Written by: Tia, Techub News

On October 10, Uniswap launched the application chain Unichain. Unichain has two major functions: Verifiable Block Building and Unichain Verification Network (UVN). There are many documents describing these two functions, so I will not repeat them here.

But if you look closely at the Verifiable Block Building, you can find that Unichain uses Priority Ordering in this block building mechanism, and the allocation of MEV is determined by the application. Priority ordering, a mechanism in which applications control the ordering of transactions, is collectively referred to as ASS (Application-Specific Sequencing).

Although Unichain did not mention ASS in the white paper and did not disclose detailed sorting rules, it can be basically determined that it falls within the scope of ASS based on its priority ordering and the mentioned MEV redistribution.

As a leader in the application layer, Uniswap's chosen roadmap and technical direction are highly forward-looking and excavatable. Therefore, this article will focus on the ASS sorting rule concept used behind Unichain and some solutions currently on the market.

What is ASS & Why Use It?

ASS stands for Application-Specific Sequencing, which means application-oriented sorting. DApp can formulate its own sorting rules and MEV allocation rules according to the needs of the application. For example, transactions that reduce slippage will be prioritized, and part of the MEV income will be allocated to LP and users. In this way, MEV is internalized by application. The new term may be unfamiliar to everyone, but the idea of ​​ASS is very simple, which is to allow applications to participate in the formulation of sorting rules and seize some sorting rights from builders and proposers.

Why should applications formulate sorting rules? MEV allows arbitrageurs to seize profits that should belong to LPs. When the profits of LPs, the important role in DEX applications, are severely squeezed, it will affect the development of DEXs. Under the PBS mechanism, validators become the profit-makers and obtain part of the profit distribution of MEVs. However, the ASS mechanism re-examines the issue of MEV value attribution and advocates that applications formulate transaction sorting rules so that the value of MEVs can return to the losers.

You may wonder how the transaction order determined by the sequencer or consensus can allow applications to participate. Since Unichain has not yet announced the specific ASS mechanism, let's take a look at several representative specific mechanism designs currently on the market:

Current ASS solutions

Usually, the order is determined by the consensus layer, but it is very costly to change it through the consensus layer. Therefore, the current ASS solutions basically bypass the consensus and mainly make changes in an off-chain way through the smart contract framework or embedded applications, so that transactions sent from the application interface to the blockchain can be prioritized according to the ordering rules set by the application.

Atlas

Atlas is a modular smart contract framework developed by FastLane. It provides an ASS solution framework for applications. Applications can customize their own sorting logic by writing DAppControl contracts within the framework.

In the Atlas framework, the specific steps of a transaction from user signing to external submission are as follows:

Three additional roles are required in the entire process: Solver, Operations Relay, and Auctioneer. The role of Atlas Solvers is limited to Atlas, and they have priority access to any value created by user operations and can extract MEV under the rules set by the DAppControl contract. Solvers have priority access over wallets, RPCs, relayers, builders, validators, and sequencers.

Operations Relay is responsible for relaying the user operations userOps generated by the user on the front end to the Atlas solver, and relaying the solver's operations to the Auctioneer after the solver has browsed the user's transactions. The task of the Auctioneer is to sort them using the bid valuation function defined in the DAppControl module and ensure the correct execution order. After determining the execution order, it signs the DAppOperation containing the CallChainHash to ensure that the Bundler cannot tamper with the transaction order after the transaction is sent to the Bundler. Subsequently, the Bundler packages the complete Atlas transaction and submits it to the network for inclusion in the block.

Since the final determination of transaction ordering must be completed by the Auctioneer, there may be a situation where the Auctioneer does not sign transactions that are not in its favor. Therefore, it is usually recommended to choose the auction beneficiary (for example, when the rule is to return MEV income to the user, the user is the beneficiary) as the Auctioneer, because the beneficiary can always trust himself.

Angstrom

Angstrom is a product developed by Sorella Labs. Different from the Atlas framework, Angstrom ensures the implementation of application sorting rules through a verifiable consensus network. The verifiable consensus network acts as a guard, and the network can be operated by providing a stake. Application transactions and transactions with arbitrage opportunities between DEX and CEX will be submitted to the network. Nodes need to propagate, verify, and build the best transaction bundle, and return the value to LP according to the LVR auction mechanism.

Currently, Angstrom is planned to be launched as a hook for Uniswap V4. A hook is a customizable smart contract tied to a liquidity pool, allowing developers to execute custom code at specific points in the life cycle of a liquidity pool, thereby implementing complex logic and functionality.

Vertex

Vertex is a decentralized exchange that uses off-chain sorters to develop application-specific sorting rules. By using off-chain sorters to process orders off-chain, Vertex reduces the risk of MEV (such as front-running and sandwich attacks) because transactions are not publicly broadcast before execution. At the same time, this mechanism allows users to verify that off-chain operations are consistent with on-chain records to prevent improper behavior of the sorter.

summary

By granting control over transaction sequencing and execution, ASS enables DApps to reduce MEV risk, optimize operations, and innovate. But there are potential trade-offs to consider behind this innovation.

The ASS mechanism sorts by built-in sorting rules within a single application, which will destroy the inherent composability between blockchain applications. Composability is the biggest weapon of DeFi against CeFi. When composability is lost, non-arbitrage transactions may be greatly reduced, thereby reducing LP's income. ASS will increase LP's MEV income, but if the reduction in non-arbitrage transaction volume is greater than LP's MEV income, it will be a loss. Therefore, how to design the ASS mechanism so that it can maintain DeFi's natural composability is an issue that ASS urgently needs to consider.

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