In-depth Discussion on Based Rollups Solutions and Their Applications in Web3

Recently, Puffer Finance launched an innovative solution called Based Rollups, aimed at providing a more secure and efficient decentralized solution for Rollups, with a particular emphasis on the decentralization of sequencers. This solution seeks to introduce Ethereum mainnet validators, bringing new technological breakthroughs to the entire ecosystem.

As a protocol that supports Ethereum mainnet PoS and Eigenlayer restaking, Puffer Finance demonstrates its strength in technological innovation. The decentralization of the sequencer has always been a focus of the community, as it directly impacts the security of the Rollups system and user experience. Based Rollups achieve decentralization by outsourcing sequencing to Layer 1, which not only reduces centralization risk but also has the potential to significantly lower transaction costs and enhance system activity.

Challenges Facing Rollups

Current ZK or OP Rollups heavily rely on centralized sequencers to determine the order of transactions. This centralized structure brings numerous risks, including potential sequencer failures, decreased user trust, and the resulting MEV issues. To address these risks, many Rollups have introduced an "escape hatch" mechanism that allows users to exit the system when problems arise with the sequencer. However, this approach often increases latency and gas fees and may become a target for MEV extraction. Therefore, there is an urgent need for a Rollups solution that incorporates decentralized sequencers.

How Based Rollups Work

In Based Rollups, Layer 1 is responsible for determining the order of transactions, achieving decentralized sorting. This approach not only inherits the activity and decentralization characteristics of Layer 1 but also eliminates the need for escape hatches, thereby enhancing the security and efficiency of Rollups. Layer 1 validators can collaborate with seekers and block builders to seamlessly include Rollups blocks in the next Layer 1 block.

It is worth noting that Layer 1 validators typically do not directly build Layer 2 blocks. Instead, each Based Rollups block is completed by Layer 2 builders, and this design avoids increasing the workload of Layer 1 validators.

Advantages of Based Rollups

1. Enhancing transaction activity and censorship resistance: Since Based Rollups are operated by Ethereum Layer 1 validators, they inherit Ethereum's censorship resistance, eliminating the need for an escape hatch mechanism, ensuring high transaction activity.

2. Reduce Transaction Costs: Transactions in Based Rollups do not require additional Gas fees and do not need to verify the signatures of centralized sorters, further reducing costs.

3. Simplify system architecture and improve security: Based Rollups only execute transactions off-chain, while sorting, data visibility, and validation occur on Layer 1. This design greatly simplifies the system architecture, eliminating the need for complex signature verification or external PoS consensus.

4. Flexible Governance Model: Although the ordering is delegated to Layer 1, Based Rollups can still implement token governance to collect base fees or choose to operate without tokenization.

Challenges Faced by Based Rollups

Despite the excellent performance of Based Rollups in several areas, they still face some challenges:

1. MEV revenue decreases: Most MEV revenue flows to Layer 1 validators, which may impact the revenue model of Based Rollups.

2. Limited Sorting Flexibility: Delegating sorting to Layer 1 may restrict the implementation of pre-confirmations, impacting user experience.

Innovative Improvements of Puffer Finance

Puffer Finance is committed to combining pre-confirmation mechanisms with Based Rollups through its UniFi architecture, providing fast (100 milliseconds) confirmation times while retaining the advantages of Based Rollups.

Core features of UniFi architecture

• User-submitted Rollups transactions are processed by Puffer validators, providing pre-confirmation guarantees.
• Validators ensure reliability through the re-staking mechanism and are ready to include transactions in Layer 1 blocks.
• Implement a pre-confirmation penalty mechanism to prevent validators from breaching their commitments.
• Puffer validators propose blocks containing the sequence of pre-confirmed Rollups to Ethereum Layer 1.
• Collect transaction fees through PufETH Vault to increase holder returns.

uniETH: An innovation to reduce market risks

uniETH, as a universal Gas token within the UniFi ecosystem, generates rewards through pufETH and is managed by a DAO, aiming to reduce market risks such as lending liquidation risks caused by Ethereum price volatility.

No Gas Trading Scenario

Puffer's Based Rollup users can earn income by locking assets, which creates the possibility for application scenarios that support gas-free transactions, and is expected to have a significant impact in the Web3 space.

Puffer's Based dApp Chain

Puffer provides developers with a Based dApp chain solution, making it as easy to launch a Based dApp chain based on Puffer as it is to deploy a smart contract. This not only inherits the security and decentralization features of Ethereum but also allows developers to obtain the transaction fees of the dApp's Rollups chain without the need to operate a centralized sorter themselves.

Looking to the Future

With the integration of pre-confirmation mechanisms and fast confirmation times, Based Rollups are expected to become the ideal choice for various applications, including GameFi. Puffer Finance's innovations provide a safer and more efficient solution for Rollups, reducing centralization risks while significantly enhancing transaction efficiency and system activity. As technology continues to evolve, we look forward to seeing more innovative applications based on this architecture, driving the Web3 ecosystem towards a more decentralized, efficient, and user-friendly direction.