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Espresso raises $60 million to achieve L2 expansion through shared sorting

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24-06-19 14:40

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Original author: Yinan

Project introduction

Introduction:

· Espresso Systems started out wanting to build a highly scalable, privacy-focused decentralized L1 protocol, but later found that not so many L1s were needed, so the mission will be achieved by building for the Ethereum ecosystem. Two separate efforts were taken to achieve this vision, addressing privacy and performance issues respectively.

· In order to provide better privacy options, Espresso developed the CAPE application, which is Espresso's smart contract system that enables custom configuration of transaction-level privacy. CAPE can be deployed on any EVM chain.

· The sorter is responsible for verifying and batching transactions made on the Layer 2 blockchain and then sending them back to the Layer 1 chain (such as Ethereum) for settlement. Rollups don’t actually require a sorter; it’s just a design choice to give users a better experience with lower fees and faster transaction confirmations.

· The main issue with sorters today is that they tend to be prone to centralization (in many cases run by a single operator) and present risks such as transaction censorship, MEV extraction, and creating single points of failure (i.e. validity issues).

· Solutions like Espresso’s shared sorter (which relies on separate, permissionless network nodes) are designed to help solve this problem. Espresso is creating a market for shared sorting, through which layer 2 chains sell block space to shared proposers, including proposers from the Ethereum mainnet EVM itself, who create surplus value by satisfying user intent on multiple chains.

Technical Architecture

CAPE

CAPE is an implementation of Espresso Systems' Configurable Asset Privacy protocol on Ethereum. Configurable Asset Privacy is a protocol that enables asset creators to issue private digital assets while specifying parties that can view specified data about ownership and transactions. CAPE also supports more advanced strategies using private verifiable credentials, freezing keys, or threshold schemes.

VERI-ZEXE — Decentralized Private Computation (DPC) System

In 2019, Bowe et al. proposed a scheme called Decentralized Private Computation (DPC) that allows users to perform arbitrary computations off-chain and submit transactions using zero-knowledge proofs to prove the correctness of that computation. They implemented a system called ZEXE (zk-execution), which instantiates the DPC solution to solve the above two pain points. Roughly speaking, ZEXE is a "programmable Zcash" that is promoted from a single application system to a smart contract system while retaining privacy guarantees.

VERI-ZEXE improves the state-of-the-art by ~9.0x in transaction generation and ~2.6x in memory usage, and is used in future versions of CAPE to enable arbitrary user-defined asset strategies while maintaining configurable asset privacy.

HotShot

HotShot is a consensus protocol that prioritizes high throughput and fast finalization, based on the HotStuff protocol.

HotShot is open and permissionless, and it decentralizes participation in the sorter network, providing high throughput and fast finality while also guaranteeing security and effectiveness. HotShot uses a Proof of Stake ("PoS") security model, and one of the key requirements put forward by the Espresso team is to achieve strong performance without affecting the size of the validator set. Specifically, HotShot should at least be able to scale to include participation from all Ethereum validators (currently over 700,000).

Tiramisu

Tiramisu is a data availability solution that is innovative in that it has three novel layers; most rollups rely on L1 blockchains (such as Ethereum) to provide data, but the downside is that it is very expensive.

Tiramisu’s base layer is called Savoiardi. This is a bribe-resistant layer (similar to Ethereum’s danksharding proposal) that provides the highest level of security. However, due to this feature, it is the least user-friendly of the three layers. To address this, Espresso added two layers to its solution.

Mascarpone is the middle layer that guarantees efficient data recovery by electing a small data management committee.

Cocoa is aptly named the “top sprinkler” of the entire system. Cocoa helps Tiramisu provide “Web2-level performance” by providing a content delivery network for Tiramisu. This facilitates efficient data recovery and greatly speeds up data propagation. Given that this layer is centralized in nature, it is completely optional and Tiramisu works perfectly without it. It helps speed up data availability and can be easily changed or removed.

Espresso Systems designed its protocol with flexibility and modularity in mind, and rollup devices using its sorter can also use any other data availability solution if they do not want to use Tiramisu.

Espresso Sequencer

is a decentralized transaction ordering system for layer 2 scaling solutions on Ethereum, a decentralized shared ordering layer.

Espresso Sequencer is designed around a single decentralized proof-of-stake security model that supports a consensus protocol for ordering transactions and a data availability mechanism that enables further performance benefits. It also contains a rollup contract system that registers committed blocks of ordered transactions, verifies their consistency with the consensus protocol and availability certificates, registers updated state commitments for each zk-VM deployed to the Espresso Sequencer, and receives and verifies proofs of state updates.

Espresso Sequencer supports decentralization of L2. It handles decentralized ordering and data availability of rollup transactions, acting as a middleware between rollups and their underlying L1 platform. Espresso Sequencer is designed as a platform on which any zk-VM or optimistic VM can be deployed. Eventually, Espresso can also act as an interoperability layer by replicating zk-VM and optimistic VM to multiple L1s simultaneously.

Development Progress

· 2022/06/15—- Espresso starts using CAPE on the Goerli testnet

· 2022/11/28—- Espresso releases Espresso testnet 1---Americano, and publicly releases Espresso Sequencer for the first time

· 2023/07/20—- Espresso Systems and Polygon zkEVM launch shared Doppio testnet

· 2023/08/05—- Espresso opens the Doppio testnet to the public and releases a demo of the end-to-end integration of the Espresso Sequencer with the Polygon zkEVM stack.

· 2023/09/29—- Espresso Systems releases testnet 3---Cortado, seamlessly integrating OP Stack aggregation and Polygon zkEVM aggregation to achieve decentralized, shared ordering.

· 2024/01/26—- Espresso Systems releases testnet 4, Gibraltar, showcasing integration with the Arbitrum technology stack. And for the first time, sees external operators running Espresso Sequencer nodes. (This testnet version also sees Espresso Sequencer support for four rollup stacks (Arbitrum, Cartesi, Optimism, and Polygon zkEVM) and multiple collaborations with Rollup projects.)

· 2024/02/03—- Espresso is about to launch its fifth testnet, Cappuccino, where it will recruit more and more entities to run Espresso Sequencer nodes to further decentralize the sorter.

· 2024/03/13—- Espresso is creating a shared ordering market through which layer 2 chains sell block space to shared proposers, including proposers of the Ethereum mainnet EVM itself, who create surplus value by satisfying user intent on multiple chains.

· 2024/05/22—- Espresso releases testnet 5---Cappuccino, Espresso has expanded the HotShot final layer to 100 nodes on the Cappuccino testnet. The testnet also adds support for Arbitrum fraud proofs.

Ecosystem

Project Collaboration

· 2023/07/19—- Espresso Systems and EigenLayer announced an ecosystem partnership to leverage re-collateralization on the Espresso Sequencer network. Through EigenLayer, Espresso Sequencer will be able to access Ethereum’s staking capital base and decentralized validator set, thereby optimizing node usage and improving capital efficiency.

· 2023/07/20—- Espresso Systems and Injective partnered, Injective integrated Espresso Sequencer, and the collaboration will start with Cascade, the first inter-chain Solana SVM rollup for the IBC ecosystem, and demonstrates Injective’s commitment to long-term decentralization and scalability. Cascade is currently in public testnet, allowing developers to deploy Solana contracts on Injective and the broader IBC ecosystem for the first time.

· 2023/07/20—- Espresso Systems and AltLayer bring Espresso Sequencer to the AltLayer Stack, providing developers with more options for accelerating decentralization through AltLayer's decentralized verification and Espresso Sequencer. The two companies will explore integrations between Rollups built using the AltLayer platform and Espresso Sequencer.

· 2023/07/20—- Espresso Systems and Catalyst collaborate to improve interoperability, with Catalyst becoming the first application dedicated to the Espresso Sequencer ecosystem. Catalyst is a cross-chain AMM platform focused on connecting modular blockchains. Catalyst is committed to leveraging Espresso Sequencer, laying the foundation for secure and seamless cross-rollup interoperability. In the coming months, Catalyst plans to prioritize the deployment of Rollups using Espresso Sequencer.

· 2023/07/20—- Espresso Systems announces plans to integrate with Spire, a layer 3 rollup-as-a-service offering, publicly announcing plans to use Espresso Sequencer for ordering and data availability.

· 2023/07/20—- Espresso Systems launches a testnet integrated with the Polygon zkEVM stack, allowing users to submit transactions to a fork of the Polygon zkEVM, which are then routed to and ordered by nodes running the Espresso HotShot protocol.

· 2023/07/20—- Espresso Systems and Caldera bring decentralized sequencing to the OP Stack, Espresso Systems and Caldera will deploy optimistic rollups, using the Espresso Sequencer for ordering and fast confirmations, and Espresso Data Availability (DA) for storage. Caldera will provide the OP Rollup interface, site hosting, block explorer, and indexer.

· 2023/12/21 —- Espresso Systems and Offchain Labs announced a partnership to bring decentralized versions of Timeboost transaction ordering and the Espresso Sequencer to the Arbitrum ecosystem and beyond. Timeboost is a transaction ordering strategy originally developed by Offchain Labs that is designed to protect users from front-running and mitigate the harmful effects of Maximum Extractable Value (MEV).

· 2024/01/26—- Espresso Systems and blockchain infrastructure provider Blockdaemon are working together to support Espresso Systems by deploying external sequencer nodes. It will manage 4 sequencing nodes located in Europe and Asia. Current collaboration 2024/03/08—- Espresso Systems and Across are working together. This collaboration will allow Across Protocol to leverage Espresso's fast pre-confirmation capabilities, which are guaranteed by the HotShot consensus protocol, which reaches finality after two consecutive blocks. The integration will leverage HotShot's shared security and fast finality to bridge between Rollups.

Project Team

· Ben Fisch—- CEO and co-founder of Espresso Systems. He is an assistant professor of computer science at Yale University. Previously, he was a doctoral student at Stanford University, working with Dan Boneh in the applied cryptography research group.

· Charles Lu—- CEO and co-founder of Espresso Systems. He previously served as the head of Binance Labs at Binance. Charles Lu studied at Stanford University.

· Benedikt Bünz—- Co-founder and chief scientist of Espresso Systems. He is a doctoral student in Dan Boneh's applied cryptography group at Stanford University. He mainly focuses on cryptography of cryptocurrencies.

Project Financing

Espresso has raised a total of $60 million through seed and Series B financing.

· On March 6, 2022, Espresso Systems has raised $32 million in funding, led by Greylock Partners and Electric Capital, with participation from Sequoia Capital, Blockchain Capital, and Slow Ventures. Espresso Systems also includes major industry players as supporters, including Polychain Capital, Alameda Research, Coinbase Ventures, Gemini Frontier Fund, Paxos, and Terraform Labs.

· On March 21, 2024, Espresso Systems announced that it had completed a $28 million Series B financing led by A16zcrypto. Espresso noted that Polygon, Taiko, o1Labs, StarkWare, Offchain Labs, and strategic investors from more than 30 ecosystem projects joined their recent Series B financing.

Project Summary

As an indispensable component of blockchain networks, transaction sorting has become a growing problem in the second layer (L2) field. The solution to the problem is a shared, decentralized sorter. A shared sorter essentially provides a decentralized service for rollups. In addition to solving problems such as censorship, MEV extraction, and validity, a shared sorter introduces cross-rollup functionality, opening up a variety of new possibilities.

As a middleware, Espresso mainly provides shared sorting services. Through a shared sorting market and powerful finality tools, it brings new unity and efficiency to the Rollup and Ethereum ecosystem. Through fair economic incentives and sorting income distribution, Espresso not only solves the current Rollup fragmentation problem, but also lays the foundation for future cross-chain operations and a wider ecosystem. In short, keep paying attention.