Using Taiko as an Example to Explain the Preconfirmation Concept: How to Make Ethereum Transactions More Efficient?

Original Article Title: 「Preconfirmation (feat. Taiko): Make Ethereum Fast for the First Time!」

Original Article Author: Ingeun Kim : : FP

This article starts from the limitations of the current L2 ecosystem and, through a specific analysis of projects like Taiko, demonstrates how the innovative concept of Preconfirmation optimizes the transaction confirmation process to improve user experience. It also reveals the challenges that the current Preconfirmation technology still needs to overcome in its development, including the dual challenge of technical refinement and ecosystem sustainability.

Key Insights

Taiko is a Layer2 network based on Based Rollup, aiming to achieve full interoperability with Ethereum while advancing the decentralization of the Sequencer. To address the latency issue in the Rollup mechanism regarding final transaction confirmation, Taiko introduces the concept of "Preconfirmation." By proactively assuring users of transaction inclusion and order, Preconfirmation effectively alleviates the inefficiencies in the transaction confirmation process of Rollup, significantly enhancing user experience.

In the Based Preconfirmation model, L1 validators provide users with a guarantee of transaction outcomes. Preconfirmers need to stake collateral and adhere to a Slashing mechanism to ensure system reliability. L2 projects like Taiko establish reliable transaction finality by introducing the Preconfirmation mechanism, creating a more convenient operational environment for services like DeFi that require real-time confirmation.

Currently, multiple projects are involved in the development of the Preconfirmation ecosystem. This technological advancement is expected to enhance the efficiency of the Ethereum L2 ecosystem, strengthen interoperability with Ethereum, and drive further expansion of the entire ecosystem.

Taiko is steadily progressing toward its ultimate goal as an Ethereum Layer2 solution. To achieve this goal, Taiko prioritizes full interoperability with Ethereum, a decentralized Sequencer, and support for developers. It is worth noting that through the architecture of Based Rollup, Taiko has achieved full interoperability with Ethereum while allowing anyone to participate as a Sequencer, thus decentralizing the Sequencer. However, despite the advantages of the Based Rollup model, it still faces some inherent inefficiencies in its structure.

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

Current L2 Efficiency Issue

With the expansion of the L2 ecosystem, numerous projects have emerged, bringing many new concepts and technology stacks. However, despite these significant advances, L2 still faces some efficiency issues that need to be urgently addressed, especially in key areas affecting user experience, making efficiency enhancement particularly important.

Rollup's Inherent Limitation: Inefficient Transaction Finality Confirmation Process

L2 has achieved 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 perform transaction ordering and execution, all other processes still need to wait for L1's final confirmation.

This architecture ensures security and data immutability by directly leveraging L1's block generation and data availability. However, relying on L1 for final confirmation results in slow transaction processing speed, limited real-time confirmation capabilities, and from a user's perspective, it is difficult to meet real-time needs.

Furthermore, many L2 sequencers and validator nodes are currently centralized. This centralization leads to inefficiencies, such as longer transaction confirmation times and potential operational interruptions, affecting the transaction processing efficiency of some Rollups, causing confirmation delays.

Introduction of the Preconfirmation Concept

The introduction of the Preconfirmation concept aims to address the inefficiency of transaction final confirmation in the L2 network. Preconfirmation allows users to receive transaction confirmations more quickly, thus alleviating the common delays and inefficiencies in the Rollup mechanism.

What Issues Does Preconfirmation Aim to Solve?

In the Rollup mechanism, there is always an efficiency issue with the confirmation process after users submit transactions to L2. As centralized L2 sequencers cannot accurately guarantee when transactions will be confirmed on L1, users are often uncertain about the order and outcome of transactions. For example, users may need to wait a long time for transactions to be included on L1, and if the transaction order is incorrect or the result is not ideal, it may lead to financial losses from executed transactions.

In a highly volatile market environment, the issues of delay and transaction reordering become more prominent as users rely on arbitrage and DeFi services. In these circumstances, transaction delays or reordering can directly result in missed opportunities. Even regular users conducting transactions may lack confidence in the finality and order of transactions on L1, leading to doubts about the reliability and usability of the blockchain.

Therefore, the design goal of preconfirmation is to address these shortcomings, particularly providing a more convenient and reliable transaction experience for users most impacted by Rollup inefficiencies.

How does Preconfirmation address these issues?

Preconfirmation resolves these issues by providing users with transaction inclusivity, ordering, and execution guarantees. It offers users 'soft confirms' through a centralized L2 sequencer, issuing preconfirmation certificates to ensure transactions will ultimately be included on L1.

The primary advantage of soft confirms is the enhancement of user experience. Users receive a confirmation certificate immediately after submitting a transaction, ensuring the transaction is included on L1 in the expected order, reducing uncertainties, especially in fast-paced trades like arbitrage. Furthermore, preconfirmation enhances user trust in the L2 system. As user confidence in secure transaction processing grows, overall L2 ecosystem adoption rates increase. Thus, preconfirmation plays a crucial role in improving Rollup efficiency and convenience.

Is Preconfirmation the ultimate solution?

While soft confirms from a centralized sequencer can enhance user experience through anticipated ordering and outcomes, it relies on trust in the sequencer. Without legal or technical enforcement, users can only rely on the sequencer's reliability. This reliance introduces a potential risk where transactions may not be included in the correct order or may not be included on L1 at all, failing to provide the stable assurance users expect.

Interpreting the Concept and Practice of Based Preconfirmation Using Taiko as an Example

Taiko has devoted significant effort to the implementation of preconfirmation as this approach aligns closely with the core features of Based Rollup. If Based Preconfirmation can be successfully integrated into Taiko's framework, it can significantly reduce transaction finality delays and enhance user experience. Moreover, this improvement will activate various previously restricted services, enabling them to operate efficiently on the Taiko network.

Before delving into a deeper understanding of Based Preconfirmation, it is necessary to first review some key features of Taiko to better comprehend the applicability and advantages of this approach.

Taiko Case Study

Taiko has fully demonstrated the core features of Based Rollup. It has not only achieved full interoperability with the Ethereum infrastructure but has also been committed to aligning with Ethereum's security mechanisms. Taiko adopts the architecture of Based Rollup, which means it does not rely on a centralized sequencer but rather relies on Ethereum's validators acting as sequencers, responsible for transaction and block ordering.

In other words, Taiko's sequencers are of the same type as Ethereum's block proposers. This design gives them special responsibilities and incentive mechanisms, such as maximizing MEV rewards and other benefits of sequencer identity. Therefore, when issues arise in Taiko's L2 sequencing process, these sequencers naturally assume corresponding responsibilities due to their vested interests in the Ethereum ecosystem. This mechanism sets Taiko apart from other Ethereum L2 projects in terms of operational accountability.

Furthermore, it is noteworthy that Taiko's Based Rollup model is designed as a "Based Contestable Rollup (BCR)," a structure aimed at incentivizing healthy competition. Through its open and permissionless design, Taiko ensures the decentralization of the system, allowing anyone to participate, thereby making the system more fair and transparent.

Based Rollup-Based Preconfirmation

So, what does the preconfirmation model designed specifically for Based Rollup look like? The answer is "Based Preconfirmation." This model aims to replace traditional soft confirmation mechanisms with direct verifications on L1 through preconfirmation.

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

Justin Drake first introduced the concept of Based Preconfirmation and proposed a specific role called "Preconfer," which can provide users with signature guarantees, clarifying transaction order and execution status. To ensure the reliability of commitments, each preconfirmer must stake a certain amount of collateral. If they fail to fulfill their commitments regarding transaction order or execution status, they will face penalties under the Slashing mechanism, resulting in a partial or complete loss of collateral.

The Slashing mechanism has been widely applied in Ethereum's PoS staking to effectively deter malicious behavior. This mechanism not only strengthens the responsibilities of validators but also establishes a certain level of trust between users and validators.

Two scenarios lead to a validator being subject to Slashing penalties:

1. Liveness Faults: If a validator fails, for any reason, to include a user's pre-confirmation transaction on-chain, a liveness fault occurs. Since liveness faults are not always intentional, the penalties are relatively mild. Such faults may stem from network issues or interruptions in the L1 or L2 blockchain, rendering transactions unable to be correctly included on-chain. To protect honest validators from undue penalties, the penalty amount for liveness faults is usually determined through user-validator negotiation.

2. Safety Faults: If a pre-confirmed transaction is included on-chain but the outcome does not align with the user's initial request, a safety fault occurs. This inconsistency is entirely the validator's responsibility, hence safety fault penalties are typically more severe. The validator's stake will be fully confiscated, regardless of whether the issue was intentional.

To become a validator in the Based Preconfirmation model, a node (usually an L1 block proposer) must accept these Slashing mechanism conditions and stake the required collateral. Once approved, the validator can then provide services to users and generate income by charging service fees.

This fee model offers significant convenience to users, enabling them to bypass the inherent delay in Rollup transaction finality. For instance, after a user submits a pre-confirmation transaction through their personal wallet, they can promptly receive a confirmation proof from the validator.

By participating as validators in Based Preconfirmation, individuals not only earn additional income through fee collection but also help optimize the transaction confirmation process in Rollup. This model not only enhances user experience but also provides a reliable and efficient transaction finality solution for the entire L2 ecosystem, further enhancing its attractiveness and utility.

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

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

For example, when a user submits a preconfirmation transaction on an L2 blockchain through a personal wallet, a standard transaction may require final confirmation, while the user requesting preconfirmation can immediately obtain assurance from the prevalidator, completing the transaction without delay. At this point, the user may even see a green checkmark in the wallet interface, clearly indicating a successful transaction.

Take DeFi services as another example. When a user performs a token swap on an L2 DeFi platform, preconfirmation can provide additional security for the related transaction. Typically, the transaction's quoted exchange rate or fee may be inconsistent with the actual completed transaction result due to delays. However, through preconfirmation, users can enjoy a fast and efficient transaction finalization process, reducing the discrepancy between expected conditions and actual results, thereby obtaining a more reliable service experience.

These use cases not only allow developers to provide more accurate services but also bring a smoother and more convenient user experience. This dynamic further supports the expansion of the L2 ecosystem while also contributing to the growth of the broader L1 ecosystem. Additionally, for the Sequencer of Based Rollup, the additional revenue brought by preconfirmation provides a significant profitable model. This design effectively addresses some of the traditional weaknesses of Based Rollup, making it an ideal choice for the Sequencer, combining reliability and attractiveness.

What are the Challenges of Based Preconfirmation?

Based Preconfirmation is still a widely studied area in Layer2 projects, represented by Taiko-driven Rollups. Although this mechanism offers a clear solution to enhance L2 performance and scalability while maintaining decentralization, it still faces some challenges that need to be addressed for wider adoption in practical applications.

First, when submitting transactions to the blockchain in Preconfer, users may not have an absolute guarantee of transaction inclusivity. Although prevalidators provide collateral to guarantee transactions, this mechanism still does not completely solve the problem of transactions not being included due to external interruptions. Especially when the transaction value exceeds the prevalidator's collateral amount, prevalidators may abuse their authority, selectively including or excluding certain transactions, posing potential risks.

Another significant challenge is the profit model based on preconfirmation. The primary source of income for prevalidators is the preconfirmation fees paid by users. However, if the number of prevalidators is insufficient or participation is low, it may lead to market centralization with monopolistic tendencies. In such cases, preconfirmation fees may be artificially raised, increasing the cost for users to conduct fast and efficient transactions, thus threatening the healthy development of the preconfirmation ecosystem.

It is worth noting that the concept of Based Preconfirmation is relatively new, having been proposed only about a year ago. To make it a "key tool" for maximizing Rollup-driven L2 scalability solutions' speed and efficiency, it will still take some time for practical implementation and refinement. However, with Rollup firmly established as a core component of Ethereum scalability, further exploration of preconfirmation to enhance performance marks an important step in L2 technology development.

In particular, Taiko has made significant progress in driving the implementation of Based Preconfirmation. At the same time, Taiko has collaborated with various partners such as Taiko Gwyneth, Nethermind, Chainbound, Limechain, Primev, and Espresso to jointly explore and develop applications for Based Preconfirmation. These collaborations aim to further advance the L2 ecosystem, with more details on this topic to be discussed in subsequent chapters.

Preconfirmation Ecosystem Landscape: Process Diagram Interpretation and Project Exploration

In this chapter, we will explore which projects are actively researching and promoting the development of preconfirmation technology in the Rollup-driven L2 ecosystem. As the ecosystem is still in its early stages of development, we will use a process diagram to more intuitively demonstrate and understand the specific preconfirmation process.

Preconfirmation Process Diagram

Preconfirmation is a complex process that requires close collaboration between L1 and L2, involving multiple roles, each with specific responsibilities. To facilitate a more intuitive understanding of this process, I have created a process diagram for a brief overview. It is important to note that this diagram aims to help explain the overall logic and therefore does not strictly differentiate between the distinct characteristics of Rollup and Based Rollup but focuses on the generic process at a fundamental level.

Before delving into the specific steps of the process diagram, let us first understand the various roles involved in the preconfirmation process and their functions:

User: An individual user of the L1 or L2 network responsible for creating and submitting transactions. If a user wishes to receive preconfirmation assurance, they will complete the transaction and send it to the preconferrer.

Preconferrer: In the preconfirmation process, the preconferrer is responsible for reviewing and validating transactions' validity, providing preconfirmation assurance to users. Through preconfirmation, users can quickly obtain transaction status assurance before final settlement. If nodes do not have preconfirmation eligibility, they act as Non-Preconf Actors, primarily handling regular transactions rather than preconfirmed transactions, similar to standard validation nodes.

L1 Validator: Responsible for providing final validation of transactions and blocks on the L1 network. Once the Preconfirmers submit transaction data, the L1 Validator verifies it and records the final data on the L1 blockchain, ensuring transaction integrity and compliance with consensus rules.

Preconfirmation Challenge Manager: When there is a dispute or issue during the preconfirmation process, this role is responsible for investigating the problem and taking appropriate action to resolve the dispute. This role plays a crucial role in maintaining the fairness and reliability of the preconfirmation process.

Now, let's walk through the preconfirmation process in sequence as outlined in the process diagram:

1. The user sends a transaction request to a Preconfirmer within the preconfirmation participants to initiate the preconfirmation process.

2. The Preconfirmer reviews the transaction and sends a preconfirmation receipt, committing to the user that the transaction will be included in an L1 block, providing the user with initial finality assurance.

3. The Preconfirmer submits the transaction data that needs to be included in the L1 block to the L1 Validator. This data could be a single transaction or aggregated data processed by an L2 sequencer.

4. The L1 Validator validates the submitted transaction data or aggregated data and records it in the L1 block, ensuring its compliance with the blockchain's consensus rules.

5. After a period of time, the L1 block containing the transaction data or aggregated data achieves finality, and the transaction is formally confirmed.

6. Users can check the final outcome of the transaction through an L1 node and, if necessary, raise any potential preconfirmation disputes or challenges using relevant information.

7. If a transaction is found to have not been correctly included on L1 as promised, the Preconfirmer will face penalties from the Preconfirmation Challenge Manager, such as being slashed on their bond or having their staked assets frozen.

Exploration of Related Projects

The following will delve into the key projects actively involved in the preconfirmation ecosystem and their relevant roles in the process. While these projects hold specific roles in the process diagram, their actual responsibilities may vary slightly. Therefore, this overview aims to provide foundational understanding and serve as general guidance. To maintain clarity, the projects within each category are listed alphabetically.

Preconfer Validators

Astria: Astria aims to replace centralized sequencers with a decentralized sequencer network and support multiple Rollups sharing this network. This design provides Rollups with stronger censorship resistance, faster block finality, and seamless cross-Rollup interaction. To achieve fast block finality, Astria introduces a preconfirmation feature that enables Rollups to provide rapid transaction confirmation and enhance censorship resistance, significantly improving user experience.

Bolt by Chainbound: Bolt is a preconfirmation protocol developed by Chainbound to offer Ethereum users near-instant transaction confirmation services. Its operation is based on a trustless participation mechanism and economic collateral, while remaining compatible with the existing MEV-Boost PBS pipeline, creating new revenue opportunities for proposers. Bolt's core functionality is L1 preconfirmation, providing immediate finality for basic transactions (such as transfers and approvals), thus enhancing user experience. By shifting the responsibility for including transactions from centralized block producers to proposers, Bolt enhances the system's censorship resistance. Additionally, the proposer collateral registration mechanism ensures a trustless environment, supporting various types of smart contracts flexibly.

Espresso System: The Espresso System is a protocol dedicated to enhancing blockchain ecosystem interoperability. It adopts the HotShot Byzantine Fault Tolerance (BFT) consensus protocol to achieve transaction ordering and data fast finality across multiple chains. The Espresso System consists of the Espresso Network and Espresso Marketplace, which work together to provide rapid transaction finality and efficient interoperability, aiming to improve the scalability and security of the blockchain ecosystem.

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

Luban: Luban focuses on developing a decentralized sequencing layer to connect transaction data between the Ethereum network and Rollups. This sequencing layer is designed as a decentralized system that separates proposal and execution roles. Luban's pre-confirmation feature significantly enhances transaction reliability by ensuring transaction executability before inclusion in the Ethereum network, while also helping optimize transaction fees, Gas prices, and MEV among other key factors.

Primev: Primev is developing a proposer network integrated with MEV, combining pre-confirmation with MEV capabilities to build an efficient and reliable peer-to-peer network. This network records commitments to Ethereum transaction execution and incentivizes proposers through a reward or penalty mechanism. Primev allows MEV participants to set specific execution conditions for their transactions, while block producers and validators can commit to meeting these conditions, ensuring transaction pre-confirmation. Based on EIP-4337, Primev supports flexible pre-confirmation and Gas fee options, enhancing transaction processing efficiency and further optimizing user experience.

Puffer Unifi: Puffer Unifi's Actively Validated Services (AVS) are built on EigenLayer and focus on addressing pre-confirmation challenges in the Ethereum ecosystem, particularly in the context of Based Rollup architecture. Puffer Unifi AVS leverages EigenLayer's re-staking feature to support the pre-confirmation participation mechanism, aiming to enhance the efficiency of transaction finality. As Based Rollup evolves, the demand for reliable pre-confirmation providers continues to grow, and Puffer Unifi AVS aims to meet this demand. Its ultimate vision is to achieve efficient pre-confirmation without altering the core protocol, thereby driving sustainable growth in the Ethereum ecosystem.

Skate: Skate's pre-confirmation AVS relies on re-staked assets on EigenLayer to provide economic security guarantees for all cross-chain operations. This AVS validates the bundling data and information required for cross-chain transactions, which are then signed and prepared for execution by Skate's relayers. Through this process, Skate AVS achieves data pre-confirmation, significantly enhancing the reliability and efficiency of cross-chain transactions.

Spire: Spire's Based Stack is a Based Ethereum Rollup framework designed to support the development of App Chains by developers. This framework allows App Chains to interact directly with Ethereum, customize their sequencing methods, support cross-chain exchanges, and optimize user experience through pre-confirmation. Based Stack supports various execution environments, ensures the sequencing revenue of App Chains, and maintains compatibility with traditional shared sequencers. As an open-source project, Based Stack provides developers with comprehensive tools and resources to build and manage App Chains, thereby promoting App Chain development and interoperability within 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 Ethereum while managing transaction sequencing directly on Ethereum. This design leverages Ethereum's security and decentralization features while providing high throughput and fast finality. Currently, Taiko is running a proposer mechanism to assist in block creation and exploring a preconfirmation mechanism to facilitate profitable block production within the community. This mechanism aims to optimize block time scheduling and data publishing efficiency. To achieve these goals, Taiko is deeply collaborating with projects like Nethermind and Gattaca.

L1 Validator

Chorus One: Chorus One is a project that provides validation services and infrastructure for blockchain networks, focusing on staking services across multiple protocols to enhance network stability and security. As an L1 validator, Chorus One's role is to validate transactions and generate blocks, thereby improving the overall network's reliability and efficiency. Recently, Chorus One has shown great interest in preconfirmation technology, even hosting related sessions during Devcon 2024.

Research

Nethermind: Nethermind is a project dedicated to developing Ethereum clients and tools, with a core focus on improving the performance and stability of blockchain networks. By introducing advanced optimization techniques, Nethermind actively drives the enhancement of Ethereum network transaction throughput. Regarding preconfirmation technology, Nethermind has been conducting in-depth research and has submitted a proposal to Taiko's grant program to expedite the deployment of preconfirmation on the Taiko mainnet. This proposal is based on Nethermind's RFP-001 project and will be implemented in two phases: the first phase will test preconfirmation functionality with a limited set of authorized participants, and the second phase plans to gradually expand the application scope of preconfirmation.

Future Outlook

Taiko and many Based Rollup Layer2 projects, whether adopting a Based Rollup architecture or not, are striving to optimize the inefficient transaction finality process in traditional Rollups. By introducing the concept of preconfirmation, these projects are building a transaction confirmation system that allows users to confirm transactions more quickly and reliably. Through this approach, these projects continue to explore how to enhance user experience and build user trust.

Taiko has fully leveraged its positioning as a Based Rollup Layer 2 project, actively promoting the implementation of Based Preconfirmation mechanism, thereby achieving full interoperability and decentralization with Ethereum. Taiko has significantly improved transaction processing speed and reliability by providing users with fast and reliable transaction finality guarantee, thus significantly enhancing the user experience.

However, multiple industry experts, including Arbitrum's Ed Felten, have pointed out that there is still a lack of mature middleware that can fully support preconfirmation. This indicates that the maturity of preconfirmation technology and the profit model of preconfirmers still face challenges that urgently need to be addressed.

As described in this article, an increasing number of projects and participants are actively entering the preconfirmation field, each bringing their unique innovative solutions aimed at enhancing the performance and efficiency of the Ethereum Layer 2. This trend also aligns with the general rule that system concepts continue to improve after initial implementation. I believe this stage marks an important milestone in the evolution of L2 systems, and is an exciting positive development in the current L2 ecosystem.

By improving user convenience through preconfirmation, it may not only have a profound impact on areas such as DeFi and gaming that prioritize speed and efficiency but also may reconnect Ethereum with its previously fragmented ecosystem by enhancing the performance of Ethereum Layer 2. This performance enhancement may enable more Type-1 Ethereum Layer 2 projects to achieve deep integration with Ethereum, unlocking the potential that was previously difficult to obtain due to speed limitations. These advancements are bound to have a profound impact on the entire Ethereum ecosystem.

Preconfirmation remains a challenging and rugged path. However, pioneers like Taiko are stepping up, focusing on providing more convenience to users. Innovation has never been easy, but as a supporter of Ethereum and its Layer 2 ecosystem, I sincerely salute and encourage their efforts.

This article is contributed content and does not represent the views of BlockBeats.