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The backbone of Ethereum is the validators, who are responsible for maintaining the security of the network and confirming transactions. Pre-confirmation is like giving this backbone a face, directly improving the user experience (UX) of ordinary users when using cryptocurrency products.
2025 is a key year for large institutions to enter the cryptocurrency market. Ethereum has an advantage in institutional staking with its decentralized validator network. Pre-confirmation may completely change the income model of validators, such as increasing income through "Proposer Commitments as a Service". But for validators, participating in pre-confirmation has both high returns and risks.
📍 Below, we will explain in four parts what pre-confirmation is, why it is important.
1) How Validators Participate in Pre-confirmation
2) What Pre-confirmation Can Bring
3) How Much Can Be Earned
4) Limitations and Potential
1) How Validators Participate in Pre-confirmation 📍
The core of pre-confirmation is: as a validator, you commit to prioritizing certain transactions (pre-confirmation transactions) in your own slot. This commitment needs to be secured through staking, and if not fulfilled (e.g., going offline), it will result in slashing. Here are the steps to participate:
1️⃣ Register Pre-confirmation Contract
You need to register your withdrawal address and BLS key (a type of cryptographic signature method) in a pre-confirmation contract.
There are various protocols to choose from, such as the 'Universal Registration Contract' (URC) developed by the Ethereum sorting community, which supports one withdrawal address corresponding to multiple BLS keys, making it easier for node operators to manage multiple validators.
Even if you are a solo validator, running only one beacon node and one validator, URC is still applicable.
2️⃣ Choose whether to delegate to a pre-confirmation provider or gateway
Gateways are responsible for collecting transaction requests from wallets, applications, or Rollups, and then finding validators to process these requests. You can register with multiple gateways until your block space is full. But do not over-commit, or you might be slashed for failing to fulfill.
If you don't delegate, you can also manually build batches of pre-confirmation transactions yourself.
3️⃣ Run Pre-confirmation Auxiliary Tools (Sidecar)
These tools are similar to upgraded versions of mev-boost, responsible for receiving, signing, and limiting block production. Commit-Boost is a neutral public tool that supports proposer commitments; there are also some gateway-specific tools like bolt, primev, etc., which are all variants of Commit-Boost.
4️⃣ Slashing Mechanism
If something goes wrong (for example, if you or the gateway fail to fulfill the commitment), the 'challenger mechanism' will determine responsibility. Challengers must submit evidence as stipulated by the protocol to prove who is at fault. Due to the security risks involved, this mechanism is still under discussion.
2) What Pre-confirmation Can Bring 📍
🔹 For Validators: You can receive transaction requests from wallets through gateways, sign them, and send them as pre-confirmation transactions to block builders.
🔹 For Rollup: You can delegate the commitment to a sequencer of a certain Rollup, allowing them to directly send batches of L2 transactions to L1. If the sequencer and builder are the same person, congratulations, you effectively become the actual proposer of the Rollup!
3) How Much Can Be Earned 📍
Pricing pre-confirmation is challenging because it is essentially a derivative of block space, which is itself difficult to price.
🔻 For example:
—— You might easily understand real-time electricity bills, but forward contracts in the energy market are much more complex. How does the electricity market balance demand and supply peaks and troughs? While electricity prices have historical data to refer to, pre-confirmation has no historical data to follow at all.
—— Ethereum has been researching block space pricing, such as EIP-1559, EIP-4844, and multi-dimensional models, but there is significant controversy. The pricing of pre-confirmation is more complex, and researchers have raised these questions:
What is the minimum additional income a validator can include from a pre-confirmation transaction?
Based on the current gas price, what is the reasonable price for future block space? How much premium is needed for advance pre-sale?
How does the cost of long-term purchase of block space change for buyers?
🔻 Two Pricing Ideas:
1️⃣ Slot-based
Split block space into smaller 'sub-rounds' and calculate the minimum pre-confirmation fee for each sub-round. Rational validators will only include pre-confirmation transactions if they are more profitable than transactions from instant auctions (JIT auction). However, to achieve rapid confirmation within 12 seconds, block space is 'chopped up', leading to a smaller search space for MEV (Miner Extractable Value) and reduced overall income. Users need to pay higher fees to compensate.
2️⃣ Epoch-based
View block space as a commodity that will mature in the future, similar to futures contracts in finance. Futures price = current price - execution price (discounted to current). Here, gas prices will fluctuate around target values and can use the Black-Scholes formula to calculate volatility.
In simple terms: you need to pay a premium to lock future block space to avoid uncertainty. The premium depends on volatility, expiration time, and price differences.
4) Limitations and Potential 📍
🔹 Limitations:
The current pricing model only applies to existing constraints, but pre-confirmation may break these limits. For example, property values typically grow linearly with area, but after reaching a certain scale, they may transition to commercial use, resulting in exponential value growth. Similarly, pre-confirmation may change the value curve of MEV, leading to new business models. Block space is not homogeneous; gas prices fluctuate not only over time but also with state. For instance, the state of Uniswap is more sought after than that of Rollup, resulting in higher prices.
🔹 Potential:
Pre-confirmation allows applications to pay fees to 'monopolize' certain states, similar to how houses in Manhattan are more expensive than those in Brooklyn.
Solana makes sought-after state transactions more expensive through access lists, while non-sought-after states remain cheap. If Ethereum introduces execution pre-confirmation, it could achieve a similar effect, automatically making sought-after states more expensive.
🔻 Application-Specific Sequencing (ASS)
—— ASS can combine with pre-confirmation to lock application states, forming a localized fee market.
—— Validators can commit to only including transactions from a certain application, with the application providing fast and cheap confirmations through gateways or sequencers.
—— But this may reduce decentralization and composability.
—— Rollup-based sequencing is a subset of ASS, such as Taiko (the first Rollup-based) supporting simple pre-confirmation gateways that prioritize user experience.
🔻 Proposer Commitment Service:
Validators should treat proposer commitments as a service, maximizing profits through gateways. The core service of the blockchain is 'settlement,' where validators are both stakeholders of the chain and suppliers of settlement, while applications are consumers. Validators can earn from different types of settlements while reducing the risk of failure (such as cross-chain failures or arbitrage failures). Decentralized staking gives Ethereum an advantage in institutional adoption, and proposer commitments can become the core of institutional products, bringing fixed returns.
🔻 Summary
Pre-confirmation is a bridge connecting validators, applications, and user experience. While it can bring more revenue, it also comes with challenges in technology, security, and profitability. Ethereum's sorting community needs to address these issues while developing two types of products:
1. Settlement services provided for applications
2. Yield tools provided for validators. If done correctly, pre-confirmation can help Ethereum excel in multiple areas. Feel free to ask anything without choosing any document.
🔹 Original article translation link: https://x.com/ceciliaz030/status/1890688136491278457