Re-staking is just the beginning for Puffer. Puffer's mission is to solve the fragmentation problem of Ethereum through Based Rollup.
Host: Joe Zhou, Deputy Chief Editor of Foresight News
Guests: Amir, Founding Contributor of Puffer; Chen Jian, Ethereum Researcher; Zhixiong Pan, Co-Founder of ChainFeeds; Ni Da, Data Arbitrageur; Chen Mo CM, DeFi OG
In this roundtable, we invite representatives from Puffer and OG friends from the Web3 Chinese community to discuss "How Puffer, beyond re-staking, helps Ethereum solve the liquidity fragmentation problem."
Amir, the founding contributor of Puffer, introduced the development history of Puffer, including enhancing the decentralization of Ethereum through anti-slashing technology and lowering the threshold for node participation. He expressed that the upcoming focus of development will be on Puffer UniFi and UniFi AVS. Another core member of Puffer, Christina, introduced Puffer's strong advisory team, including core researcher Justin Drake from the Ethereum Foundation and Shen Yu. She believes that the re-staking protocol is just the beginning for Puffer, and Puffer UniFi's mission is to use Based Rollup solutions to address Ethereum's fragmentation issue.
Additionally, guests like Chen Jian and Zhixiong Pan shared their understanding of Puffer and their attention to its future development. Chen Jian believes that with the development of the entire industry and exploration of technology, Puffer's positioning is no longer just about Ethereum re-staking, but now proposes solutions to Ethereum's liquidity fragmentation problem. Zhixiong Pan believes that Puffer is a protocol emerging from the Ethereum community, centered on underlying technological innovation, exploring new directions for rollups by leveraging underlying security and capabilities.
Dialogue with Amir, Founding Contributor of Puffer
Host: Please briefly introduce the Puffer project and its development over the past year.
Amir: One of the main challenges for Ethereum is maintaining decentralization. Two years ago, when Ethereum transitioned from proof-of-work to proof-of-stake, the centralization of validators raised concerns. The emergence of staking and re-staking products like Puffer is beneficial for maintaining Ethereum's level of decentralization.
In the past year, Puffer has achieved highly efficient permissionless staking, allowing users to become operator nodes by staking just 2 ETH, while becoming a validator node in Ethereum's consensus mechanism requires staking 32 ETH. This greatly enhances the capital utilization efficiency of nodes and provides more returns for stakers and nodes through native ETH re-staking. We have created a permissionless decentralized protocol that operates very similarly to Ethereum itself but achieves minimal governance.
Ethereum still faces the problem of liquidity fragmentation, where users must decide which chain to use, which L2 to go to, and even developers must choose one or two L2s to deploy protocols synchronously. In our view, this is not a zero-sum game but a negative-sum game. Users often do not know which chain to participate in due to liquidity fragmentation. Currently, most users have the same poor user experience; participating in one L2 locks them in, and after unlocking, they cannot use other chains for a short time. When L2s create their own ecosystems and become copies of Ethereum, many protocols are deployed, so users locked in seem to have no reason to leave. However, the numerous L2s today have caused liquidity shortages, and we believe L2s are changing and will gradually evolve into sidechains rather than becoming another Ethereum. Based Rollup can achieve batch processing of transactions, with transactions sorted by validators, allowing for instant withdrawals. Without using any other third-party bridges, the protocol can quickly complete interactions between Based Rollups and can also interact with L1 and execute other transactions, effectively enhancing overall liquidity.
Based Rollup has the drawback of slow transaction sorting by Ethereum validators, as users are limited by a 12-second block time. To address this issue, Puffer proposes another technology called pre-confirmation, namely the UniFi AVS product, which guarantees a fast transaction speed of 100 milliseconds for users.
Host: Please introduce the team and the current development status of the team.
Amir: Jason and I founded Puffer Finance two years ago; we have known each other for ten years and attended the same university. We both have hardware engineering backgrounds, with Jason focusing on zero-knowledge proofs during his PhD, while I prefer hardware engineering, focusing on applying hardware faster to AI infrastructure and underlying infrastructure.
Puffer Labs is building infrastructure for the Puffer ecosystem. The Puffer Foundation will become an important foundation for the development of the Puffer community until it fully transitions to community governance and control. We have introduced the Validator Ticket mechanism and launched our UniFi AVS, which provides pre-confirmation services that will bring 100-millisecond confirmation speeds.
We will announce more information about Based Rollup in the coming weeks. Based Rollup is a rollup that allows for timely withdrawals, also known as atomic composable rollup. Since the sorters are decentralized Ethereum validators rather than running on a single computer, we are deploying a unified Rollup, allowing anyone to deploy their own Based dApp Chain.
Christina: I am currently one of the core members of Puffer and have been with the project since its inception, so I can be considered part of the founding team. I am based in Silicon Valley and have been in the blockchain industry for the past six or seven years, initially responsible for Puffer's marketing and then introducing and maintaining investor relations, gradually evolving into a core team member.
Through more than a year of development, our team has completed four rounds of financing. Puffer is the only LRT project that has received investments from Binance Labs, Coinbase Ventures, and numerous Wall Street funds. Our advisory team includes industry leaders, such as Justin Drake, a core researcher at the Ethereum Foundation, who was a key behind-the-scenes figure in helping Ethereum upgrade from PoW to PoS. Additionally, Shen Yu is also a member of the advisory team and is very strict in reviewing our technology. Currently, we have reached 32 full-time members, including many outstanding talents in the industry.
In everyone's impression, Puffer may just be a liquidity re-staking project, but in reality, re-staking is just the beginning. Puffer's mission is to solve Ethereum's fragmentation problem through Based Rollup. After Ethereum upgraded to PoS, if you want to become an Ethereum validator, you need to stake at least 32 ETH. Although this is much lower than the previous mining threshold, ordinary people still cannot participate; only those with substantial funds can become Ethereum validators. Puffer has significantly lowered the threshold, allowing anyone to become an Ethereum validator with just 2 ETH.
At one point, Lido's market share reached 33%, raising community concerns that Lido would affect Ethereum's decentralization and neutrality. Puffer initiated a "vampire attack," successfully reducing Lido's market share to 28%, greatly diminishing the threat of centralization, which is a significant contribution Puffer has made to the Ethereum ecosystem.
Next, Ethereum faces a new problem: there are many L2s, leading to significant liquidity fragmentation. The Ethereum Foundation foresaw this issue early on and is actively seeking solutions. To address Ethereum's liquidity fragmentation problem, Justin Drake proposed the Based Rollup solution, which he believes is a terminal technology. After multiple discussions, we initiated the development of the Puffer UniFi product to implement Based Rollup, with the testnet launching soon. The combination of Puffer UniFi and UniFi AVS can achieve transaction speeds of 100 milliseconds and contribute more significantly to Ethereum's scalability and ecosystem development.
Zhixiong Pan: How do you view Bitcoin re-staking? Is there enough differentiation in Bitcoin re-staking, and will you consider integrating it?
Amir: Bitcoin cannot be accurately classified as re-staking; Ethereum's re-staking is essentially a branch of programmable slashing. BTC itself does not have native staking, so there is a fundamental difference from Ethereum's LRT. Puffer is very interested in new assets, including potential stablecoins, ERC-20 tokens, and various forms of BTC. These assets may also be staked on the Puffer platform in the future.
Zhixiong Pan: What different opportunities do general L2s and application chains have in the future?
Amir: If a rollup is created but cannot be combined with L1, it means users cannot freely move between L1 and L2, leading to delays of hours or even days. Most importantly, you cannot launch applications that are truly built on specific L2s; users must wait or rely on trusted third-party bridges to use them.
To enable cheaper transactions, we need to build chains that are composable and can integrate with L1. We need to make them composable through shared sequencers, allowing them to share liquidity and facilitate capital flow. Justin Drake proposed using Ethereum L1 as the sequencer. Everyone trusts the data availability of Ethereum L1. So why not use Ethereum validators to sort its transactions? To achieve composability with another L2, we need to complete proof services using technologies like SGX hardware-supported TEE.
Chen Jian: What is the current focus of Puffer's development?
Amir: The next focus of development is Puffer UniFi.
Puffer is rooted in Ethereum's native capabilities, and Puffer UniFi will bring changes to user experience, including the ability to trade without paying additional gas fees. The pre-confirmation technology mentioned earlier is a feature that positions Puffer far ahead of other competitors in the Based Rollup space. Puffer itself can be understood as a layer one node of Ethereum, capable of implementing millisecond-level transaction pre-confirmation logic. Additionally, Puffer allows users to stake for rewards, and combined with improvements in transaction speed and experience, I believe Puffer will contribute even more to the Ethereum ecosystem in the future.
Chen Jian: What is the relationship and difference between Based Rollup and chain abstraction?
Amir: Chain abstraction is essentially a bridge, while Based Rollup addresses the issue of liquidity fragmentation not through a bridging method, which is the fundamental technical difference. If the fragmentation issue is solved through a bridge, it remains a third-party solution, and gaining sufficient trust in a third party is still quite difficult. The chain abstraction solution requires users to use a third-party product to proxy transactions across various chains. For Puffer UniFi, we use Ethereum layer one nodes to help users complete the pre-confirmation and packaging process for transactions across various Based Rollups. So this is a bridge-less concept; since there is no bridge, there is no issue of third-party trust.
Dialogue with the Chinese Web3 Community Builders
Host: How do you view Puffer's role in the industry?
Zhixiong Pan: Puffer is a protocol that has emerged from the Ethereum community, centered on underlying technological innovation. It differs from some other LRTs because Puffer aims to maintain good development efficiency and functionality while decentralizing, which is quite challenging. However, I believe Puffer has found a good balance, and there are many directions worth exploring in the entire ecosystem, such as the AVS technology based on Based Rollup. Puffer explores new directions for rollups by leveraging underlying security and capabilities, such as Based Rollup and pre-confirmation technology. The entire Ethereum community should encourage new concepts and ideas, even if the demand side has not yet emerged, as it is a technology worth investing in for the future.
Chen Jian: I have been closely accompanying Puffer for nearly two years, watching it grow from a team of just three people to dozens. Puffer initially aimed to create a decentralized competitive product to Lido, then moved to re-staking, and now is working on Based Rollup. As the entire industry develops and explores technology, the problems Puffer addresses for the Ethereum ecosystem have become increasingly significant. From solving the centralization issue of Ethereum stakers to addressing the native nature of re-staking, and now tackling the overall liquidity fragmentation problem of Ethereum, Puffer has consistently sought ways to make Ethereum more decentralized and efficient. It is definitely not a speculative team.
Ni Da: When Puffer first launched its re-staking service, it had a feature for team selection. I remember Shen Yu and Chen Jian promoting the project, which showed me that this project places great importance on the community, especially the Chinese community. Many friends in the Chinese community have been actively building, and Puffer has provided its own solutions to the liquidity fragmentation problem in Ethereum, which is commendable. The fact that Puffer spent $1.8 million to purchase EIGNE for airdropping to the community is also one of the reasons I personally like Puffer.
Chen Mo: It is not easy for Puffer to find the UniFi direction from the re-staking track, and it aligns well with Based Rollup. There are many re-staking projects now, and as the market puts it, infrastructure may be more abundant than applications, with the application side clearly lagging behind. It’s like building many roads but having no cars running on them. This reflects the current market sentiment, but this issue cannot be entirely attributed to re-staking, nor is it appropriate to define re-staking as meaningless. Market explosions need to wait for infrastructure to lead, and only with more complete infrastructure can developers build new applications, which will bring in new users. After completing this process, a noticeable wealth effect may emerge.
We need to consider whether we are providing developers with more possibilities and choices on the application side. If Puffer UniFi has found such a direction that can provide more possibilities for future innovations, I think it is quite valuable. Puffer UniFi and chain abstraction share a common goal: enhancing the ultimate user experience, allowing users to use applications on different chains without worrying about which chain they are on, or creating barriers in asset transfers between applications due to being on different chains. Puffer UniFi achieves this in a more native and straightforward manner. At this level, Puffer can provide more innovation for future developers.
Host: What are your expectations for Puffer's future development?
Chen Mo: I am particularly focused on the UniFi and Based Rollup directions. The advantage of the UniFi solution is that it is more native and simple, without needing to introduce an additional third party or consensus layer to solve the problem. The issue with chain abstraction is that it must introduce a third party, which could be a bridge or a chain. This presents significant challenges, as the newly introduced third party must either have a strong decentralized consensus, which is not easy to establish, or require many trusted institutions to endorse it.
However, UniFi still has its drawbacks. If applications built on the UniFi or Based Rollup ecosystem can achieve synchronization and coordination through L1 sorting, integrating existing popular solutions with UniFi may be relatively difficult. If UniFi can become a significant ecosystem in the future, its coordination and synchronization will provide users with a good experience. But the market is such that the order of who comes first is also very important. The solutions that emerge later face challenges not only from the market but also from technology. How to get users to accept it, how to drive more chains, and build a stronger ecosystem are all things worth looking forward to.
Ni Da: Our current focus is still on Ethereum, and we hope Puffer can do more for the Ethereum ecosystem even when facing unfair treatment. The re-staking bonus period has passed, so users may no longer be concerned about what will happen with re-staking, but rather focus more on returns and security. Additionally, community interaction is important; Puffer is willing to develop together with the Chinese community and the overall community.
Zhixiong Pan: Puffer was one of the early protocols working on AVS and re-staking, so expectations should not be too high, as the maturity of re-staking will take a long time to prove. Additionally, Based Rollup is a completely new direction and ecosystem that requires more time for exploration and layout. Of course, UniFi is a very interesting protocol that combines new technologies and concepts, bringing user experiences closer to more traditional processes while maintaining consistent values. Therefore, I also look forward to UniFi attracting more applications and users.
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