Puffer paid $1.8 million out of his own pocket to compensate users. Such a noble project made me want to study it.
I used to think of Puffer as a Restaking project, but I found that this is just the tip of the iceberg.
Puffer has become a decentralized infrastructure provider for Ethereum, with products including:
1) Based Rollup solution Puffer UniFi,
2) Preconf Technology Solution UniFi AVS
3) Re-pledge product Puffer LRT.
Puffer’s Restaking business itself is also very powerful, with a TVL of up to 1.3 billion US dollars, ranking second among its peers.
Let’s talk about Puffer UniFi first
The current Ethereum landscape reminds me of the ancient Zhou Dynasty. The Zhou Dynasty implemented a feudal system, which divided land and power among the princes, forming a pattern in which the Zhou emperor was the king and the princes managed the local areas. On the surface, it looks very powerful, but in fact, there are open and covert struggles, and when it comes to core interests, everyone has their own agenda. This is very similar to the current ETH-centered, with hundreds of large and small layer2s such as Arbitrum, Optimsim, and Starknet. The princes are independent and have their own rules and ways of playing, resulting in a fragmented situation. The use of assets on multiple chains is inefficient, and the cost of maintaining multiple layer2s for dapp developers has increased significantly, all of which reduce the value of the entire system.
To solve this problem, Based Rollup, also known as L1 sequencing Rollup, was proposed. Based Rollup allows L1 validators to decide on the ordering of Layer 2 Rollup transactions. By transferring these responsibilities, Rollup users no longer need to trust centralized sequencers to deliver transactions, but can instead leverage Ethereum's decentralized set of validators to obtain a more reliable and trusted neutral transport layer. The advantages of Based Rollup are quite obvious, for example, it can inherit the security and decentralization characteristics of Ethereum L1. It can also increase Ethereum's control and effectively solve the fragmentation problem in the Ethereum ecosystem.
Although Based Rollup is very powerful, it also has its own weakness, that is, the confirmation time. If it relies on the Ethereum validator for sorting, it takes 12 seconds for the block to be generated. Such a slow speed is really a waste of time, so Puffer UniFi made its debut. The core point is to adopt the preconfirmation mechanism. Preconfirmation is equivalent to an appointment voucher, and it will be your turn when the time comes. The validator will provide preconfirmation before packaging the transaction into the L1 block. These preconfirmations are not final confirmations, but they pat the user's chest to ensure that their transactions will be included in the blockchain. If the preconfirmer's boasting is not realized, they will face penalties such as confiscations. The preconfirmation mechanism can shorten the transaction confirmation time to about 100 milliseconds, which is perfect. The advantages of Puffer UniFi include:
● High security and decentralization: UniFi inherits the security and decentralization characteristics of Ethereum Layer 1 because it directly utilizes Ethereum validators for transaction sorting. Unlike traditional Rollups that rely on centralized sorters, UniFi is not subject to single points of failure or censorship risks.
● Synchronous Composability: UniFi supports synchronous composability with other Based Rollups, which means that users can interact with smart contracts on different Rollups in the same transaction.
● Near-instant transaction confirmations: By integrating UniFi AVS, UniFi can provide near-instant transaction confirmations (approximately 100 milliseconds).
● Native yield and gas-free transactions: UniFi users can earn native yield by staking Puffer’s liquidity staking token (LRT) pufETH. As the universal gas token in the UniFi ecosystem, unifiETH’s yield can be used to subsidize gas fees, thus enabling gas-free transactions.
● Promote Ethereum L1 value capture: UniFi’s Based Rollup structure allows gas fees to be returned to Ethereum block proposers, which helps enhance the economic security of Ethereum L1.
● Application Chain-Based Integration: UniFi allows developers to launch their own Application Chain-Based, enabling them to directly reap economic benefits and promote interoperability within the broader Ethereum ecosystem.
Let’s talk about it again: Puffer UniFi AVS
In the pre-determination part, we talked about that if the pre-determination confirmer brags, he will face a fine, so that he will work honestly. So how to fine? Instead of requiring the pledge of some tokens or ETH, Puffer came up with a better solution. That is to use EigenLayer's AVS service. In short, it is to use the ETH in EigenLayer's Restaking as collateral.
UniFi AVS is built on EigenLayer to pre-process registration, rewards, and penalties. For EigenLayer validators, it can register as a pre-determined validator of Puffer UniFi without permission, and the rewards obtained are an additional benefit.
The whole process is roughly like this. In the base rollup ecosystem, the user submits a transaction request. After the Puffer validator (as a pre-confirmer) receives the transaction, if it chooses to provide pre-confirmation, it will issue a commitment to the user within about 100 milliseconds. The validator then packages these transactions with other transactions and proposes a new block to Ethereum L1. The Puffer Sequencer Contract accepts the batch of transactions, thereby confirming the transaction status. The on-chain registration and severance mechanism of UniFi AVS runs through the entire process to ensure that the validator is responsible for the pre-confirmed commitment.
Regarding the Restaking business, Puffer's data is also very good. According to defillama data, Puffer's TVL is as high as 1.3 billion US dollars, ranking second among all Liquid Restaking protocols, surpassing Eigenpie and Renzo.
In summary, as an important participant in Ethereum's decentralized infrastructure, Puffer is providing key support for the expansion and optimization of the Ethereum ecosystem with its innovative technical solutions and strong product ecology. Whether it is solving the Ethereum fragmentation problem through Puffer UniFi's Based Rollup, or significantly improving the transaction confirmation speed through pre-confirmation technology, Puffer has demonstrated its deep strength in improving security, decentralization, and user experience. At the same time, with the integration of UniFi AVS and EigenLayer, Puffer also provides validators with more flexible staking and revenue solutions, further consolidating its leading position in the Restaking field.
