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A primer on proposer preconfirms

Chorus One
Chorus One
September 9, 2024
5 min read
September 9, 2024
5 min read

In the blockchain industry, where the balance between decentralization and efficiency often teeters on a knife's edge, innovations that address these challenges are paramount. Among these innovations, preconfirmations stand out as a powerful tool designed to enhance transaction speed, security, and reliability. Here, we’ll delve into what preconfirmations (henceforth referred to as “preconfirms” ) are, why they matter, and how they’re set to transform the blockchain landscape.

Preconfirms are not a new concept.

The idea of providing a credible heads-up or confirmation that a transaction has occurred is deeply ingrained in our daily lives. Whether it's receiving an order confirmation from Amazon, verifying a credit card payment, or processing transactions in blockchain networks, this concept is familiar and widely used. In the blockchain world, centralized sequencers like those in Arbitrum function similarly, offering guarantees that your transaction will be included in the block.

However, these guarantees are not without limitations. True finality is only achieved when the transaction is settled on Ethereum. The reliance on centralized sequencers in Layer 2 (L2) networks, which are responsible for verifying, ordering, and batching transactions before they are committed to the main blockchain (Layer 1), presents significant challenges. They can become single points of failure, leading to increased risks of transaction censorship and bottlenecks in the process.

This is where preconfirms come into play. Preconfirms were introduced to address these challenges, providing a more secure and efficient way to ensure transaction integrity in decentralized networks.

Builders, Sequencers, Proposers: Who’s Who

Before jumping into the preconfirms trenches, let’s start by clarifying some key terms that will appear throughout this article (and are essential to the broader topic).

Builders: In the context of Ethereum and PBS, builders are responsible for selecting and ordering transactions in a block. This is a specialized role with the goal of creating blocks with the highest value for the proposer, and builders are also highly centralized entities. Blocks are submited to relays, which act as mediators between builders and proposers.

Proposers: The role of the proposer is to validate the contents of the most valuable block submitted by the block builders, and to propose this block to the network to be included as the new head of the blockchain. In this landscape, proposers are the validators in the Proof-of-Stake consensus protocol, and get rewarded for proposing blocks (a fee gets paid to the builder from the proposer as well).

Sequencers: Sequencers are akin to air traffic controllers, particularly within Layer 2 Rollup networks. They are responsible for coordinating and ordering transactions between the Rollup and the Layer 1 chain (such as Ethereum) for final settlement. Because they have exclusive rights to the ordering of transactions, they also benefit from transaction fees and MEV.  Usually, they have ZK or optimistic security guarantees.

The solution: Preconfirmations

Now that we’ve set the stage, let’s dive into the concept of preconfirms.

At their core, preconfirms can provide two guarantees:

  • Inclusion Guarantees: Assurance that a transaction will be included in the next block.
  • Execution Guarantees: Assurance that a transaction will successfully execute, especially in competitive environments where multiple users are vying for the same resources, such as in trading scenarios.

These two guarantees matter. Particularly for:

Speed: Traditional block confirmations can take several seconds, whereas preconfirms can provide a credible assurance much faster. This speed is particularly beneficial for "based rollups" that batch user transactions and commit them to Ethereum, resulting in faster transaction confirmations.  @taikoxyz and @Spire_Labs are teams building based rollups.

Censorship Resistance: A proposer can request the inclusion of a transaction that some builders might not want to include.

Trading Use Cases: Traders may preconfirm transactions if it allows them to execute ahead of competitors.

Preconfirmations on Ethereum: A Closer Look

Now, zooming in on Ethereum.

The following chart describes the overall Proposer-builder separation and transaction pipeline on Ethereum.

Within the Ethereum network, preconfirms can be implemented in three distinct scenarios, depending on the specific needs of the network:

  1. Builder issued Preconfirms

Builder preconfirms suit the trading use case best. These offer low-latency guarantees and are effective in networks where a small number of builders dominate block-building. Builders can opt into proposer support, which enhances the strength of the guarantee.

However, the dominance of a few builders means that onboarding these few is key. However, since there are only a few dominant builders, successfully onboarding these players is key.

  1. Proposer issued Preconfirms.

Proposers provide stronger inclusion guarantees than builders because they have the final say on which transactions are included in the block. This method is particularly useful for "based rollups," where Layer 1 validators act as sequencers.

Yet, maintaining strong guarantees are key challenges for proposer preconfirms.

The question of which solution will ultimately win remains uncertain, as multiple factors will play a crucial role in determining the outcome. We can speculate on the success of builder opt-ins for builder preconfirms, the growing traction of based rollups, and the effectiveness of proposer declaration implementations. The balance between user demand for inclusion versus execution guarantees will also be pivotal. Furthermore, the introduction of multiple concurrent proposers on the Ethereum roadmap could significantly impact the direction of transaction confirmation solutions. Ultimately, the interplay of these elements will shape the future landscape of blockchain transaction processing.

Commit-Boost

Commit-boost is a mev-boost like sidecar for preconfirms.

Commit-boost facilitates communication between builders and proposers, enhancing the preconfirmation process. It’s designed to replace the existing MEV-boost infrastructure, addressing performance issues and extending its capabilities to include preconfirms.

Currently in testnet, commit-boost is being developed by a non-ventured-backed neutral software for Ethereum with the ambition of fully integrating preconfirms into its framework. Chorus One is currently running commit-boost on Testnet.  

Recap - The preconfirmation design space
  1. Who chooses which transactions to preconfirm.
    1. This could be the builder, the proposer, or a sophisticated third party (“a gateway”) chosen by the proposer.
  2. Where in the block the preconfirmed transactions are included.
    1. Granular control over placement can be interesting for traders even without execution preconfs.
  3. Whether only inclusion or additionally execution is guaranteed.
    1. Without an execution guarantee, an included transaction could still fail, e.g. if it tries to trade on an opportunity that has disappeared.
  4. How and what amount of collateral the builder or proposer puts up
    1. Preconfers must be disincentivized from reneging on their promised preconfs for these to be credible.
    2. E.g. This could be a Symbiotic or Eigenlayer service, and proposed collateral requirements range from 1 ETH to 1000 ETH.

Final Word

Chorus One has been deeply involved with preconfirms from the very beginning, pioneering some of the first-ever preconfirms using Bolt during the ZuBerlin and Helder testnets. We’re fully immersed in optimizing the Proposer-Builder Separation (PBS) pipeline and are excited about the major developments currently unfolding in this space. Stay tuned for an upcoming special episode of the Chorus One Podcast, where we’ll dive more into this topic.

If you’re interested in learning more, feel free to reach out to us at [email protected].

About Chorus One

Chorus One is one of the largest institutional staking providers globally, operating infrastructure for over 60 Proof-of-Stake (PoS) networks, including Ethereum, Cosmos, Solana, Avalanche, Near, and others. Since 2018, we have been at the forefront of the PoS industry, offering easy-to-use, enterprise-grade staking solutions, conducting industry-leading research, and investing in innovative protocols through Chorus One Ventures. As an ISO 27001 certified provider, Chorus One also offers slashing and double-signing insurance to its institutional clients. For more information, visit chorus.one or follow us on LinkedIn, X (formerly Twitter), and Telegram.