Equilibrium Infra Bulletin #36: App-Specific Sequencing, State of Wallets, zkVM testing, and more...
Equilibrium Labs builds the state-of-the-art of decentralized infrastructure. We are a global team of ~30 people who tackle challenges around security, privacy, and scaling.
🔍 A New Era of DeFi with App-Specific Sequencing (Yuki Yuminaga, Sorella Labs)
⚡️ Topic Summary
App-specific sequencing provides additional guarantees for applications to control transaction ordering while remaining on a shared ledger. It aims to reduce toxic MEV (improving UX) and allow applications to capture more of the value they create. It is also in the interest of general-purpose chains (L1/L2s) to keep successful apps happy rather than have them launch app chains and leave the ecosystem (lose users, liquidity, and mind share).
Applications enabled by app-specific sequencing (sovereign applications) have the following properties:
Restricted Sequencing Rights: Only a designated sequencer can interact with the application’s contract on the chain that it settles to.
App-Specific Mempools: Users send signed messages to an app-specific mempool rather than a public mempool. These intents are then collected and processed by the app-specific sequencer.
Order-Agnostic Outcomes: Transactions from an application are consolidated into a single bundle that is sent to builders for inclusion. However, this bundle needs to be independent of the state of other applications so that its position in the block doesn’t matter. If there are dependencies with other apps, things become more complicated.
🤔 Our Thoughts
App-specific sequencing is only one solution to the wider problem of how apps can capture more value while retaining (some) composability with other apps. Another approach is app-specific chains/rollups that leverage shared sequencing (or based sequencing). All approaches ultimately try to achieve the same end goal but have different tradeoffs as seen in the table below.
Overview of different solutions (source) Some of the downsides and additional considerations with the app-specific sequencing approach include:
Liveness guarantees - Relying on the app-specific sequencers to follow the protocol correctly and provide timely state updates.
Additional trust assumptions - This can be mitigated with either economic or cryptographic guarantees to ensure that the sequencer adheres to the prescribed sequencing rules.
Composability - Many apps have dependencies on each other, which would likely require a “super builder” that can order transactions for multiple apps or other solutions like inclusion preconfirmation or builder commitments. However, this introduces yet another point of complexity and coordination.
Value share - While the current state is clearly extractive from the POV of apps, it’s also unlikely that the validators/proposers are willing to give up 100% of their current income. An equilibrium likely exists in the middle, but how exactly benefits will be shared amongst users, apps, and validators of the base layer is unclear.
Summary graph of tradeoffs between different solutions by FastLane (source)
💡 Research, Articles & Other Things of Interest
📚 Reflections Post Aleo Mainnet Launch: Equilibrium started working on Aleo back in 2020 and four years later the network is finally live. The post highlights our key engineering contributions and covers what’s next for us.
📚 State of Wallets 2024: New research from Flashbots shows that payment for orderflow is increasing.
📚 zkVM Testing Report: Evaluating and comparing different zkVMs along with a link to tests for anyone who wants to replicate the tests.
📚 Introducing Gateway: The Decentralized Private Computer: The Gateway Virtual Machine (GVM) is a Turing-complete VM designed to execute arbitrary functions over any set of private inputs. Leverages MPC (garbled circuits) and all computation is verifiable through ZKPs.
📚 Possible futures of the Ethereum protocol - Part 1 (The Merge) and Part 2 (The Surge): Paths to how Ethereum could achieve single-slot finality, more scalability across L1 and L2s, and other features on the roadmap.
📚 The Impact of Increasing Blob Count: Pectra, PeerDAS, and Beyond: What can you expect from the upcoming DA upgrades to Ethereum?
🤌 Personal Recommendations From Our Team
📚 Reading: The Freeze-Frame Revolution - Peter Watts: The components of any successful revolution are conspiracy, code, and unavoidable casualties.
🎧 Listening: Heart Is A Beating Drum - The Kills: From the 2011 album “Blood Pressures” by the English-American rock duo.
💡 Other: Quantum Computing: Between Hope and Hype: Should we worry about the effects of quantum computing and have a plan? Scott Aaronson thinks so.