Espresso Systems: Creating a New Generation of L2 Scaling Solutions Through Shared Ordering

Espresso Systems initially focused on building a highly scalable and privacy-centric decentralized L1 protocol. Later, the team realized that the market did not need so many L1 public chains, so they shifted their focus to providing infrastructure services for the Ethereum ecosystem. Espresso's mission focuses on two core directions: enhancing privacy and performance.

To enhance privacy protection, Espresso has developed the CAPE application. This is a smart contract system that enables transaction-level privacy customization and can be deployed on any EVM-compatible chain.

In terms of performance improvements, Espresso focuses on optimizing the sequencer. The sequencer is responsible for validating and batching transactions on the layer two network and sending them back to the layer one network ( for settlement, such as Ethereum ). Although Rollup does not necessarily require a sequencer, introducing one can provide users with lower fees and faster transaction confirmation speeds.

The main issue facing the current sorter is its high degree of centralization, often controlled by a single operator. This can lead to risks such as transaction censorship, MEV arbitrage, and single points of failure. To address this, Espresso has proposed a shared sorter solution, relying on an independent, permissionless network of nodes. Espresso is building a shared sorting market where layer two networks can sell block space to shared proposers, including proposers on the Ethereum mainnet. These proposers create additional value by meeting user demands across multiple chains.

Technical Architecture

CAPE

CAPE is a configurable asset privacy protocol implemented by Espresso Systems on Ethereum. It allows asset issuers to create private digital assets while specifying particular parties who can view ownership and transaction data. CAPE also supports advanced strategies such as private verifiable credentials, freeze keys, or threshold schemes.

VERI-ZEXE is a decentralized privacy-preserving computation ( DPC ) system. In 2019, Bowe et al. proposed the DPC scheme, allowing users to perform arbitrary computations off-chain and submit transactions using zero-knowledge proofs to verify the correctness of the computations. They implemented a system called ZEXE, which extended a single application system into a smart contract system while preserving privacy guarantees. VERI-ZEXE enhances transaction generation efficiency by approximately 9 times and reduces memory usage by about 2.6 times. The future CAPE version will use VERI-ZEXE to support arbitrary user-defined asset strategies.

HotShot

HotShot is a consensus protocol that prioritizes high throughput and fast finality, developed based on the HotStuff protocol. HotShot is open and permissionless, decentralizing the power of participants in the ordering network while ensuring security and efficiency, all while providing high throughput and quick final results. HotShot employs a Proof of Stake ( PoS ) security model, with one of its design goals being to achieve robust performance without impacting the size of the validator set. Specifically, HotShot should be able to scale to include all Ethereum validators (, which currently exceeds 700,000 ) participants.

Tiramisu

Tiramisu is a data availability solution consisting of three innovative layers:

1. Savoiardi - Base layer, provides anti-bribery functionality, highest security but least user-friendly.

2. Mascarpone - Middle layer, ensuring efficient data recovery through the election of a small data management committee.

3. Cocoa - The top layer, providing a content distribution network for Tiramisu, significantly enhancing data propagation speed. This layer is optional and mainly used to improve performance.

Espresso considered flexibility and modularity when designing the protocol, and the Rollup using its sorter can also choose other data availability solutions.

Espresso Sequencer

Espresso Sequencer is a system that provides decentralized transaction ordering for layer two scaling solutions on Ethereum. It is designed based on a single decentralized proof-of-stake security model, supporting consensus protocols for transaction ordering and data availability mechanisms that can further enhance performance.

The Espresso Sequencer also includes a summary contract system, responsible for:

• Submitted sorting transaction block
• Verify its consistency with the consensus protocol and the availability certificate
• Register updated state commitments for each zk-VM deployed on the Espresso Sequencer
• Receive and verify evidence of status updates

Espresso Sequencer supports decentralized L2, processing decentralized ordering and data availability of aggregated transactions, acting as middleware between aggregation and the underlying L1. It is designed as a platform that can deploy any zk-VM or optimistic VM. In the future, Espresso can also serve as a cross-chain interoperability layer by simultaneously replicating the VM to multiple L1s.

Development Process

• In June 2022, Espresso started using CAPE on the Goerli test network.
• In November 2022, the Espresso testnet 1(Americano) was released, marking the first public unveiling of the Espresso Sequencer.
• In July 2023, launched the shared Doppio testnet with Polygon zkEVM.
• In August 2023, the Doppio testnet was opened to the public.
• In September 2023, the testnet 3(Cortado) was released, integrating OP Stack and Polygon zkEVM aggregation.
• In January 2024, the testnet 4(Gibraltar) will be released, showcasing the integration with the Arbitrum technology stack.
• In May 2024, the testnet 5(Cappuccino) will be launched, expanding HotShot to 100 nodes and increasing support for Arbitrum fraud proofs.

Ecosystem Cooperation

Espresso Systems has established partnerships with multiple projects, including:

• EigenLayer: Utilizing re-staking on the Espresso Sequencer network
• Injective: Integrated Espresso Sequencer, starting from Cascade
• AltLayer: Introducing Espresso Sequencer to AltLayer Stack
• Catalyst: Enhance interoperability and become the first application dedicated to the Espresso Sequencer ecosystem.
• Spire: Plans to use Espresso Sequencer for ordering and data availability.
• Polygon zkEVM: Launched integrated testnet
• Caldera: Introduce decentralized ordering into the OP Stack
• Offchain Labs: Introduced a decentralized version of Timeboost transaction ordering into the Arbitrum ecosystem
• Blockdaemon: Deploy external sorter node to support Espresso Systems
• Across: Use Espresso's fast pre-confirmation feature for cross-Rollup bridging.

Project Team

• Ben Fisch: CEO and Co-Founder, Assistant Professor of Computer Science at Yale University
• Charles Lu: CEO and co-founder, former head of Binance Labs
• Benedikt Bünz: Co-founder and Chief Scientist, PhD student at Stanford University

Project Financing

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

• March 2022: Completed a $32 million seed round, led by Greylock Partners and Electric Capital.
• March 2024: Completed $28 million Series B financing, led by a16z crypto.

Project Summary

Sorters, as a key component of blockchain networks, face the important challenge of decentralization in layer two networks. Shared, decentralized sorters provide solutions for Rollups. In addition to addressing issues such as censorship, MEV extraction, and validity, shared sorters also open up new possibilities for cross-Rollup functionality.

Espresso, as middleware, primarily provides shared ordering services. Through a shared ordering market and powerful finality tools, it brings new unification and efficiency to the Rollup and Ethereum ecosystems. Its fair economic incentives and ordering revenue distribution mechanism not only address the current fragmentation issues of Rollup but also lay the foundation for future cross-chain operations and broader ecosystem development.