Explaining the concept of Preconfirmation with Taiko as an example: How to make Ethereum transactions more efficient?

This article starts from the current limitations of the L2 ecosystem, analyzing the practical implementation of projects such as Taiko to demonstrate how the innovative concept of preconfirmation optimizes the transaction confirmation process and enhances user experience. It also reveals the challenges that preconfirmation technology still needs to overcome in its development, including both technical improvements and the sustainability of the ecosystem.

Original Title: 《Preconfirmation (feat. Taiko): Make Ethereum Fast for the First Time!》

By: Ingeun Kim : : FP

Key Overview

• Taiko is a Layer2 network based on Based Rollup, aiming to achieve full interoperability with Ethereum while promoting the decentralization of sequencers. To address the delay in final transaction confirmation in the Rollup mechanism, Taiko introduced the concept of "preconfirmation." By providing users with early guarantees of transaction inclusion and ordering, preconfirmation effectively alleviates inefficiencies in the Rollup confirmation process, significantly improving user experience.
• In the Based Preconfirmation model, L1 validators provide users with guarantees of transaction results. Preconfirmers are required to stake collateral and comply with a slashing mechanism to ensure system reliability. L2 projects like Taiko, by introducing preconfirmation mechanisms, establish reliable transaction finality, creating a more convenient operational environment for services such as DeFi that require real-time confirmation.
• Currently, multiple projects have joined the construction of the preconfirmation ecosystem. This technological advancement is expected to improve the efficiency of the Ethereum L2 ecosystem, strengthen interoperability with Ethereum, and drive further expansion of the entire ecosystem.

Taiko is steadily advancing toward its ultimate goal as an Ethereum Layer2 solution. To achieve this, Taiko prioritizes comprehensive interoperability with Ethereum, decentralized sequencers, and developer support. Notably, Taiko achieves full interoperability with Ethereum through the Based Rollup architecture and allows anyone to participate as a sequencer, thus realizing sequencer decentralization. However, despite the advantages of the Based Rollup model, there are still some inherent inefficiencies in its structure.

This article takes Taiko as an example to deeply analyze the concept of preconfirmation. As a key component in the Layer2 technology stack, preconfirmation is an important step for the further development of Rollups.

Current L2 Efficiency Issues

With the expansion of the L2 ecosystem, numerous projects have emerged, bringing many new concepts and technology stacks. However, despite these significant advances, L2 still faces some pressing efficiency issues, especially in key areas affecting user experience, where improving efficiency becomes particularly important.

Inherent Limitations of Rollup: Inefficient Transaction Finality Process

L2 achieves scalability through Rollup, relying on the data availability and transaction processing of L1 platforms such as Ethereum. However, Rollup has an inherent limitation: although it can independently complete transaction ordering and execution, all other processes still need to wait for final confirmation on L1.

This architecture ensures security and data immutability by directly leveraging L1’s block production and data availability. However, relying on L1 for final confirmation leads to slower transaction processing and limited real-time confirmation capabilities, which from a user perspective, fails to meet real-time needs.

In addition, many L2 sequencers and validator nodes are still centralized. This centralization can lead to inefficiencies, such as longer transaction confirmation times and potential operational interruptions, thereby affecting the transaction processing efficiency of some Rollups and causing confirmation delays.

The Introduction of Preconfirmation

The concept of preconfirmation was introduced to address the inefficiency of final transaction confirmation in L2 networks. Preconfirmation allows users to obtain transaction confirmation more quickly, alleviating the common delays and inefficiencies in the Rollup mechanism.

What problems does preconfirmation aim to solve?

In the Rollup mechanism, the confirmation process after users submit transactions to L2 has always been inefficient. Since centralized L2 sequencers cannot accurately guarantee when a transaction will be confirmed on L1, users are often uncertain about the order and outcome of their transactions. For example, users may have to wait a long time for their transaction to be included on L1, and if the transaction order is wrong or the result is unsatisfactory, it may lead to financial losses from already executed transactions.

In highly volatile market environments, the issues of delay and order changes are even more pronounced, as users rely on arbitrage and DeFi services. In these cases, transaction delays or order changes directly result in lost opportunities. Even ordinary users may lack confidence in the final confirmation time and order of their transactions on L1, leading to doubts about the reliability and usability of the blockchain.

Therefore, the design goal of preconfirmation is to address these shortcomings, especially to provide a more convenient and reliable transaction experience for users most affected by Rollup inefficiencies.

How does preconfirmation solve these problems?

Preconfirmation solves these problems by providing users with guarantees of transaction inclusion, ordering, and execution. It offers users "soft confirmation" through centralized L2 sequencers and issues preconfirmation certificates to ensure that transactions will eventually be included on L1.

The main advantage of soft confirmation is that it enhances user experience. Users can receive confirmation certificates immediately after submitting transactions, ensuring that transactions are included on L1 in the expected order, reducing uncertainty, especially in fast-response transactions such as arbitrage. In addition, preconfirmation increases user trust in the L2 system. As users gain confidence in the secure handling of their transactions, the overall usage of the L2 ecosystem will also increase. Thus, preconfirmation plays a key role in improving the efficiency and convenience of Rollup processing.

Is Preconfirmation the Ultimate Solution?

Although soft confirmation from centralized sequencers can improve user experience through expected ordering and results, it relies on trust in the sequencer. Without legal or technical enforcement, users can only rely on the reliability of the sequencer. This dependency brings the possibility that transactions may not be included in the correct order, or may not be included on L1 at all, failing to provide the stable guarantees users expect.

Understanding the Concept and Practice of Based Preconfirmation with Taiko as an Example

Taiko has invested significant effort in implementing preconfirmation because this approach is highly compatible with the core features of Based Rollup. If Based Preconfirmation can be successfully incorporated into Taiko’s framework, it can not only significantly reduce the delay in final transaction confirmation but also enhance user experience. Furthermore, this improvement will activate previously restricted services, enabling them to operate efficiently on the Taiko network.

Before delving into Based Preconfirmation, it is necessary to review some key features of Taiko to better understand the applicability and advantages of this approach.

Taiko Case Analysis

Taiko fully demonstrates the core features of Based Rollup. It not only achieves full interoperability with Ethereum infrastructure but also aligns completely with Ethereum’s security mechanisms. Taiko adopts the Based Rollup architecture, which means it does not rely on centralized sequencers but instead relies on Ethereum validators to act as sequencers, responsible for transaction and block ordering.

In other words, Taiko’s sequencers are the same type of role as Ethereum’s block proposers. This design gives them special responsibilities and incentive mechanisms, such as obtaining maximum extractable value (MEV) rewards and other benefits associated with the sequencer identity. Therefore, when problems occur in Taiko’s L2 sequencing process, these sequencers naturally bear corresponding responsibilities due to their interests in the Ethereum ecosystem. This mechanism makes Taiko significantly different from other Ethereum L2 projects in terms of operational responsibility.

It is also worth noting that Taiko’s Based Rollup model is designed as a "Based Contestable Rollup (BCR)," a structure intended to incentivize healthy competition. Through an open and permissionless design, Taiko ensures system decentralization and allows anyone to participate, making the system fairer and more transparent.

Preconfirmation Based on Based Rollup

So, what does a preconfirmation model specifically designed for Based Rollup look like? The answer is "Based Preconfirmation." This model aims to replace the traditional soft confirmation mechanism with confirmations directly verified on L1.

Based Preconfirmation provides a system in which some L1 validators voluntarily participate and offer preconfirmation services. As sequencers, these validators provide users with verifiable predictions of Rollup transaction results. This approach gives users credible guarantees of transaction inclusion and ordering, and these guarantees are directly based on L1, thereby enhancing the credibility and reliability of the Rollup process.

Justin Drake first proposed the concept of Based Preconfirmation and introduced a specific role called "Preconfer," who can provide users with signed guarantees, specifying the order and execution status of transactions. To ensure the reliability of their commitments, each Preconfer must stake a certain amount of collateral. If they fail to fulfill their commitments regarding transaction order or execution status, they will face slashing penalties, i.e., partial or total loss of their collateral.

The slashing mechanism has been widely used in Ethereum PoS staking to effectively deter malicious behavior. This mechanism not only strengthens the sense of responsibility of Preconfers but also establishes a certain trust foundation between users and Preconfers.

There are two situations in which Preconfers will be penalized by slashing:

1. Liveness Faults: If a Preconfer fails to include a user’s preconfirmed transaction on-chain for any reason, a liveness fault occurs. Since liveness faults are not always intentional, the penalty is relatively mild. Such faults may be caused by network issues or interruptions in the L1 or L2 blockchain, resulting in transactions not being properly included on-chain. To protect honest Preconfers from undue punishment, the penalty amount for liveness faults is usually negotiated between the user and the Preconfer.
2. Safety Faults: If a preconfirmed transaction is included on-chain but the result is inconsistent with the user’s original request, a safety fault occurs. This inconsistency is entirely the responsibility of the Preconfer, so the penalty for safety faults is usually much harsher. The Preconfer’s collateral will be fully forfeited, regardless of whether the issue was intentional.

To become a Preconfer in the Based Preconfirmation model, a node (usually an L1 block proposer) must accept these slashing conditions and stake the required collateral. Once approved, the Preconfer can provide services to users and earn income by charging service fees.

This fee model provides significant convenience for users, allowing them to bypass the inherent delays in Rollup transaction finality. For example, after submitting a preconfirmed transaction through a personal wallet, users can immediately receive a confirmation certificate from the Preconfer.

Preconfers participating in Based Preconfirmation can not only earn additional income by charging fees but also help optimize the Rollup transaction confirmation process. This model not only enhances user experience but also provides a reliable and efficient transaction finality solution for the entire L2 ecosystem, further increasing its attractiveness and practicality.

Why Are Users Willing to Pay for Preconfirmation?

This is closely related to the core purpose of preconfirmation. Users are willing to pay for preconfirmation because it directly addresses the inefficiency of transaction finality in Rollups, bringing significant convenience to users.

For example, when users submit preconfirmed transactions on an L2 blockchain through their personal wallets, standard transactions may require waiting for final confirmation, while users requesting preconfirmation can immediately receive a guarantee from the Preconfer and complete the transaction without delay. At this point, users may even see a green checkmark in the wallet interface, clearly indicating that the transaction has succeeded.

Take DeFi services as another example. When users perform token swaps on L2 DeFi platforms, preconfirmation can provide additional guarantees for related transactions. Normally, the quoted exchange rate or fees for a transaction may differ from the actual result due to delays. But with preconfirmation, users can enjoy a fast and efficient transaction finality process, reducing the gap between expected conditions and actual results, thus obtaining a more reliable service experience.

These application scenarios not only enable developers to provide more precise services but also bring users a smoother and more convenient experience. This dynamic further supports the expansion of the L2 ecosystem and contributes to the growth of the broader L1 ecosystem. In addition, for Based Rollup sequencers, the extra income brought by preconfirmation provides a considerable profit model. This design effectively addresses some of the traditional weaknesses of Based Rollup, making it an ideal choice for sequencers, combining reliability and attractiveness.

What Challenges Does Based Preconfirmation Face?

Based Preconfirmation remains a highly watched research area in Rollup-driven Layer2 projects represented by Taiko. Although this mechanism provides a clear solution to improve L2 performance and scalability while maintaining decentralization, it still faces some urgent challenges in practical application to achieve broader adoption.

First, when a Preconfer submits a transaction to a block, users may not obtain an absolute guarantee of transaction inclusion. Although Preconfers provide guarantees for transactions by staking collateral, this mechanism still cannot completely solve the problem of transactions not being included due to external interruptions. Especially when the transaction value exceeds the Preconfer’s staked amount, Preconfers may abuse their authority to selectively include or exclude certain transactions, posing potential risks.

Another significant challenge is the profit model based on preconfirmation. The main source of income for Preconfers is the preconfirmation fees paid by users. However, if there are not enough Preconfers or participation is insufficient, it may lead to market centralization and monopoly tendencies. In this case, preconfirmation fees may be artificially raised, increasing the cost for users to conduct fast and efficient transactions, thereby threatening the healthy development of the preconfirmation ecosystem.

It is worth noting that the concept of Based Preconfirmation is relatively new, having been proposed only about a year ago. To make it a "key tool" for maximizing the speed and efficiency of Rollup-driven L2 solutions, more time is needed for practice and refinement. However, as Rollups have firmly established themselves as the core component of Ethereum scalability, further exploration of preconfirmation to enhance performance marks an important step in the development of L2 technology.

In particular, Taiko has made significant progress in promoting the implementation of Based Preconfirmation. At the same time, Taiko has collaborated with partners such as Taiko Gwyneth, Nethermind, Chainbound, Limechain, Primev, and Espresso to jointly explore and develop application scenarios for Based Preconfirmation. These collaborations aim to drive further evolution of the L2 ecosystem, and more details will be discussed in subsequent sections.

Panoramic View of the Preconfirmation Ecosystem: Process Diagram Interpretation and Project Exploration

In this chapter, we will explore which projects are actively researching and advancing the development of preconfirmation technology in Rollup-driven L2 ecosystems. As this ecosystem is still in its early stages, we will use a process diagram to more intuitively display and understand the specific process of preconfirmation.

Preconfirmation Process Diagram

Preconfirmation is a complex process that requires close collaboration between L1 and L2, involving multiple roles, each with specific responsibilities. To facilitate a more intuitive understanding of this process, I have created a process diagram for a brief overview. It should be noted that this diagram is intended to help explain the overall logic and does not strictly distinguish between the different characteristics of Rollup and Based Rollup, but rather focuses on the general process at the foundational level.

Before understanding the specific steps in the process diagram, let’s first get to know the roles involved in the preconfirmation process and their functions:

• User: An individual using the L1 or L2 network, responsible for creating and submitting transactions. If users want preconfirmation guarantees, they send the completed transaction to the Preconfer.
• Preconfer: In the preconfirmation process, the Preconfer is responsible for reviewing the transaction and verifying its validity, then providing the user with a preconfirmation guarantee. Through preconfirmation, users can quickly obtain a guarantee of the transaction status before final settlement. If a node does not have preconfirmation qualifications, it acts as a Non-Preconf Actor, mainly handling ordinary transactions rather than preconfirmed transactions, similar to standard validator nodes.
• L1 Validator: Responsible for final verification of transactions and blocks on the L1 network. Once the Preconfer submits transaction data, the L1 Validator verifies it and records the final data on the L1 blockchain, ensuring the integrity of the transaction and compliance with consensus rules.
• Preconfirmation Challenge Manager: When disputes or issues arise in the preconfirmation process, this role is responsible for investigating the problem and taking appropriate measures to resolve the dispute. This role plays a key role in maintaining the fairness and reliability of the preconfirmation process.

Now, let’s sort out the specific process of preconfirmation according to the order in the process diagram:

1. The user sends a transaction request to the Preconfer among the preconfirmation participants to initiate the preconfirmation process.
2. The Preconfer reviews the transaction and sends a preconfirmation receipt, promising the user that the transaction will be included in an L1 block, thus providing the user with an initial guarantee of final confirmation.
3. The Preconfer submits the transaction data that needs to be included in the L1 block to the L1 Validator. This data may be a single transaction or aggregated data processed by the L2 sequencer.
4. The L1 Validator verifies the submitted transaction data or aggregated data and records it in the L1 block, ensuring it complies with blockchain consensus rules.
5. After a period of time, the L1 block containing the transaction data or aggregated data reaches finality, and the transaction is officially confirmed.
6. The user can check the final result of the transaction through the L1 node and, if necessary, use the relevant information to raise any potential preconfirmation disputes or challenges.
7. If the transaction is not correctly included on L1 as promised, the Preconfer will face penalties from the Preconfirmation Challenge Manager, such as being slashed or having their staked assets frozen.

Related Project Exploration

• Astria: Astria is committed to replacing centralized sequencers with a decentralized sequencer network and supporting multiple Rollups to share this network. This design provides Rollups with stronger censorship resistance, faster block finality, and seamless cross-Rollup interaction. To achieve fast block finality, Astria introduces preconfirmation functionality, enabling Rollups to provide rapid transaction confirmation and enhanced censorship resistance, significantly improving user experience.
• Bolt by Chainbound: Bolt is a preconfirmation protocol developed by Chainbound, providing Ethereum users with near-instant transaction confirmation services. It operates based on trustless participation mechanisms and economic collateral, and is compatible with existing MEV-Boost PBS pipelines, creating new revenue opportunities for proposers. Bolt’s core feature is L1 preconfirmation, providing instant finality for basic transactions (such as transfers and approvals), thereby enhancing user experience. By shifting the responsibility for transaction inclusion from centralized block builders to proposers, Bolt enhances system censorship resistance. Meanwhile, the staked proposer registration mechanism ensures a trustless environment and flexibly supports various types of smart contracts.
• Espresso System: Espresso System is a protocol dedicated to enhancing interoperability in the blockchain ecosystem. It adopts the HotShot Byzantine Fault Tolerance (BFT) consensus protocol to achieve fast finality of transaction order and data across multiple chains. Espresso System includes Espresso Network and Espresso Marketplace, which work together to provide fast transaction finality and efficient interoperability, aiming to improve the scalability and security of the blockchain ecosystem.
• Ethgas: Ethgas is a marketplace for trading block space, with transaction matching managed by a centralized system and on-chain processes executed through smart contracts. Ethgas provides two main functions: inclusion preconfirmation (ensuring transactions are included within a specified gas limit) and execution preconfirmation (ensuring transactions reach a specific state or result). Ethgas focuses on protecting transaction privacy in block space trading and is known for its neutrality in operations.
• Luban: Luban focuses on developing a decentralized sequencing layer to connect transaction data between the Ethereum network and Rollups. This sequencing layer is designed as a decentralized system that separates the roles of proposal and execution. Luban’s preconfirmation functionality significantly improves transaction reliability by ensuring executability before transactions are included in the Ethereum network, while helping to optimize transaction fees, gas prices, and MEV, among other key factors.
• Primev: Primev is developing a proposer network integrated with MEV, combining preconfirmation with MEV functionality to build an efficient and reliable peer-to-peer network. This network records commitments to Ethereum transaction execution and incentivizes proposers through reward or penalty mechanisms. Primev allows MEV participants to set specific execution conditions for their transactions, and block builders and validators can commit to meeting these conditions, thus ensuring transaction preconfirmation. Based on EIP-4337, Primev supports flexible preconfirmation and gas fee options, not only improving transaction processing efficiency but also further optimizing user experience.
• Puffer Unifi: Puffer Unifi’s Actively Validated Services (AVS) are built on EigenLayer, focusing on addressing preconfirmation challenges in the Ethereum ecosystem, especially in the Based Rollup architecture. Puffer Unifi AVS leverages EigenLayer’s restaking functionality to support the preconfirmation participation mechanism, aiming to improve the efficiency of transaction finality. As Based Rollup develops, the demand for reliable preconfirmation providers continues to grow, and Puffer Unifi AVS aims to meet this demand. Its ultimate vision is to achieve efficient preconfirmation without changing the core protocol, thereby promoting the sustainable growth of the Ethereum ecosystem.
• Skate: Skate’s preconfirmation AVS relies on restaked assets on EigenLayer to provide economic security for all cross-chain operations. This AVS verifies the bundled data and information required for cross-chain transactions, which are then signed and prepared for execution by Skate’s relayers. Through this process, Skate AVS achieves data preconfirmation, significantly improving the reliability and efficiency of cross-chain transactions.
• Spire: Spire’s Based Stack is a Based Ethereum Rollup framework designed to support developers in building application chains (App Chains). This framework allows application chains to interact directly with Ethereum and customize their sequencing methods, supporting cross-chain swaps and other functions, while optimizing user experience through preconfirmation. Based Stack supports multiple execution environments, ensures sequencing revenue for application chains, and remains compatible with traditional shared sequencers. As an open-source project, Based Stack provides developers with the complete tools and resources needed to build and manage application chains, thereby promoting application chain development and interoperability in the Ethereum ecosystem.
• Taiko Gwyneth: Taiko Gwyneth is a Rollup design under development by Taiko, classified as a based Rollup architecture. Its goal is to achieve full interoperability with Ethereum while directly managing transaction sequencing on Ethereum. This design fully leverages Ethereum’s security and decentralization features while providing high throughput and fast finality. Currently, Taiko is running a proposer mechanism to assist block creation and exploring preconfirmation mechanisms to facilitate profitable block production within the community. This mechanism aims to optimize block time scheduling and data publishing efficiency. To achieve these goals, Taiko is working closely with projects such as Nethermind and Gattaca.

• Chorus One: Chorus One is a project providing validation services and infrastructure for blockchain networks, focusing on staking services across multiple protocols to enhance network stability and security. As an L1 validator, Chorus One’s responsibility is to validate transactions and generate blocks, thereby improving the reliability and efficiency of the entire network. Recently, Chorus One has shown great interest in preconfirmation technology, even hosting related events during Devcon 2024.

• Nethermind: Nethermind is a project dedicated to developing Ethereum clients and tools, with the core goal of improving the performance and stability of blockchain networks. By introducing advanced optimization technologies, Nethermind actively promotes the improvement of Ethereum network transaction throughput. Regarding preconfirmation technology, Nethermind has been conducting in-depth research and has submitted a proposal to Taiko’s grant program to accelerate the deployment of preconfirmation functionality on the Taiko mainnet. This proposal, based on Nethermind’s RFP-001 project, will be implemented in two phases: the first phase will test preconfirmation functionality among a limited set of authorized participants; the second phase plans to gradually expand the scope of preconfirmation application.

Looking Ahead

Taiko and many Based Rollup Layer2 projects, whether or not they adopt the Based Rollup architecture, are working to optimize the inefficient transaction finality process in traditional Rollups. By introducing the concept of preconfirmation, these projects are building a transaction confirmation system that allows users to confirm transactions more quickly and reliably. Through this approach, these projects continue to explore how to enhance user experience and build user trust.

Taiko fully leverages its position as a Based Rollup Layer 2 project, actively promoting the implementation of the Based Preconfirmation mechanism to achieve comprehensive interoperability and decentralization with Ethereum. By providing users with fast and reliable transaction finality guarantees, Taiko greatly improves transaction processing speed and reliability, significantly enhancing user experience.

However, as pointed out by many industry experts, including Arbitrum’s Ed Felten, there is still a lack of mature middleware that can fully support preconfirmation. This indicates that the maturity of preconfirmation technology and the profit model for Preconfers still face challenges that need to be further addressed.

As described in this article, more and more projects and participants are actively entering the preconfirmation field, each bringing unique innovative solutions aimed at improving the performance and efficiency of Ethereum Layer2. This trend also aligns with the general rule of continuous optimization after the initial implementation of system concepts. I believe this stage marks an important milestone in the evolution of L2 systems and is an exciting and positive development in the current L2 ecosystem.

Improving user convenience through preconfirmation may not only have a profound impact on areas such as DeFi and gaming, which emphasize speed and efficiency, but also reconnect previously fragmented parts of the Ethereum ecosystem by enhancing Ethereum Layer2 performance. This performance improvement may enable more Type-1 Ethereum Layer2 projects to achieve deep integration with Ethereum, thereby unlocking potential that was previously difficult to realize due to speed limitations. These advances are bound to have a far-reaching impact on the entire Ethereum ecosystem.

Preconfirmation is still a challenging and rugged path. However, pioneers like Taiko are forging ahead, focusing on providing users with greater convenience. Innovation has never been easy, but as a supporter of Ethereum and its Layer2 ecosystem, I sincerely salute and encourage their efforts.