Author: Roland Roventa
Trump’s victory has set off a wave of DeFi resurgence, making Ethereum (which accounts for 63% of the total locked DeFi volume in the world) likely to break through with this momentum. Since the results of the US presidential election were announced, the Ethereum ecosystem has continued to perform beyond expectations.
However, Ethereum’s rollup-based scaling path, while critical to scaling, faces a significant challenge: fragmentation. The current rollup ecosystem is in a winner-takes-all situation, resulting in liquidity, user attention, and user communities being scattered across isolated L2 chains. To fully tap the potential of the resurgence of DeFi, Ethereum must resolve these divisive dynamics. Ethereum needs to resolve the current fragmentation and build a more unified and open network.
Bridging the Gap: Solving Ethereum’s Fragmentation and Liquidity Challenges
Puffer Finance’s innovative solution, UniFi, directly addresses Ethereum’s fragmentation challenge. We believe that once the market recognizes that Puffer is not just another Liquid Heavy Staking Token (LRT), but an innovative infrastructure solution, its performance will exceed expectations.
Puffer’s Past : Puffer was originally a leading LRT protocol focused on providing decentralized staking solutions.
Puffer's current situation : Puffer has evolved into a unified solution centered on Ethereum. Puffer has grown from the first native liquid heavy pledge protocol to a comprehensive Ethereum integrated expansion ecosystem, consisting of the following three core components:
1. Decentralized Liquid Restaking Protocol (LRT)
Puffer’s flagship product has anti-slashing features, provides high yield and security, and supports decentralized re-staking in the Ethereum ecosystem.
2. UniFi Based Rollup Stack
An L2 based serialization solution that enables seamless interaction between L2<>L2 and L2<>L1, supporting atomic composability for efficient cross-chain operations.
3. UniFi Pre-Confirmed AVS
The industry’s first pre-confirmed AVS provides near-instant transaction finality for L1 and L2 transactions, significantly improving the speed and reliability of the Ethereum network.
Through UniFi’s rollup-based stack, Puffer Finance transforms Ethereum’s fragmentation into a positive-sum ecosystem.
Puffer UniFi Based Roll-up Stack – What is it and how does it work?
What are based roll-ups?
Based rollups is an advanced scaling method that integrates directly with Ethereum's shared sorter without relying on other L2 commonly used centralized sorters (such as optimistic or zero-knowledge proof L2). Its core idea was first proposed by Justin Drake in a research article in March 2023:
“Based rollup, or L1-ordered rollup, means its ordering is driven by the underlying L1. Specifically, based rollup means that the next L1 proposer can cooperate with L1 searchers and builders to include the next rollup block in the next L1 block without permission.” - Justin Drake
For those with a non-technical background, the above description may seem complicated. In short, the main chain-based aggregation verifies transactions directly on L1, giving full play to the efficiency of Ethereum's existing mechanisms. In contrast, other common aggregation schemes (such as optimistic & ZK) usually verify transactions on L2 first and then submit them to L1.
Through based sorting (using Ethereum L1 validators for sorting), the following advantages can be obtained:
● Inherits the activity and decentralization characteristics of the Ethereum network: ensures reliability and is not affected by single point failures.
● Simplified infrastructure: No need to run a separate sequencer.
● Faster execution: Faster transaction finality through pre-confirmation (more on this later).
● Aligned with L1 economic interests: creates new income opportunities for existing validators through non-expropriate MEV (maximum extractable value).
● Reduce operating costs: because transaction sorting is handled by L1.
Based Rollups > Optimistic Rollups
tl'dr:
characteristic | Based Rollups | Optimistic Rollups |
Sorting mechanism | Managed by Ethereum’s decentralized L1 validators | Centralized sorter |
Confirmation time | There is a pre-confirmation mechanism, and the confirmation is almost instant (within 100 milliseconds) | Longer, due to delays in fraud proofs |
Security Model | Inheriting the security and decentralization of Ethereum L1 | Assumed validity; reliance on fraud proofs |
Interoperability | Synchronous composability across L1 and Rollup | Limited, usually asynchronous due to validation |
Composability | Liquidity unification between L1 and Rollup | Liquidity dispersion between Rollups |
User Experience | Seamless experience, speed up with pre-confirmation | Slower, affected by fraud proof verification |
By optimizing the underlying transaction sorting process, costs can be reduced and speeds can be increased while retaining the inherent security and decentralization of the Ethereum network.
Puffer is Based
Puffer UniFi is an Ethereum-based rollup that enables the creation of application chains through its technology stack.
It solves the problem of Ethereum liquidity fragmentation by achieving synchronous composability. Transactions on UniFi can interact directly with other based rollups without bridging, creating a unified liquidity and application layer. Developers can easily launch their own application chains, capture transaction fees and take advantage of shared liquidity.
UniFi aims to bring atomic composability to the Ethereum chain – redefining what’s possible with on-chain interactions. Through atomic composability, UniFi will allow Layer 1 and Layer 2 to interact smoothly and integrated within a single Ethereum block. For example, a user or protocol can deposit assets from L1 to UniFi, perform complex operations such as swaps or liquidity mining, and then withdraw assets back to L1 within the same 12-second Ethereum block. This is not only fast, but also a breakthrough in blockchain interoperability.
Puffer does not compete with L1, but collaborates with L1 to extend its capabilities in an integrated way.
How does it work?
Inspired by research with Justin Drake, Puffer UniFi uses trusted execution environments (TEEs) in its processing stack. To achieve real-time proofs, Puffer plans to use TEEs as a temporary auxiliary tool. The implementation of real-time proofs can significantly improve interoperability. Once zero-knowledge proof (ZK proof) technology reaches sufficient speed, provers will be able to move from relying on trusted hardware to a completely zero-knowledge-based solution.
Puffer UniFi Architecture Analysis
Architecture Overview - Puffer's UniFi Pre-Confirmation AVS provides users with L2 execution confirmation services. Users can experience sub-second transaction speeds when interacting through UniFi. In the UniFi Universal Rollup, native revenue tokens can be used as fuel (Gas) tokens.
The consensus layer, data availability layer, and settlement layer are all handled by the base layer (Layer 1, i.e. Ethereum). Rollup focuses on the functions of the execution layer.
This is the uniqueness of Puffer app-chain.
Why is this important?
Puffer is building its own app-chain using based rollups, which enables seamless integration of the EVM protocol. This provides everyone in the ecosystem with the opportunity to participate and benefit, whether individual validators or large dApps, all of which can benefit from a faster, more efficient and more decentralized Ethereum. Ethereum's fragmentation problem has existed for too long, and now is the time to change this status quo.
Ecosystem Overview
Growth will occur in phases:
Phase 1: Puffer will introduce based rollups to users and developers. For protocols that are not yet ready to run their own application chains, they can be deployed directly to UniFi.
Phase 2: UniFi will launch an SDK that allows any dApp developer to quickly build and deploy their own application chain in a simplified manner.
UniFi Pre-Confirmed AVS
UniFi provides near-instant execution confirmation through preconfirmation technology. This is not just a speed improvement, but a new Ethereum scalability solution. Preconfirmation technology solves Ethereum's fragmentation problem while providing extremely fast transaction confirmation.
How to achieve it? Because Ethereum's 12-second block time limits the finality of fast transactions, preconfirmation (preconf) becomes critical to improving user experience. To solve this problem, Puffer has developed a proprietary preconfirmation AVS technology that provides near-instant (about 100 milliseconds) transaction confirmation guarantees, ensuring that the transaction will be included in the next block. This innovation greatly improves the speed and reliability of the based rollup ecosystem.
If it works?
Preconfirmations are divided into two types: Execution and Inclusion . Both can be used to provide users with faster transaction confirmations on L1 or L2: The advantage of execution preconfirmation is that it provides users with a final and guaranteed commitment, including confirmation of the status after the transaction is executed. For example, it can confirm the price of transaction execution, thereby significantly improving the user experience.
Implementing L1 execution pre-confirmation is challenging; however, L2 execution pre-confirmation effectively solves this problem. Puffer UniFi AVS uses this capability to provide a more optimized user experience.
Pre-confirmation guarantee mechanism: Pre-confirmation represents the promise of the proposer (validator or authorized proposer) to the user. If this promise cannot be fulfilled, there should be a penalty, such as slashing. Re-staking protocols like EigenLayer play an important role in providing slashing guarantees for pre-confirmation. It is worth noting that Puffer UniFi Pre-confirmation AVS is the first service of its kind to run on EigenLayer.
Puffer UniFi: The Catalyst for the Next Chapter of Ethereum – Unification
UniFi’s synchronous composability is a game-changing innovation. Interactions across Rollups are like operations on a unified chain, without the need for L2 bridges (which everyone hates), thereby reducing costs and mitigating security risks associated with asset transfers. UniFi’s approach unifies liquidity, enabling developers and users to seamlessly interact across chains, and improving Ethereum’s liquidity and user experience like never before.
What it means to developers: UniFi provides developers with a unique opportunity to scale applications in a unified and low-friction environment. By eliminating centralized orderers, UniFi significantly reduces operating costs, allowing developers to focus on the product itself without having to worry about the complexity of isolated L2 applications. In addition, UniFi's architecture makes the deployment of based rollups almost as simple as deploying smart contracts, greatly reducing the entry barrier for developers and encouraging innovation.
Revenue Gain: How Puffer’s Based Rollups and Pre-Confirmation Drive Value in the Ethereum Ecosystem
All revenue streams will be converted into revenue for the fund reserve, which will be governed through the $PUFFER token.
Puffer's upgraded revenue model (note, not just an LRT) takes full advantage of based rollups and pre-confirmation technology to create sustainable value within the Ethereum ecosystem. Through based rollups, Puffer generates sorting fees, thanks to the mechanism that allows Ethereum validators to manage transaction sorting. UniFi not only supports seamless interoperability between Ethereum L1 and L2, but also supports interoperability between L2s, thereby achieving the unity of liquidity and composability. By integrating sorting fees into the Ethereum validator network, Puffer captures transaction-based revenue while strengthening the value of Ethereum's native economy.
Users can also pay preconfirmation tips to prioritize their transactions. This provides Puffer with an additional revenue stream, which together with transaction inclusion fees, forms a diversified revenue stream. These fees and tips will be injected back into the Puffer ecosystem, further enriching the value of its native tokens pufETH and unifiETH, while providing additional benefits to token holders.
As Puffer core contributor Amir explains:
“If every user pays a premium for these pre-confirmations to ensure faster, more reliable transactions on Ethereum, then AVS becomes tied to every transaction a user makes on Ethereum. This builds a very powerful, efficient revenue-generating AVS that can steadily output organic revenue.”
About vePuffer
One of the key factors that enables a protocol to achieve sustainable long-term price growth is tokenomics. A good protocol must have a well-designed token model that focuses on creating value for long-term holders. At Mechanism Capital, we focus on tokenomics design and support teams that can innovate and maximize token value capture.
Puffer Finance is launching vePuffer as an update to the token economics. The goal is to pass value to token holders and align incentives across the ecosystem. To do this, they are introducing the following innovations:
Decentralized Governance:
vePUFFER enables the community to participate in voting on the allocation of PUFFER points, in line with Puffer’s goal of decentralization.
Trading points:
The second season of ERC20 PUFFER Points supports trading, and users can obtain early returns or make additional purchases through trading, thereby increasing flexibility and arbitrage potential.
Flexible strategies :
Tradable points allow users to decide to hold, sell or buy based on personal strategy and market sentiment, enhancing risk management capabilities.
Bribery Market :
Protocols can provide incentives to vePUFFER holders to increase the number of votes in their pool, thereby improving APR and liquidity.
Competitive Agreement :
Bribery mechanisms allow the protocol to attract votes to increase the APR, promoting user participation and creating an aligned incentive mechanism.
Community-driven rewards system :
The vePUFFER model supports governance, speculation, and diversification strategies, empowering users to shape the incentives of the ecosystem.
Why Puffer's UniFi is unique: Reshaping Ethereum's Rollup landscape
By launching UniFi, Puffer creates an opportunity for Ethereum to transform from a fragmented Rollup environment to a unified, positive-sum ecosystem that brings together developers, users, and liquidity in unprecedented ways. The end result? A stronger, more resilient Ethereum that can meet the needs of billions of users.
Disclaimer : The content of this article does not constitute any investment advice.
