Key Takeaways:

• Rollup is a technology that shifts the task of transaction sequencing from Ethereum’s main chain (Layer 1) to Layer 2, where transactions are executed. These transactions are then settled and validated on Layer 1, inheriting Ethereum’s core strengths of security and decentralization while significantly boosting performance on Layer 2.
• Taiko, a Type-1 zkEVM, introduces two innovative frameworks—Based Contestable Rollup (BCR) and Based Booster Rollup (BBR)—that greatly expand the technical benefits of Based Rollup. BCR enhances network security through a multi-proof system and dispute resolution mechanisms, while BBR improves scalability by using sharding for transaction execution and data storage.
• Puffer UniFi, a re-staking protocol built on Eigenlayer, achieves Layer 1-based transaction sequencing, pre-confirmation, and cross-chain Rollup operations, simplifying the development of dedicated chains. These innovations overcome some of the traditional limitations of Based Rollup, ensuring value is returned to Ethereum’s foundational layer.
• Although Based Rollup is still in its early stages and faces technical challenges as well as competition from other sequencing methods, its strengths in security, decentralization, and simplicity position it as a promising direction for the future development of Rollup technology. It has the potential to pave the way for a more decentralized and innovative approach to Rollup design.

As a technical solution that integrates transaction sequencing functionality from L2 into L1, Based Rollup has quickly been adopted by protocols such as Taiko and Puffer Finance since its proposal by Ethereum Foundation researcher Justin Drake in March 2023 and continues to evolve. This article provides a deep dive into its mechanics, unique advantages, and current challenges while exploring its potential to shape the future of blockchain technology.

The Background and Mechanics of Based Rollup Technology

Background: Layer 2, Rollup, and Sequencers

The blockchain community has learned through experience that scaling Ethereum without compromising its security and decentralization is difficult. Developers agree that moving transaction execution to Layer 2 (L2) will relieve the main chain (Layer 1) of high transaction throughput demands. Rollup technology is at the heart of this solution.

In simple terms, Rollup consists of a set of smart contracts on Layer 1 and network nodes on Layer 2. Layer 2 handles transaction execution, while Layer 1 is responsible for settlement, consensus, and data verification, ensuring the security of transactions. This approach significantly reduces the burden on Ethereum’s main chain by offloading many transactions to Layer 2, lowering transaction fees and paving the way for broader blockchain adoption.

Rollups generally fall into two categories: ZK Rollup and Optimistic Rollup.

ZK Rollup verifies off-chain transactions using zero-knowledge proofs, offering high security and privacy but requiring complex deployment and significant hardware resources. In contrast, Optimistic Rollup takes a more optimistic approach, only requiring fraud proof when disputes arise. This makes Optimistic Rollup more cost-effective and efficient in verification but extends dispute resolution and withdrawal times.

In a Rollup system, the sequencer is a crucial component of Layer 2 network nodes, responsible for receiving transaction requests, determining their order of execution, batching them, and passing them to Layer 1 smart contracts. The sequencer plays a key role in improving transaction processing efficiency and user experience.

For instance, in Arbitrum, which uses Optimistic Rollup, transactions are sequenced by the sequencer on a First Come First Serve (FCFS) basis. Once the sequencer confirms the order, it writes the transactions into blocks on Layer 1 (Ethereum mainnet) and provides immediate “pre-confirmation” on Layer 2, allowing users to know their transaction is complete on Layer 2 before it is finalized on Layer 1.

However, if the sequencer fails or crashes before completing this process, the user’s transaction remains on Layer 2 and does not complete on Layer 1. This scenario reveals potential risks such as transaction delays and downtime, which have indeed occurred.

This centralized sequencer design weakens Ethereum’s control over Layer 2 at the settlement level, potentially leading to issues like censorship, errors, MEV extraction, front-running, traffic fragmentation, and even forced shutdowns (as seen in Linea and Blase due to asset theft), which could undermine the stability and security of the entire Rollup system.

In summary, the centralization of sequencers has become a significant concern within the industry due to the excessive power it grants them.

The Technical Breakthrough of Based Rollup

The idea of having Ethereum’s main chain handle sequencing can be traced back to Ethereum’s founder, Vitalik Buterin, in early 2021. He envisioned a highly flexible and scalable blockchain solution, which he called the “Total Anarchy” Rollup, where anyone could scale transactions without restrictions.

Vitalik, along with Justin Drake, who later proposed Based Rollup, suggested achieving this goal through the innovative concept of Proposer-Builder Separation (PBS). In this framework, the role of the block proposer fundamentally changes; instead of maximizing block revenue independently, proposers rely on a market mechanism where multiple participants submit Bundles (or Rollup blocks in the case of Layer 2) to the proposer. The proposer then selects the highest-fee Bundle for submission. This process is similar to the Mempool mechanism at the block level, limiting the autonomy of the proposer and preventing an uncontrolled search for optimal transactions across the network. Instead, proposers screen pre-set blocks from a resource pool.

This mechanism is inspired by urban traffic management strategies, where taxi operation areas are restricted to ensure service providers (proposers) compete within a specific range (market). This reduces inefficiencies caused by disorganized competition, such as neglecting long-distance, low-value rides, and helps transfer block-building decision-making power from Layer 2 to the main chain, leading to a more centralized and orderly block production process.

Currently, most Rollup solutions are still “training wheels”, meaning they have not yet achieved trust minimization or complete trustlessness. To address the efficiency bottlenecks and trust issues in sequencing, verification, and execution in existing Rollup solutions, many have proposed alternatives.

Rollkit sovereign Rollups, for example, introduced the “pure fork-choice rule,” which emphasizes addressing resource pricing or denial-of-service (DOS) vector issues at the execution layer. For instance, if a packet contains an infinite loop (like while(true)) and consumes the maximum amount of gas, Rollkit sovereign Rollups would adopt measures such as burning gas to handle it.

Even Opside proposed an early Native solution, suggesting improvements to Ethereum’s PoS, allowing IDE staking to become validators. These validators would act as sequencers and provers at Layer 3, with sequencers proposing blocks and provers generating zk proofs to validate them. The first prover to submit valid proof would receive the block reward.

Ethereum Foundation researcher Justin Drake is credited with the formal proposal of having the L1 main chain handle sequencing. In a blog post from March 2023 (though the concept may have been introduced earlier), he first fully articulated the prototype of Based Rollup.

“A rollup is said to be based, or L1-sequenced, when its sequencing is driven by the base L1. More concretely, a based rollup is one where the next L1 proposer may, in collaboration with L1 searchers and builders, permissionlessly include the next rollup block as part of the next L1 block.”

This idea aims to overcome the limitations of existing Rollups by outsourcing sequencing rights to Ethereum L1 validators. Because of its close relationship with Layer 1, Justin named it Based Rollups or L1-sequenced Rollups.

This design allows L1 proposers to collaborate with L2 searchers and builders without needing permission, directly including Rollup blocks in L1 blocks. By doing so, Based Rollup centralizes sequencing rights and minimizes trust, as all sequencing operations are carried out by Ethereum L1 validators, who have already undergone rigorous screening and trust verification.

When Justin Drake introduced the Based Rollup concept, he also proposed an innovative idea: reusing Ethereum validators to validate Rollup transactions. The idea is that with the increasing number of Rollups (including general-purpose and application-specific Rollups), there is a need for a universal solution to validate these transactions. By leveraging Ethereum’s existing validator pool, Based Rollup can significantly reduce validation costs and improve validation efficiency.

As Based Rollup solutions have recently been adopted by protocols like Taiko and Puffer Finance, Vitalik, Justin, and others have further elaborated on this technology’s potential, attracting some market attention.

Of course, compared to other scaling solutions, Based Rollup is still in its early exploratory stage. In the following sections, we will discuss its technical details and application scenarios.

Analysis of Based Rollup Technology

Based Rollup technology centers around publishing the state changes of transactions after sequencing to Layer 1 (L1), allowing extraction of MEV (Maximal Extractable Value) from Layer 2 (L2). This approach leverages Ethereum L1 to handle all sequencing and security needs.

Technical Principles

Based Rollups simplify the typical sequencing process by offloading the task to nodes on L1 (like the Ethereum mainnet). These nodes, including L1 searchers or participants, can submit Based Rollups’ transaction data to L1 block producers without permission. Searchers and builders (potentially incentivized by Based Rollup or third parties) are responsible for integrating Rollup transaction data into blocks and submitting them.

By delegating sequencing responsibilities to L1 block producers, Based Rollup’s design becomes more streamlined, enabling L2 to focus solely on execution efficiency. This also allows Based Rollup to inherit L1’s decentralization properties while closely integrating with L1’s economic model, where transaction fees are paid directly to L1 nodes (like Ethereum validators).

In essence, Based Rollup’s consensus, data publication, and settlement layers are all based on Ethereum, while only the execution layer is built on the Rollup network, specifically managing transaction execution and state updates.

Operational Process

The operation of Based Rollup involves L2 searchers collecting transactions into bundles and sending them to L2 block proposers, who then build L2 blocks. Finally, L1 searchers include these L2 blocks within L1 blocks, completing the sequencing and recording process.

• L2 searchers gather transactions: L2 searchers compile L2 transactions into bundles and send them to L2 block proposers.
• L2 block construction: L2 block proposers use these bundles to construct an L2 block.
• L1 includes L2 blocks: L1 searchers then incorporate these L2 blocks (or their bundles) into L1 blocks, finalizing the sequencing and recording process.

Advantages and Challenges of Based Rollup

Advantages of Based Rollup

The key advantage of Based Rollup is its ability to shift transaction sequencing responsibilities to L1, thereby inheriting Ethereum’s full decentralization and liveness while significantly improving L2 performance. This approach simplifies the technology, reduces latency, and lowers operational costs without additional security measures.

Economically, L1 miners benefit from participating in L2 transaction sequencing, which enhances the overall network health and economic security.

Specific advantages include:

1. Liveness: Based Rollup can avoid network interruptions or censorship issues commonly seen in traditional Rollups due to sequencer failures. This ensures fast and efficient transactions without requiring fallback mechanisms.
2. Decentralization: By leveraging the existing infrastructure of L1 searchers, builders, and block producers, Based Rollup maintains a high degree of decentralization, in line with the open and transparent principles of Web3.
3. Simplicity: Based Rollup inherits Ethereum L1’s security and decentralization by reusing its underlying validator stack and Proposer-Builder Separation (PBS) infrastructure, eliminating the need for L2’s proprietary sequencer systems or external consensus mechanisms, thus reducing complexity and security risks.
4. Cost-Effectiveness: With L1 handling sequencing, L2 transaction processing and confirmation become more efficient, without the need for complex infrastructure and energy consumption to handle and verify L2 transactions like in Optimistic Rollup and ZK Rollup, particularly in high-transaction environments.
5. Aligned Economic Incentives: MEV flows to L1, bolstering economic security and reinforcing Ethereum’s value as a settlement layer. Meanwhile, L2 can still generate revenue from congestion fees, maintaining a degree of economic autonomy.
6. Sovereignty: Even though sequencing relies on L1, Based Rollup retains control over governance tokens, fee collection, and the autonomous use of revenues, ensuring its independent role within the ecosystem. L1 also ensures that value flows back to strengthen its foundational layer’s sovereignty, mitigating the risks of fragmentation and inefficiency caused by independent L2 operations.

Challenges of Based Rollup

Inherent Mechanisms and Technical Limitations

While Based Rollup offers significant benefits, it also comes with notable technical and operational limitations that can hinder its wider adoption:

1. Revenue Constraints and MEV Loss: Since sequencing depends on L1, most MEV revenue is directed to L1 validators, limiting Based Rollup’s revenue streams. This could raise concerns about the sustainability and profitability of projects, which is why many L2 and RaaS projects have hesitated to pursue this model due to potential financial drawbacks.
2. Reduced Sequencing Flexibility: Delegating sequencing to L1 reduces the flexibility in transaction sequencing, impacting strategies like First Come First Serve (FCFS). Adding technical solutions to address this issue increases protocol complexity. Additionally, L1 sequencing may prioritize miner profits over the best interests of Based Rollup users.
3. Delayed Transaction Confirmation: Theoretically, Based Rollup’s transaction confirmation is tied to L1’s block time (currently 12 seconds on Ethereum), which may not meet users’ expectations for immediacy. While re-staking mechanisms can offer pre-confirmation, these solutions are still immature and not widely adopted. For example, the original Arbitrum implementation and the first public testnet (Ropsten L2) used this native Rollup sequencing design, but L2’s centralized sequencer later replaced it to meet the demand for faster transactions. Reverting to the original method might be seen as a step backward.
4. Potential Decentralization Issues: Although Based Rollup benefits from L1’s decentralization, the auction mechanism for block rights designed to capture MEV could raise the entry barrier for L1 participation and add complexity.
5. Role Assignment Challenges: Many discussions have overlooked the practical challenges of reassigning roles after Based Rollup replaces the original sequencer design. While MEV flowing to L1 provides economic incentives for validators, integrating Rollup validation into Ethereum’s protocol, establishing fair MEV profit distribution, and managing congestion or consensus issues from multiple searchers submitting transactions simultaneously remain unresolved. Projects like Taiko have progressed in addressing these challenges, which will be discussed later.

External Competition Pressure

Based Rollup also faces competitive pressure from other optimized sequencing solutions. In addition to Based Rollup’s approach of discarding L2’s sequencers, there are many innovative and user-friendly alternatives:

First, minor modifications to proof mechanisms or verification methods, like Polygon’s PoE consensus algorithm, decentralize sequencing at the Rollup network layer.

Second, independent decentralized sequencer architectures, such as Metis, use a pool of sequencers composed of multiple nodes, employing random rotation, staking, PoS consensus for managing multi-signature keys, and validator sampling to achieve decentralized sequencing. Conversely, Espresso offers modular sequencer middleware, providing a shared sequencing service for L2. Flashbots’ SUAVE introduces an EVM-compatible chain dedicated to transaction sequencing via block “bidding.”

Another example is SQUAD, developed by Eigenlayer and AltLayer. SQUAD is designed as an open network for any EigenLayer AVS (Actively Validated Services) operator, requiring minimal LST staking or delegated staking mechanisms to register sequencing requests from Rollups and match them with sequencers.

As a side note, there is some debate in the market suggesting competition between AVS and Based Rollup, but in reality, they don’t directly compete. Based Rollup primarily focuses on block proposal methods, while AVS offers PoS or other consensus-based security for DApps that can’t directly deploy on Ethereum. There’s no technical conflict between the two, and recent developments like Eigenlayer’s re-staking combined with Espresso’s decentralized sequencer could promote Based Rollup adoption by empowering L1 validators to participate in sequencing operations. Ultimately, the choice to use L1 validators as sequencers is up to projects like Espresso, not Eigenlayer.

In conclusion, shifting the role of transaction sequencing from L2 to L1 doesn’t solve all challenges and may introduce new ones. While solutions like Eigenlayer’s re-staking protocol and zero-knowledge proofs (ZKPs) could address some of Based Rollup’s inherent limitations, a fully developed solution has yet to emerge. Conversely, shared sequencers under development by projects like Eigenlayer are gaining traction due to their flexibility and ease of implementation, posing significant competition for Based Rollup. This suggests that Based Rollup may need to adapt by integrating other technologies to better fit its application scenarios.

Based Rollup Use Cases

The concept of Based Rollup has been around for just over a year, representing a refreshed approach to an old idea. As a result, the theory and implementation details are still being refined, and only a few projects are currently building on Based Rollup. Below, we will share three practical examples of how this technology is being used.

Taiko: The First Layer 2 to Deeply Explore and Implement Based Rollup

Taiko is a Layer 2 (L2) that leverages ZK Rollup technology and has developed a Type-1 zkEVM. This zkEVM provides the same opcodes and functionality as Ethereum, ensuring high compatibility with the existing Ethereum ecosystem.

Soon after introducing the Based Rollup concept, Taiko positioned itself as a Based Rollup, prioritizing Ethereum equivalence over the speed/cost of generating ZK proofs. With several technical innovations, Taiko describes itself as a highly configurable, fully open-source, permissionless Rollup that is on par with Ethereum.

Technical Architecture

In a blog post from 2022, Taiko outlined its three main components: the ZK-EVM (for proof generation), the Taiko L2 Rollup Node (for managing the Rollup chain), and the Taiko Protocol (which connects these two components to verify the Rollup protocol).

1.ZK-EVM: Ethereum Mirror

Function: The ZK-EVM is the core computing engine of Taiko, responsible for generating proofs to ensure the accuracy of EVM (Ethereum Virtual Machine) computations on the Rollup. It implements a ZK-EVM that supports all Ethereum opcodes and verifies all computations on the Rollup chain through validity proofs.

Features: The ZK-EVM maintains perfect equivalence with Ethereum’s EVM, allowing developers to seamlessly migrate and deploy existing Ethereum smart contracts and dApps without code changes. This means that all Ethereum and Solidity tools can work seamlessly with Taiko, ensuring continuity and efficiency in the development process.

2.Taiko L2 Rollup Node: Efficient Execution, Secure Verification

Function: The Taiko L2 Rollup Node manages the Rollup chain, retrieving transaction data from Ethereum and executing these transactions on L2. It is based on a forked version of Ethereum’s Geth, using the same hash algorithm, signature scheme, and data structure as Ethereum to ensure compatibility and interoperability.

Features: These nodes manage the state of the Rollup chain and ensure transaction determinism and finality. Through parallel proof generation and decentralized verification mechanisms, Taiko L2 Rollup Node provides efficient and secure transaction processing.

3.Taiko Protocol: Seamless Integration

Function: The Taiko Protocol bridges the ZK-EVM and Taiko L2 Rollup Node, defining and enforcing Rollup rules and participant qualifications, ensuring the network’s security, decentralization, and permissionless nature.

Features: This protocol consists of smart contracts deployed on Ethereum, which serve as the data availability mechanism and verifier for ZK-SNARK proofs. Smart contracts on Taiko L2 handle key protocol functions. The Taiko Protocol ensures that all proposed blocks are deterministic and can be proven parallel, improving transaction processing speed and efficiency.

In summary, Taiko achieves equivalence, compatibility, and scalability with Ethereum through the coordinated operation of these three main components. It enables the seamless migration and deployment of existing Ethereum smart contracts and dApps and provides efficient and secure transaction processing services.

Key Innovations

Taiko’s significant innovations include the BCR framework (Based Contestable Rollup) and the BBR framework (Based Booster Rollup), both of which greatly enhance the technical advantages of Based Rollup. These innovations are discussed in detail below.

BCR (Based Contestable Rollup): Contestable Aggregation

BCR is built on a multi-proof system, incorporating dispute resolution (similar to fraud-proof systems) into the transaction verification process. Multiple layers of competition ensure decentralized generation and verification, enhancing network security.

Workflow
In this system, anyone can become a proposer, suggesting a block construction plan and providing zero-knowledge proofs to ensure transaction accuracy and privacy protection. If validators question the state transition results of a specific block, they can initiate a high-level challenge proof, attempting to correct the L2 block state and make decisions between correct and incorrect paths.

Many studies have overlooked how BCR addresses malicious or hasty competition in this process. In reality, BCR introduces its own proving and cooldown windows, with higher-level proofs having significantly higher validity and dispute margins than lower-level proofs. This steep cost increase effectively deters reckless or malicious challenges.

Simply put, anyone can become a proposer, and submit blocks and zero-knowledge proofs, and validators can challenge the results by submitting challenge proofs. Continuous verification challenges significantly enhance the network’s security, ensuring the fairness and credibility of each block.

Features
Taiko emphasizes flexibility and security in its design while also balancing economic costs.

• Multi-proof system

Taiko’s multi-proof system allows each level to use its proof system. By combining multiple sub-provers to create a more reliable composite prover, costs increase, but security is significantly enhanced. This system can vertically layer and horizontally integrate multiple sub-verifiers.

• Prover availability

Taiko implements dynamic level allocation, randomly assigning the minimum required level for each new block, with the probability of a block being assigned a higher level inversely proportional to its level. When facing capital-intensive attacks, community nodes can collectively resist invalid proofs through dispute margins, maintaining system stability.

• Dynamic configuration adjustments

Taiko’s design is highly adaptable, allowing the system to dynamically adjust the proof requirements of blocks based on changes in high-level proof costs. This flexibility allows the system to gradually transition from OP proofs to ZK proofs, optimizing security and economic incentives.

• Cost vs. security tradeoffs

While ZK-Rollup is secure, its costs can challenge high-transaction volume chains. Taiko’s dispute Rollup serves as a bridge, allowing application chains to start with cost-effective configurations and gradually enhance security, seamlessly integrating with existing architectures.

• Guardian provers

Guardian provers act as a safety net for high-level provers during the system’s early stages, handling errors in the proof system. As the system matures, its role diminishes, providing a critical security layer in the early stages without interfering with transaction sequencing.

BBR (Based Booster Rollup): Scaling with a Boost

BBR marks a significant step forward following the introduction of BCR. This is an out-of-the-box, native L1 scaling method that enables transaction execution and storage sharding. Imagine it like adding extra CPU/SSD power to a developer’s laptop—once a dApp is deployed, it can automatically and rapidly scale across all necessary L2s.

How It Works

Here’s a breakdown of the key implementation details:

• L1CALL and L1DELEGATECALL Precompiles:
• L1CALL allows L2 to read and write L1 state directly.
• L1DELEGATECALL lets L1 smart contracts run on L2 while using L2 state for all storage operations.
• ZK-EVM Coprocessor:
• Using a Zero-Knowledge Ethereum Virtual Machine (ZK-EVM) as a coprocessor, L1 smart contract workloads can be offloaded to L2, while all states remain on L1.
• Only the ZK proof needs verification on L1, with final state updates applied there.

Key Features

• Decentralization and Ethereum Alignment:

BBR inherits the decentralization and simplicity of L1, avoiding the risks of introducing centralized or semi-centralized sequencers.

Automatic Scaling: Deploy a dApp on L1 just once, and it will automatically scale across all L2s without additional setup.

• Efficient Transaction Execution and Storage Sharding:

BBR enhances chain scalability with a dual-layer structure that shards both transaction execution and storage.

• ZK-EVM Coprocessor:

BBR acts as a ZK-EVM coprocessor, offloading L1 smart contract workloads to L2 while keeping all state on L1.

• Reduced Fragmentation:

By enabling atomic cross-rollup transactions across all L2s, BBR addresses the current fragmentation issues faced by Rollups.

Limitations

The official documentation also openly acknowledges the limitations of the BBR framework, summarized as follows:

1. Contract Deployment Limits: With BBR, contracts are only deployable on L1. L2s can inherit L1 smart contracts but cannot deploy new contracts independently, which restricts L2’s ability to scale on its own.
2. Shared Data Expansion Bottleneck: BBR relies heavily on L1’s shared data, limiting data availability expansion. All processes must revert to L1, which can affect overall scalability.
3. Challenges with Parallelization: Not every dApp can easily adapt to BBR’s parallel model, limiting how some smart contracts scale on L2.
4. Strict Node Synchronization Requirements: BBR requires tight synchronization between L1 and L2 nodes, demanding low-latency communication, which increases hardware requirements and operational complexity.
5. Initialization Complexity: L2 contract initialization needs special handling to ensure data consistency, raising development costs and potential security risks.
6. Cost and Data Availability Challenges: While L2 processing costs are convenient, the demand for on-chain data increases; additionally, L2 transactions require extra account nonce management, increasing system complexity.
7. Storage and Computation Trade-off: In the BBR model, computation can be optimized to L2, but state updates still require L1 involvement, making storage-intensive operations costly.

Puffer UniFi: A Restaking-Driven Innovative Based Rollup

Puffer Finance is a liquid staking derivatives (LSD) protocol built on Ethereum’s Eigenlayer restaking protocol. Currently, it ranks third in this sector with a TVL of over $1.7 billion. At the end of June, Puffer Finance announced a partnership with the Ethereum Foundation to jointly develop Based Rollup, and in early July, they launched the corresponding product, Puffer UniFi, in its test version.

Technical Architecture

According to the whitepaper, when users submit Rollup transactions to Puffer validators, these validators ensure that the transaction will be recorded on-chain through pre-commitments, adding conditions to maintain reliability. Ultimately, they submit blocks containing confirmed Rollup transactions to Ethereum L1. The Puffer Sequencer advances the Rollup state, while the pufETH Vault collects transaction fees to reward UniFi users.

1. Users submit their Rollup transactions, which are then processed by Puffer validators. These validators ensure that users know their transactions will be included in the Ethereum L1 state through pre-commitments.
2. Puffer validators restake and apply slashing conditions to ensure reliability, handling Rollup transactions from users and publishing pre-commitments. These validators are prepared to include transactions in L1 blocks.
3. The Preconf Slasher AVS enforces additional slashing conditions on validators to prevent them from breaking pre-commitment promises.
4. Puffer validators submit blocks to Ethereum L1, which include pre-committed, ordered Rollup batches.
5. The Puffer Sequencer Contract accepts batched transactions.
6. The pufETH Vault collects congestion fees and competition fees generated by Rollup transactions. These fees generate returns for pufETH holders and are natively rewarded to UniFi users.

Key Innovations

According to its latest introduction, UniFi draws on Justin Drake’s research insights, with specific key innovations as follows:

• Based Sequencing

UniFi directly utilizes Ethereum’s decentralized validators on L1, allowing transactions to be sequenced in a credibly neutral manner without relying on centralized sequencers. This means L1 validators are responsible for sequencing transactions within the UniFi Rollup.

• Pre-confirmations (Preconfs)

UniFi integrates a pre-confirmation system that provides users with fast and reliable transaction confirmations (approximately 100 milliseconds) before their transactions are finalized on L1. These pre-confirmations are issued by Puffer’s restaking validators, who are incentivized to act correctly or face penalties such as slashing.

(Note): Since Puffer is one of the few staking platforms supporting Native Restaking, a portion of L1 validators can be designated to commit to including Rollup blocks in the L1 blocks they propose in the future. Validators know who will be designated as a proposer at least 32 blocks in advance, ensuring L2 Rollup blocks are included on the mainnet and protected by the mainnet, addressing the L2 transaction delay issue caused by slow L1 block times mentioned earlier.

• Decentralized Sequencer:

The architecture aims to expand from a single centralized sequencer to tens of thousands of decentralized sequencers. This is achieved through the validator set implemented by Puffer, meaning that as the number of validators increases, the network becomes more decentralized.

• Synchronous Composability:

Transactions within UniFi can directly interact with other Rollup-based systems, enabling seamless interactions without the need for bridges. This eliminates delays, extra costs, technical challenges, and security risks associated with using bridges, addressing key issues of fragmentation and inefficiency in the Ethereum ecosystem.

From the above, it’s evident that UniFi leverages Restaking to achieve L1-based sequencing, pre-confirmations, and cross-rollup operations, and facilitates the development and creation of dedicated chains. It effectively addresses many of the limitations and challenges of the original Based Rollup, ensuring that value flows back to Ethereum’s foundational layer.

RISE Chain: A High-Performance L2

RISE Chain is built on the Rust-based Reth node infrastructure, introducing innovative state access architecture, parallel EVM, continuous block execution, and layered Merkle Patricia Tree (MPT). Through ongoing research on RISE DB and interoperability, RISE aims to build a more inclusive and scalable blockchain ecosystem.

According to Justin’s summary, this protocol also follows the Based Rollup technology route, but it is still in the whitepaper stage with no additional information available at this time. Therefore, it is only briefly mentioned here.

In addition, while reviewing related information, I found that several other projects are exploring the application of Based Rollup, but they are all in the early exploration stages and won’t be detailed here.

Conclusion

Based Rollup, as a return-to-roots Ethereum Rollup scaling solution, represents a major shift in how Ethereum L2 scaling is approached by transferring the role of sequencers to L1 management. This design is more efficient and politically aligned, representing a significant evolution in how Ethereum L2s are scaled.

This design isn’t a minor technical tweak but rather allows Rollups to focus on execution, with security needs handled by L1. The consensus, data publishing, and settlement layers are all based on Ethereum, while the execution layer is built on the Rollup network, responsible for processing transactions and state updates.

In practice, Based Rollup pioneers are driving innovation through the solution’s enhanced security, decentralization, and simplified systems. While it’s uncertain whether it will become the ultimate Rollup solution, its importance in diversifying Rollup networks is undeniable, especially in a landscape where centralized or semi-centralized sequencers dominate.

Although Based Rollup faces dual challenges of market and technical validation, resistance from existing interests, and competition from various shared sequencer solutions, it is gaining significant market advantages as projects like Taiko and Puffer Finance continue to innovate.

Looking ahead, Based Rollup, as an innovative route in the Rollup field, not only overcomes traditional challenges of transparency and single points of failure with its native sequencing mechanism but also shows strong potential in the Rollup L2 solutions market. It’s expected to occupy an important position. We look forward to more developers exploring and optimizing Based Rollup in revenue models, sequencing flexibility, user experience, protocol design, and ecosystem collaboration. Based Rollup is poised to overcome existing challenges, achieve broader applications, and drive further development, bringing more innovation and growth opportunities to the Ethereum ecosystem.

Partial References：

https://vitalik.ca/general/2021/01/05/Rollup.html

https://www.nervos.org/knowledge-base/zk_Rollup_vs_optimistic_Rollup

https://docs.arbitrum.io/how-arbitrum-works/sequencer

https://x.com/drakefjustin/status/1798734295332274408

https://abmedia.io/taiko-and-puffers-based-Rollups-will-change-the-landscape-of-ethereum

https://taiko.mirror.xyz/7dfMydX1FqEx9_sOvhRt3V8hJksKSIWjzhCVu7FyMZU

https://taiko.mirror.xyz/VjNjFws6OOVez5YCDMwjy4BUiDqZBHYDvcW4-JZGDkc

https://x.com/jason_chen998/status/1799692331635048697

https://ethresear.ch/t/based-Rollups-superpowers-from-l1-sequencing/15016

https://medium.com/@MTCapital_US/mt-capital-research-decentralized-sequencer-sector-comparative-research-4ca4621e1d8d

https://medium.com/ybbcapital/from-theory-to-practice-can-based-Rollup-achieve-l1-sequencing-driven-Rollup-solution-3dbfc3a45bef

https://vitalik.eth.limo/general/2022/08/04/zkevm.html

https://substack.chainfeeds.xyz/p/based-Rollup

https://medium.com/puffer-fi/get-ready-for-puffer-unifi-charting-new-waters-for-ethereums-ecosystem-e95482708ebb

https://medium.com/search?q=based+Rollup

https://taiko.mirror.xyz/oRy3ZZ_4-6IEQcuLCMMlxvdH6E-T3_H7UwYVzGDsgf4

https://blog.altlayer.io/introducing-restaked-Rollups-ac6a1e89b646

https://www.panewslab.com/zh/articledetails/pylr0ff1.html

https://vitalik.eth.limo/general/2024/06/30/epochslot.html

https://docs.altlayer.io/altlayer-documentation/restaked-Rollups/squad-for-decentralised-sequencing

https://defillama.com/protocol/puffer-finance

https://unifi.puffer.fi/

https://github.com/risechain/whitepaper/blob/main/RISE%20White%20Paper%20-%20Draft%20v0.5.pdf

https://www.panewslab.com/zh/articledetails/84vh6558.html

This article is based on the author’s independent research and analysis, provided for reference only and does not constitute investment advice. Any information mentioned in this article should not be considered as a recommendation or endorsement of any specific project or strategy. The market carries risks, and investments should be made cautiously. Gate.io assumes no responsibility for any consequences arising from the reader’s use of this article.