DEV Community: Cero Network

Launching Cero Testnet: Small Step For Cero, Giant Leap for Rollups

Cero Network — Fri, 21 Feb 2025 08:45:50 +0000

The launch of the Cero Lotus testnet marks a major milestone in Cero’s effort to revolutionize the blockchain landscape. This testnet isn’t just another step forward – it’s a leap towards a truly decentralized sequencing network that not only tackles the technical challenges faced by rollups but also reimagines their economic model.

Cero Chain: A Network Built of, by, and for Rollups

Cero believes rollups should have full control over their own infrastructure while also benefiting from a broader ecosystem. That’s why Cero is more than just a decentralized sequencer—it’s a network designed specifically for rollups, where they are both the primary stakeholders and the biggest beneficiaries.

Cero looks to unite rollups across settlement layers, i.e. whether you are a rollup that settles on Ethereum or Arbitrum One or ZkSync Era or no L1 at all(sovereign rollups), Cero targets to unify rollups across all ecosystems for better value capture and stability, this is mother of all ecosystems that Cero offers as, Super-system.

Additionally, while Cero identifies as a network of rollups, it remains open to external validators to further improve participation on this security layer. Rollups’ participation ensures that sequencing shall take place however the Super-system seems apt.

Economic Viability Through Diversified Revenue Streams

Rollups today face a major challenge – economic sustainability. The reliance on transaction fees in a single token makes revenue unpredictable and volatile. Cero fixes this problem by customizing the economic model for rollups so to create stable and diversified income streams for rollup operators:

Additional Revenue Streams: Rollup operators participating in Cero’s decentralized sequencer network gain access to block rewards from sequencing blocks across all the rollups within the Super-system. This model extends the rollup operators’ role to serve sequencing beyond just serving their own rollup, thereby increasing the resource utilization & promoting growth.

Multi-Token Yields: Rollups pay a certain percentage of their sequencing fee revenue to a central pool, which is then redistributed back to the rollups in ratio of their own contribution, but in the form of different tokens. This reduces the reliance of rollups on single token’s volatility.

Subscription-Based Model: Cero introduces a flat monthly fee model paid in CERO tokens, ensuring predictable costs while redistributing value within the network to validators – including rollup operators themselves.

This means rollups participating in the Super-system gain financial stability rather than facing economic uncertainty. Plus, Cero is already working on additional mechanisms to further improve rollup sustainability. Stay tuned!

Security & Fairness: Protecting Users’ Transactions

Security is for everyone, especially for end users. Cero ensure that every transaction is protected, fairly ordered, and guaranteed to settle correctly by –

Censorship Resistance – No single entity can censor transactions. By spreading sequencing across multiple participants, Cero ensures fair and neutral inclusion of transactions.

Verified On-Chain Settlements –Cero persists submitted transaction sequences to L1 smart contracts, extending the consensus of the transaction order to the L1s where they can be utilized and proven against by the rollup contracts.

MEV Exploitation Protection – Through decentralized transaction sequencing, Cero prevents unfair advantages like front-running and sandwich attacks, ensuring protection for all users.

By leveraging trust-minimized infrastructure, rollups using Cero gain security guarantees that centralized sequencing solutions simply can’t match.

Configurability & Modularity: Rollups on Their Own Terms

No two rollups are the same, and Cero recognizes that a one-size-fits-all approach does not work for most. That’s why Cero is designed to be highly configurable and modular, allowing rollups to tailor their sequencing and settlement preferences to meet their requirements.

The core framework is designed to extend operations over multiple L1 for settlement and multiple DAs for data storage preferences. This is how Cero intends to create the Super-system of rollups across various ecosystems. Realizing that the preferences of rollups are even more granular, Cero has a big list of other options it looks to work on. Stay tuned!

Cero Lotus Testnet: Your Gateway to the Future of Decentralized Sequencing

The Cero Lotus Testnet is now live, offering the rollups the opportunity to experience the future of decentralized sequencing.

What’s Inside?

Permissioned Network – The current release remains permissioned as they work with the close partners to integrate and experiment with.
Validator & Rollup Onboarding – If you’re interested in early access, get in touch with the team!

Explore the Lotus Testnet

Dashboard – View rollups and sequencing activity on Lotus.
Explorer – Dive into transaction data, blocks, and on-chain activities.
Developer Docs – Read more!

What’s Next?

While the Cero Lotus network is an early-release network, it remains for the purpose of early integrations with their partners and preparing for what comes next. The next launch would be the permissionless and a persistent network, which would be usable for production purposes by testNets across various stacks. To get more details, feel free to reach out.

Source Link: https://cero.network/blog/launching-cero-testnet-small-step-for-cero-giant-leap-for-rollups/

Struggling to Achieve dApp Sovereignty? Try App- Specific Sequencer

Cero Network — Thu, 06 Feb 2025 12:25:16 +0000

Attacks in blockchain are undeniable. The case of Peraire-Bueno brothers stealing $25 Million through an MEV attack is an example of this. Also, hundreds of millions of dollars are lost every year due to MEV and sandwich attacks. Over the years, several innovations have been rolled out to tackle MEV issues, and the latest one is application-specific sequencing, commonly known as ASS.

By switching to app-specific sequencers, dApps get access to full sovereignty over transaction sequencing, thus getting the freedom to build highly intent-specific dApps. While ASS is an innovative concept and it has been there for a while, there is still some sort of confusion, counterarguments, and a lack of awareness around it. Hence, let’s do an in-depth analysis of app-specific sequencing. We’ll understand its core concept, working mechanism, comparison with L1/L2, and the possibilities it opens for dApps.

The challenges with existing sequencing methods

A bunch of innovations have been introduced to eliminate the challenge of MEV (Maximum Extractable Value) and ensure fairness in dApps and user experience. Proposer-builder separation (PBS) and Multiple Concurrent Proposers (MCP) are among the two popular concepts that dApps often use. PBS was proposed before MCP due to challenges such as the centralization of the sequencer. In PBS, sequencer function is controlled by the respective team, and its mempool remains private. While this maximally eliminated the MEV issue, the concept of a centralized sequencer could not endure in long run.

Ethereum’s rising concern for centralization and censorship risks led to creation of MCP. The idea of MCP is to enable parallel block proposals, i.e., individual proposers for each account. This definitely solved the decentralization issue and reduced the risks related to centralised proposers. However, MCP also faced challenges like reordering complexities, higher switching costs, and a lack of ordering rules. As a solution to the challenges of PBS and MCP, application-specific sequencing has been brought forward.

*Deep dive into Application-Specific Sequencing
*

Application-specific sequencing is a key innovation in Layer2 paradigm to offer sovereignty

for applications without spinning up a new chain. A good example can be ‘userOps’. ASS-based dApps can program their custom sequencing method and start sequencing userOps in a more composable way. With ASS, applications have the flexibility to–

Control their transaction ordering process.
Implement custom execution policies.
Execute functions autonomously.

Control on transaction ordering refers to dApp’s ability to control how users’ transactions (both for front-end and smart contract) are ordered, implement customs, and use case-specific parameters for further ordering processes. These transactions are specific to application’s operations, touching its state. This more refined ordering mechanism helps lower the negative consequences of MEV.

Speaking about policy execution, ASS enables dApps to implement execution policies that define what transactions will be ordered under which condition. This means dApps can set up scripts off-chain to monitor sequencer’s behavior and revoke admin privilege if any suspicious activity is detected. This avoids problems like the protocol’s TVL being compromised and MEV issues and ensures a decentralization ethos. Regarding, the autonomous function execution, it opens possibilities for smart contracts to customize the execution function based on user-centric needs.

The end motive for all these approaches is to enable sovereignty for dApps, enabling them to sequence and operate with their custom fee structure while retaining the composability of general-purpose Layer2s, the best of both aspects.

How application-specific sequencing works?
To better understand the working mechanism of ASS, let’s look at the two different transaction ordering methods; one without ASS and another with ASS.

Transactions are coming out from public and private mempools.
Transactions go to the builder.
Send to the Relayer (the auctioneer).
Finally, transactions reach the block proposers, where block will be created.

With ASS, there will be an additional ‘App-specific mempool’, and the transaction ordering/supply will be like this:

With the app-specific mempool, the sequencer network will perform transaction sequencing and develop a large bundle (Angstrom Bundle).
The bundle is submitted to the builder along with the transactions coming from public and private mempools.
Later on, transactions will be processed through Relayers and Proposers.

Key Properties of App-specific Sequencing
Following are the key properties that underpin the whole application-specific sequencing process:

1. Controlled Sequencing Rights: ASS-powered applications achieve the ‘app-specific’ effect by setting up their own delegated sequencers. This means applications can have a different consensus mechanism but with pre-defined rules about what all sequencers can participate in sequencing, allowing for predictable and secure transaction sequencing.

2. App-Specific Mempools: ASS allows dApps to set up & manage their own use case-specific mempools that grant them full control over how network’s state is updated and through which sequencer (as discussed in the previous section). This granularity in the state comes naturally with app-specific mempools through a bunch of signed transactions propagated within the ASS infrastructure.

3. Order Agnostic Outcomes: As the most important aspect of ASS, order-agnostic outcomes ensure consistency in transaction execution, allowing the sequencer to achieve more efficient task execution as defined by the dApp.

*What all possibilities App-specific sequencers open for dApps?
*
*Offers sovereignty & autonomy to dApps: *
One of the main ideas of ASS is to bring back sovereignty to dApps. When we say ‘sovereignty’, it means that the application can control their state, state updates, and all the execution of all the transactions happening from the contracts. All these are possible because dApp is able to achieve sovereignty over its sequencing process through the privacy controlled by block builders. Additionally, sequencing allows dApps to be hyper-optimized for the users. This optimization refers to ‘economic payoffs’ (paper). This includes better price optimization, lower transaction costs, and improved overall user experience.

Regarding autonomy, dApps with ASS can use on-chain agents to maintain interaction with other protocols directly. Think of a dApp optimized for fully autonomous trading; this is a major step to bring ‘autonomous capitalism’ in DeFi, removing the biggest issues like fragmented liquidity.

**Clear revenue source with MEV capture:
**The ability to control transactions opens up very feasible design possibilities for applications, allowing them to generate higher revenue with more refined and controlled ‘MEV extraction.’ That’s because ASS offers applications with full control to reorder transactions based on their priority fees submitted on the underlying Layer1. This eliminates the issue of MEV spamming, which often leaves out significant value uncaptured. Here’s a tweet from Farcaster Labs further highlighting this:

*Supports user-centric design: *
Another exciting feature of ASS is the support for user-centric design. Let’s see how:

User-centric rule for economic payoffs-
One of the significant features of ASS is its design to be user-centric. The rules governing sequencing and execution should prioritize the users’ economic benefits. Example-a trading dApp like CoW DAO can use ASS to achieve the best price execution based on the users’ intentions, ensuring that the transaction outcomes are as favorable as possible for the user.
Off-chain computation for complex sequencing-
Computation in ASS can be initially (or at some point) complex for dApps. Hence, ASS allows applications to move peer-to-peer move to off-chain. This allows for enhanced scalability and efficiency as a substantial volume of transactions are off-loaded.
Intent-based orders/signed messages-
All the orders or signed messages that ASS receives are intent-based. For example, defined limit order for a trade. Based on the given intent, ASS ensures to achieve the best results from the messages it receives.

*Interoperable nature: *
ASS is designed to have seamless compatibility with global state (while maintaining its own local state), thus enabling cross-chain interoperability without needing any bridging solution or third-party services. dApps using ASS can basically coordinate through block building, or they can design a specific consensus enabled with assets transfer rules.

*Scaling & Customizability: *
Critical functionality of a dApp, for example- AMM, is largely dependent on the sequencing rules. By granting dApps control over the sequencing, ASS opens possibilities for next-gen dApps. For example, a few additions to application’s existing construction can allow for additional customization, like the flexibility to choose programming language or customization in the execution environment itself. That said, it depends largely on the ASS you select.

Comparing ASS with L1, L2s, and Based L2 Rollups

One question that often arises for ASS is’ “why app-specific sequencer and not a sovereign L1/L2, or based L2s? Here’s a tweet from Celestia’s COO highlighting this:

The below comparative table answers it well:

*Transition to App-specific sequencing with Cero *
App-specific sequencing is definitely a future-ready concept, and hence dApps have been adopting ASS on a rapid scale. If you want to achieve dApp sovereignty and eliminate MEV issues, Cero can be your ideal solution. Cero’s decentralized sequencing network is optimized for all new-age sequencing needs, including application-specific, shared, and dedicated sequencing. Also, if you have a custom need for a sequencer (for appchains, L1, L2s, or rollups), Cero is ready to assist you. Get your early access to Cero here. Or, you can connect with our experts to understand more about Cero, its features & offerings. Send all your queries via email or for an upfront discussion, and schedule a 1-to-1 meeting.

The Dark Side of MEV Extraction & Exploitation: Is Your Blockchain at Risk?

Cero Network — Fri, 31 Jan 2025 06:16:07 +0000

In the year 2014, when Micheal Lewis released the book “Flash Boys”, who would have thought that the concept of latency arbitrage, prevalent in traditional finance, would find its roots deeply ingrained in an emerging technology called blockchains, allowing network participants to capitalize on super normal profits? Due to this latency arbitrage, who would have thought that a blockchain as grand as Ethereum would lose $1.3 B?

Moreover, down the line, the latency arbitrage getting rebranded as MEV would turn into a headache for blockchain networks. But here we are in the present, where MEV is ending up as a complex, systemic problem for blockchains. How can we get past it? Only when we know what it is and the ways we can adopt to overcome this problem.

**What is MEV Extraction And How It Turns Malignant?
**MEV extraction is the process where the block producers extract some value at the time of aggregating/including/executing/broadcasting transactions on blockchains. This process is necessary for the smooth running of the blockchain. But turns evil nonetheless the moment the MEV extractor, instead of simply relying on auctioning for the block space in exchange for higher fees, starts to exploit other means to profit from the users. Thereby compromising the blockchain network and putting the users’ interests in jeopardy.

**What MEV Extractors Do To Jeopardize User’s Interest?
**In the blockchain design, the veracity of the blockchain depends on how every participating entity, like the block producers, sequencers, proposers, builders, and others, is rightfully doing their task to safeguard users’ interest and ensure smooth running of the blockchain. In lieu of these services, these participating entities/ aka extractors, are extracting value in the form of fees for auctioning the block space, but they turn parasitic upon doing the following activities;

Front Running & Back Running Front running is the process where the miners/validators insert their own transactions. This generally happens because the miners/validators are aware of the type of transaction in the mempool. So, they try to manipulate that by placing their transaction before based on the favorable situation.

For example, if the miner/validator is seeing a volume of an asset purchase, for example, Ethereum in T4. To exploit the favorable scenario, the miner validator can place an order for the purchase of an equivalent or lesser amount prior to that transaction. It will be followed by the MEVTarget Transaction( T4), and in this way, later on, the miner/validator will place a reverse nature transaction with high gas fees to benefit from the same as shown in the image;

But one may question that it would amount to reputational damage done to the validator. It is a reality as long as the validator is old enough in the network, but what if there’s a new validator. For instance, if it is a new node undertaking the front-running, they can withhold the transaction for a fraction of a second/millisecond. Now, this rogue validator can scan through multiple transactions to assemble them all at once and since it only consumes a millionth or lesser, even for all the honest nodes validating the transaction, it becomes very hard to trace the misbehaviour.

Validators on the Bancor protocol abused users in the worst ways using this technique. The perpetrator used flash bots to identify transactions in the mempool by a millionth of a second delay. What they did was place a higher fee to get their transaction executed first after analyzing all the transactions and keeping them in a specific order. Due to this practice, the daily profit of the front-runner bot hit $2500. Moreover, they were able to generate more than $6 million in total revenues, which would have otherwise accrued to other users on the platform.

At the same time, due to this practice, the UX had also gone for a toss because validators/ sequencers sequencing the transaction in their own ways amounted to compromising the throughput and finality of the protocol. So, instead of transactions happening in seconds, it took more than 1 minute to even 30 minutes to execute a transaction. These events severely dented the adoption of blockchain in specific regions where laws are passed against such practices.

Back Running Back running is the process where the MEV extractor of the blockchains can identify a high-value transaction and accordingly take action based on that transaction to profit from it. As you can see in the image below, how the back running is in progress where the MEV extractor is placing a transaction immediately after an executed transaction to extract benefit.

This could be catastrophic if the MEV bot can identify all the transcations as a buy/sell and arrange the same in the manner that it can benefit them.

The Balancer exploit is a prime example to put here. In that event, the MEV extractors saw a technical glitch where in the Balancer pool, some specific tokens like STONK(STA) required a small transfer fee while initiating the swaps. The attacker exploited this design flaw by swapping tokens in and out of the protocol countless times to reduce the STA Token balance. Due to repeated exploitation of the transfer fee mechanism that validators could see on the Balancer protocol, they were able to drain $500,000 of WETH, LINK, and other tokens from various Balancer Pools because STA token value depreciated to such a level that they could literally take $10,000 in loans and were required to pay only $500, as an example and they remaining amount swapped was kept as their profits.

Sandwich Attack Sandwich is the combination of the two attacks explained above, where the MEV extractor will backrun and front-run a transaction all at once to inflict damage on the user. As a result of that, the user will be executing the trade at the worst price possible as shown by the image below.

Due to this practice, DeFi, which is driving crypto adoption has been hit the most. Why? For example, the BNB Chain almost lost $1.5 billion in trading volume in a single day, affecting more than 43,400 transactions. Due to this, it can severely impact all the DeFi applications hosted on top of a blockchain like BNB. The users can feel that their trust has been breached and it could even trigger mass exodus, thereby completely destroying the liquidity of the DEX.

Time Bandit Attacks This is considered the second worst type of MEV attack because it completely dilutes the ethos of blockchains. For example, we all know that blockchains are immutable, secure, and irreversible. But the time bandit attack completely flips this concept.

*MEV Extraction & Exploitation
*
In a time bandit attack, the attacker can completely rewrite a blockchain transaction that has already been mined to profit from the same. It might sound like a double-spending attack, but instead of the validator using the same cryptos for making more than a single payment, in a time bandit attack, an attacker will see a transaction, bribe the validator to re-do the transaction by auctioning the consensus of the block by controlling the hash/network power.

Which means, if you made a profitable trade of say $1 M, the attacker will replace that transaction by putting the consensus of that block on auction. The highest auction will win the way to validate the block and it will include a new transaction and replace the inflicted transaction with that of the time bandit attacker.

The Ethereum Classic incident that happened in August is a prime example to put here. On the Ethereum Classic chain, the MEV attacker organized more than 7,000 blocks or two days’ worth of mining.

Due to this event, the hashrate of the Ethereum Classic blockchains nosedived to new lows and even questioned the authenticity of launching an application on top of blockchains.

How Do We Get Past Such Attacks As The Next Victimized Blockchain?
From Intent Based Trading to auctioning to more, a lot of progress has been going on to counter-balance MEV attacks. For example, Paraswap has introduced Intent Based Trading in August, 2024. In the Intent based Trading, the validators will only see the Intent in the mempool instead of the whole transaction to exploit opportunities. Likewise, decentralized sequencers for roll ups is another major sprint in nipping the bad MEV problem in the bud. In order to understand how decentralizing sequencers for rollups could help solve the bad MEV problem, you will have to look at Cero’s initiative to fight the bad MEV wars. We shall cover that in our next installment where we will explain how CERO is solving the innate roll ups MEV problem.