Based rollups explained: L1 sequencing and Base's tokenless decentralization
Thread645 words
Explains based rollups, where Ethereum searchers, builders and proposers do the sequencing, with benefits in resilience, MEV alignment and no sequencer token. Notes limits: MEV flows to L1, finality UX, and pre-confirmation ideas.
Key claims
Based rollups need no sequencer token and inherit Ethereum's liveness
MEV revenue flows to L1, not L2
Preconfirmations via inclusion lists, builder bonds or EigenLayer restaking could speed finality
0/ “Base can achieve tokenless decentralization by becoming based.”
is how @drakefjustin ended his blog post that describes a minimalistic rollup design with decentralized sequencing (transaction ordering). But what does it mean? 🤔
a 🧵 on based rollups (0/20)
1/ if you're not familiar with how transaction ordering currently works on rollups, I recommend to check out this thread first 👇
x.com/expctchaos/status/1682359858119741443
2/ but let's dive in 🚀
based #rollups, which are also known as L1-squenced rollups, imply that the rollup network's sequencing (tx ordering) is done on the same L1 network on which the rollup is based, typically #Ethereum
3/ specifically, for #Ethereum, it means that all the searchers, builders & proposers in the network partake in the rollup network's sequencing, decentralizing the process
4/ but let's have a look how blocks are built on #Ethereum
most #Ethereum network blocks are currently forged using a middleware named #MEV-Boost. In the future, this procedure will be inherent to the Ethereum protocol through enshrined Proposer-Builder Separation (PBS)
5/ here's how it works 👇
searchers initially scan the mempool for #MEV opportunities, bundle these, and submit them to the builders, who create comprehensive blocks to maximize MEV revenue. These blocks are then handed over to proposers and added to the #Ethereum blockchain
6/ the process entails searchers and builders bidding nearly as much #MEV revenue as they can generate to have their bundles and transactions selected, resulting in a flow of MEV revenue from
searchers → builders → proposers
x.com/expctchaos/status/1678127741357441026
7/ but back to based rollups & why the approach is interesting
based rollups have several notable benefits compared to traditional rollup networks that manage their sequencing 👇
8/ 🌐 resilience & decentralization:
they rely on E#thereum for sequencing transactions, thereby capitalizing on Ethereum's robustness and decentralized validator set. This approach negates the risk of sequencer or validator failure unless the $ETH network itself faces an issue
9/ 💸 economic alignment:
when an #MEV opportunity is spotted in based rollups, #Ethereum network searchers and builders submit corresponding bids, allowing the revenue from based rollups’ MEV to flow naturally into Ethereum L1
10/ 🪙 simplicity & no token requirement:
Based Rollups are simpler and don't require tokens for sequencing, as this process is handled by the #Ethereum network
11/ however, based rollups have certain limitations too 👇
12/ 💰 revenue flow:
the rollup network's #MEV revenue flows into #Ethereum L1, without accumulating value on Layer 2 (L2)
13/ 👤 user experience:
relying on #Ethereum's finality can be unfriendly from a user experience perspective. However, researchers are currently exploring ways to impose faster finality in advance through, inclusion lists, builder bonds and more
14/ another approach is to use @eigencloud's restaking network to build a middleware layer that serves as a fast finality / settlement layer, which gives a pre-confirmation secured by a crypto-economic security model (slashing)
15/ so, to conclude this thread, let's quickly go back to the quote from the first tweet.
16/ considering the two design goals, @BuildOnBase laid out in their announcement blog post, one might argue that the naming collision with the concept described here could be a happy coincidence
17/ these design goals are
🔹 tokenlessness: “We have no plans to issue a new network token.” (in bold)
🔹 decentralisation: “We […] plan to progressively decentralize the chain over time.”
18/ and how can @BuildOnBase this tokenless decentralization?
exactly, become based 💡
19/ I hope this thread helped you get a high-level understanding of the concept frens
what is your take on based rollups? what are the use cases you see them work well for? 🤔
follow me (@expctchaos) for more content like this 🫡
20/ if you want to learn more, check @drakefjustin's article here 📚
ethresear.ch/t/based-rollups-superpowers-from-l1-sequencing/15016
also tagging a few chads to follow 👇 🫡
@0xchadnik
@splinter0n
@Only1temmy
@Louround_
@thesaint_
@0xSalazar
@poopmandefi
@ShivanshuMadan
@0xShivani
@hmalviya9
@wacy_time1
@ThorHartvigsen
@poopmandefi
@0xDinoEggs
@jinglingcookies
@DOLAK1NG
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