism aims to optimize block time scheduling and data release efficiency. To achieve these goals, Taiko is collaborating closely with projects such as Nethermind and Gattaca.

L1 validators

Chorus One: Chorus One is a project that provides validation services and infrastructure for blockchain networks, focusing on stake services in multiple protocols to enhance network stability and security. As L1 validators, Chorus One is responsible for validating transactions and generating blocks to improve the reliability and efficiency of the entire network. Recently, Chorus One has shown great interest in pre-confirmation technology, even hosting related events during Devcon 2024.

Research

Nethermind: Nethermind is a project dedicated to developing ETH block clients and tools, with the core goal of improving the performance and stability of the Block network. By introducing advanced optimization techniques, Nethermind actively promotes the increase in transaction throughput of the ETH network. Regarding pre-confirmation technology, Nethermind has been conducting in-depth research and has submitted a proposal to Taiko’s funding program to accelerate the deployment of pre-confirmation functionality on the Taiko Mainnet. This proposal is based on Nethermind’s RFP-001 project and will be implemented in two stages: the first stage will test pre-confirmation functionality among a limited number of authorized participants, and the second stage plans to gradually expand the application scope of pre-confirmation.

Looking to the future

Taiko and many other Layer2 projects based on Rollup are working to optimize the inefficient transaction finalization process in traditional Rollup, regardless of whether they adopt the Based Rollup architecture. By introducing the concept of preconfirmation, these projects are building a transaction confirmation system that allows users to confirm transactions faster and more reliably. Through this approach, these projects are constantly exploring how to improve user experience and build user trust.

Taiko fully utilizes its positioning as a Layer 2 project based on Based Rollup to actively promote the implementation of Based Preconfirmation mechanism, thereby achieving comprehensive interoperability and Decentralization with Ethereum. By providing users with fast and reliable transaction finality guarantee, Taiko significantly improves transaction processing speed and reliability, thus significantly improving user experience.

However, industry experts including Ed Felten of Arbitrum have pointed out that there is still a lack of mature middleware that can fully support pre-confirmation. This indicates that the maturity of pre-confirmation technology and the profit model of pre-confirmers still face challenges, which need to be further addressed.

As described in this article, more and more projects and participants are actively entering the pre-commitment field, each bringing their own unique innovative solutions aimed at improving the performance and efficiency of the Ethereum Layer2. This trend also conforms to the universal law of continuous optimization after the initial implementation of the system concept. I believe that this stage marks an important Node in the evolution of the L2 system, and is an exciting positive development in the current L2 ecosystem.

By improving user convenience through pre-confirmation, it may have a profound impact not only on areas that value speed and efficiency, such as Decentralized Finance and gaming, but also by improving the performance of Ethereum’s Layer2, reconnecting Ethereum with previously fragmented parts of the ecosystem. This performance improvement may enable more Type-1 Ethereum Layer2 projects to integrate with the Depth of Ethereum, unlocking potential that was previously difficult to achieve due to speed limitations. These developments are bound to have a profound impact on the entire Ethereum ecosystem.

Pre-confirmation is still a challenging and bumpy road. However, pioneers like Taiko are rising to the challenge and focusing on providing more convenience for users. Innovation is never easy, but as a supporter of Ethereum and its Layer2 ecosystem, I sincerely admire and encourage their efforts.