Ethereum Liquidity revolution pioneer force

In the Ethereum ecosystem, stake services are an important cornerstone of network security and decentralization. However, traditional stake mechanisms still face many challenges in terms of barriers, efficiency, and profit distribution. As an innovative infrastructure in the Ethereum ecosystem, Puffer has completely reshaped the stake ecosystem of Ethereum with Liquidity for stake (nLRT), Puffer UniFi based on Based-Rollup technology, and pre-confirmation technology UniFi-Preconf-AVS, bringing new opportunities for users and node operators. This article will comprehensively analyze the technical highlights and business model of Puffer, and explore its profound significance for Ethereum's decentralization and sustainable development.

Introduction to Puffer

Puffer is an innovative infrastructure of Ethereum, and its core products include:

Liquidity re-stake (LRT): By using the native Liquidity re-stake protocol, you can launch Node services with as low as 2 ETH, equipped with anti-slashing (anti-slashing) technology;

UniFi-Based-Rollup: Built on Based-Rollup technology, solving the Ethereum Liquidity fragmentation challenge, and providing permissionless vertical stake services;

UniFi-Preconf-AVS: By pre-confirming ( preconfirmations) technology, the transaction time is greatly shortened, making the user experience of Based-Rollup comparable to other high-performance Rollup technologies.

Three Core Product Goals Clearly Defined

For users: Solve the Ethereum Liquidity fragmentation challenge while significantly increasing transaction speed while maintaining high Decentralization.

For ETH Ethereum Node: By providing sustainable returns, it helps Ethereum further achieve Decentralization, thereby enhancing its trustworthiness.

Business Analysis

Puffer further creates more potential returns for Puffer's stakers by building the UniFi application chain and technology stack, and UniFi-AVS for pre-confirmation.

puffer-UniFi-Based-Rollup and Technology Stack

Compared to Optimistic-Rollup and ZK-Rollup, the main difference of Based-Rollup lies in the different transaction ordering. The transaction ordering of OP-Rollup and ZK-Rollup requires two rounds of Layer2 and one round of Layer1. However, the transaction ordering of Based-Rollup is all done in Layer1, which means the highest level of decentralization. Currently, most Layer2 solutions adopt centralized ordering mechanisms, which eliminates single point of failure and malicious risks, and all ETH stakeholders can benefit from it.

The puffer plan to build its own UniFi-Based-Rollup and promote the UniFi technology stack, thereby achieving an ecosystem similar to OP-Superchain.

However, due to the consistent (12s/block) block time of Based-Rollup and Layer1, it is not sufficient to meet the application requirements. How to improve user experience, especially transaction speed, becomes extremely important.

puffer-UniFi-Preconf-AVS

UniFi-Preconf-AVS, which means pre-confirmation ( preconfirmations ) technology, can greatly reduce the waiting time for users when using UniFi-Based-Rollup (100 millisecond level ), making the user experience of Based-Rollup comparable to OP-Rollup and ZK-Rollup. Therefore, only with the blessing of UniFi-AVS, UniFi-Based-Rollup is a competitive and complete system. Validators providing verification services for UniFi-AVS can all benefit from staking.

Puffer UniFi first stage testnet ( limited to developers ) has been completed, the second stage testnet ( will be launched to the public ) soon.

Puffer provides permissionless, verticalized ETH Ethereum stake service (LST+LRT), belonging to the native Liquidity restake protocol (Native LRT, nLRT).

Typical Liquidity stake protocols, such as LidoDAO, RocketPool, etc. Typical vertical protocols, such as Ether.fi, Puffer, etc. If only LRT service protocols are provided, there is KelpDAO.

In the Ethereum Liquidity stake service system, there are three important roles, namely ETH staker (Staker), Node operator (Node-Operator), and Liquidity stake protocol.

stakers deposit ETH into the Liquiditystake protocol and receive Liquiditystake tokens ➡ The Liquiditystake protocol collaborates with Node operators to jointly launch an Ethereum verification node, with the Node operators responsible for operation to earn PoS verification rewards ➡ The PoS verification rewards are returned to the stakers as agreed, while the remaining portion is used for protocol fees and Node operator fees.

The launch of ETH blockchain validation Node has the following pain points:

1. The entry threshold is too high, requiring 32ETH to start, with low capital utilization;

2. To avoid the risk of being confiscated due to Node offline, the common industry practice is to run one Node on two devices (i.e., one device is in standby as a backup). However, this further creates the risk of double signing, and the penalties associated with double signing are even more severe;

3. The stake income of the ETH workshop decreases with the increase of the stake rate of the ETH workshop, but the emergence of Eigenlayer is expected to systematically solve the problem of continuous low yield;

4. Launching ETH verification Node through Liquiditystake protocol, most protocols adopt whitelist mechanism, not permissionless.

Puffer took the opportunity to solve the above pain points, and independently developed unique anti-seizure technology and a node mechanism that can be operated with as low as 2ETH.

puffer 抗罚没技术

The technology consists of two modules: Secure-Signer( and Remote-Attestation-Verification) (RAVe).

The secure signature module is the use of a trusted execution environment (TEE) for storing and managing the validator's public key required for Node verification. The TEE can ensure the security of the validator's public key to the highest degree, comparable to the security level of a cold wallet.

The remote authentication module is used to verify whether the security signature module is running normally and to extract the verifier's public key in a secure environment to complete remote signature.

By using the above-mentioned anti-forfeiture technology, the risk of forfeiture is minimized to the greatest extent, thereby increasing the possibility of improving capital efficiency.

In addition, puffer monitors the running status of puffer series nodes through the Guardians module to prevent nodes from being seized for a long time due to offline status, ensuring that node operators do not suffer significant financial losses.

Puffer starts at 2ETH to activate Node and Validator Tickets ( Validator-Tickets) mechanism

Node operators initiate the puffer series Node by paying 2ETH as collateral and purchasing validator tickets.

The benefit of starting a Node with as low as 2ETH is that, the more Nodes operated, the higher the probability of being randomly selected as a validating Node, the higher the yield, and the higher the capital utilization; it also significantly reduces the entry barrier, indirectly increasing the level of Decentralization of the Ethereum network.

VT is equivalent to the ticket to open the Node. The introduction of this mechanism helps to constrain Node operators ( to avoid loss of liquidity stake or even principal loss ), and is equivalent to prepaying the stake income to the stakeholders. It should be noted that the price of VT will change with the increase or decrease in Node startup demand.

The emergence of Eigenlayer has brought more income to ETH Ethereum stakers. Liquiditystake certificates are lent out to applications chains, infrastructure projects in need through re-staking by Eigenlayer's active verification service (AVS) to secure consensus of ETH Ethereum, in exchange for re-staking income.

Puffer, as a vertical stake service protocol, its issued pufETH belongs to Liquidity stake voucher, which can simultaneously obtain PoS validation income and AVS validation income.

Valuation Analysis

This article only provides valuation methodology and does not provide specific conclusions.

Valuation of Vertical Stake Services

Method one, the amount of ETH staked through ether.fi is about 2.1M, with ether.fi having a market value of $330M, while the amount of ETH staked through puffer is about 220k, which can be used as a reference to estimate the valuation of pufferstake service.

Method 2, the estimated value of pufferstake service can be obtained by participating stake amount of ETH in puffer * ETH price * stake annualized return (LST+LRT) * puffer protocol fee rate * PE.

UniFi and UniFi AVS valuation

The public chain Transactions is a key metric for computing revenue; Transactions * Gas * Margin * PE yields the valuation of puffer UniFi+UniFi AVS.

Risk Warning

Please note that Puffer protocol fees and stake income are not clear, there is uncertainty in the development of UniFi ecosystem, and there are risks such as protocol vulnerabilities. Puffer attaches great importance to protocol security. In the past year, Puffer has hired four professional code audit companies, Blocksec, Creed, Nethermind and Slowmist), to complete four code audits, and the risk of protocol vulnerabilities is relatively low.

Conclusion

Through innovative technological design and deep industry insights, Puffer has solved multiple pain points in the ETH stake ecosystem. Its native Liquidity for staking, UniFi-Based-Rollup, and pre-confirmation technology not only optimize the user experience but also help the decentralization process of the Ethereum network. Against the backdrop of rapid industry development, Puffer's emergence provides a new industry benchmark, and its future potential is worth continuous attention and expectation.