Today we are going to talk about unichain, which is the second-layer network of uniswap. At present, this news has directly pulled up the price of the currency by about 20%. Now it has adjusted back. So is this second-layer network of uni good or bad for uni in the end? Let's take a look at its technical white paper. (Previously, I talked about UNI's collection of decentralized finance-UNISWAP decentralized exchange explanation, and the king-level update-the new version UNISWAP X)
Why build this second layer network? -Solving the challenges faced by DeFi
Over the past six years, the Uniswap protocol has processed $2.4 trillion in trading volume, attracted millions of users, and completed nearly 500 million transactions. The design goals of this time include:
1. Low cost and further decentralization
The original uni was built on Ethereum, but the biggest problem with Ethereum is that the gas fee is too expensive and the speed is slow. If it is migrated to L2, the transaction cost of Unichain will be reduced by about 95% in the short term.
The huge gap between decentralized DEX and CEX is the gas fee issue. The current transaction fee of mainstream CEX is 0.08-0.1%, and the lowest for VIP users is about 0.06%, which means that a transaction of 10,000 U is about 8-10 U, while the gas fee for each transaction in CEX is about 8 US dollars (currently). In other words, if the transaction is higher than 10,000 U, it is more cost-effective in DEX, but many small transactions are not so favorable.
2. Fast transactions, almost instant
The next generation of DeFi requires faster transactions. Unichain will achieve 1 second block time at launch and will soon introduce 250 millisecond "sub-blocks" to make the user experience near instantaneous. Faster blocks also improve market efficiency and reduce value loss due to MEV.
The improvement is made possible by a block generator developed in partnership with Flashbots that uses a trusted execution environment (TEE). In addition to improving speed, TEEs can also improve transparency in transaction ordering and prevent transaction failures.
3. Seamless multi-chain transactions
As part of the Optimism Superchain, unichain is working with OP Labs to implement native interoperability, enabling single-block cross-chain messaging between Superchain L2s. For chains outside of Superchain, interoperability between all chains is improved through projects such as ERC-7683.
Shortly after Unichain goes live, cross-chain trading capabilities will be introduced in the Uniswap interface and Uniswap wallet.
Technological innovation
To address existing challenges, Unichain introduces two main features: Verifiable Block Generation and Unichain Verification Network.
1. Verifiable block generation
Block generation plays a crucial role in determining Maximum Extractable Value (MEV) leakage and latency characteristics. Unichain employs a novel block generation protocol that optimizes user experience and value retention while maintaining neutrality.
1.1 Separation of sequencer and block generator
Unichain separates the role of block generation from the sorter through a verifiable block generator built in collaboration with Flashbots. Block generation operations are performed within a trusted execution environment (TEE), allowing external users to verify that they comply with the sorting rules. TEE provides higher trust and security guarantees compared to traditional servers.
The initial TEE generator will run on Intel's TDX hardware with an open source generator code base. It provides private data access and verifiable execution through its computational integrity properties. Proofs of execution will be published publicly, allowing users to verify that blocks were generated within the TEE according to the declared policy.
TEE block generation not only reduces the risk of autonomous ordering, but also provides a framework for transparent incremental improvements.
1.2 Flashblocks
Lightning blocks are block pre-confirmations issued by TEE block generators. Shorter block times reduce the selection cost for liquidity providers, reduce latency for users, and promote more efficient on-chain markets. As transactions flow to the TEE generator, it progressively commits to generate lightning blocks, which are collections of transactions that will be included in the final proposed block. The sorter then broadcasts these lightning blocks as pending blocks, providing an experience that is several times faster than the default block time.
In most current rollup architectures, block proposals are difficult to achieve sub-second block times due to fixed delays in serialization and state root generation. Lightning blocks bypass this overhead and make low-latency blockchain interactions possible.
TEE enforces prioritization of each lightning block and supports a lightning block bundle type that allows users to target specific lightning blocks for inclusion. These features combined enable applications to allocate MEV to users through methods such as MEV taxes.
1.3 Trustless rollback protection
Verifiable generators provide trustless rollback protection, reducing the risk of users paying fees for failed transactions. TEEs simulate transactions when generating blocks and are programmed to detect and delete any failed transactions.
Rollback protection reduces user friction and improves efficiency for automated market makers (AMMs) and intent-based systems, allowing participants to have greater confidence in their trades.
1.4 Future Work
Verifiable block generators are the foundation for many future Unichain improvements, potentially including:
- Encrypted memory pool: Users can encrypt transactions to enhance privacy before transactions.
- Scheduled Transactions: TEEs can be programmed to allow users or smart contracts to submit automated transactions, executing scheduled or recurring actions.
- TEE coprocessor: TEE can allow smart contracts to request private, verifiable computations.
2. UNICHAIN Verification Network (UVN)
Unichain addresses the risk issues in a single sorter architecture by introducing the Unichain Verification Network (UVN). UVN is a decentralized network of node operators that independently verify the latest blockchain state. While rollups benefit from the strong security of the underlying blockchain, the behavior of the sorter still affects the liveness, MEV dynamics, and finality of the blockchain.
UVN is a scalable platform initially focused on validating blocks for faster finality.
In a single-sequencer rollup, there are two main risks in particular that affect the speed of cross-chain settlement:
- Block ambiguity risk: The sequencer may propose multiple conflicting blocks at the same height, leading to uncertainty as to which block will be finalized.
- Invalid block risk: The sorter may publish an invalid block, causing the chain to roll back when the fault proof is submitted, further delaying settlement.
These risks lead to longer wait times for blockchain finality, preventing liquidity from flowing smoothly between networks. UVN addresses these challenges by having validators attest to the canonical chain when a block is proposed, providing faster economic finality.
2.1 Staking Validator
To become a validator in UVN, node operators must stake UNI on the Ethereum mainnet. The staked amount is tracked in a smart contract on Unichain, which receives notifications about stake and unstake operations via a local bridge. Unichain blocks are divided into fixed-length epochs. At the beginning of each epoch, the current staked balance is snapshotted, blockchain fees are charged, and rewards for each staked token are calculated.
Participants can also stake and vote for a validator, thereby increasing the stake weight of that validator. A limited number of validators with the highest stake weight will be considered the active set and will be eligible to issue proofs and receive the specified reward for that period.
Summarize
At present, Uniswap is definitely more beneficial than harmful when it comes to building a second-layer network, especially in terms of transaction fees, which is undoubtedly the most important point for users. If the fees are reduced to the current 5%, it can completely compete with the first-tier CEX. Moreover, the controversial UNI is worthless, which gives UNI real empowerment, because UNI can be pledged to become a node and become an indispensable part of the entire ecological closed loop. Third, it is cross-chain and user-insensitive. Fourth, the allocation and capture of MEV can be controlled by yourself, including rollback, and there is no need to worry about hacker incidents. So UNI is very optimistic.
