Espresso Systems: An Innovative Path to L2 Scaling through Shared Ordering

Espresso Systems initially planned to build a highly scalable, privacy-focused decentralized L1 protocol. However, as the industry evolved, they realized there was no need to create a new L1 and instead focused on providing solutions for the Ethereum ecosystem. Espresso's mission focuses on two main directions: privacy and performance.

To enhance privacy protection, Espresso has developed the CAPE application. This is a smart contract system that enables customized privacy configurations at the transaction level. CAPE can be deployed on any chain that supports EVM.

In terms of performance, Espresso focuses on improving the sequencer. The sequencer is responsible for validating and batching transactions on the Layer 2 blockchain and sending them back to the Layer 1 chain for settlement. While Rollups do not necessarily require a sequencer, it can provide users with lower fees and faster transaction confirmation speeds.

The main challenge currently faced by the sorters is the tendency towards centralization, which may lead to risks such as transaction censorship, MEV attacks, and single points of failure. To address these issues, Espresso has proposed a shared sorter solution. This solution relies on independent, permissionless network nodes.

Espresso is building a shared sorting market. In this market, Layer 2 chains can sell block space to shared proposers, including proposers from the Ethereum mainnet. These proposers create additional value by meeting the needs of users across multiple chains.

Technical Architecture

CAPE

CAPE is a configurable asset privacy protocol implemented by Espresso Systems on Ethereum. This protocol allows asset creators to issue private digital assets while specifying which parties can view ownership and transaction-related information. CAPE also supports advanced strategies such as private verifiable credentials, freeze keys, or threshold schemes.

VERI-ZEXE is a decentralized private computing ( DPC ) system. It originates from a proposal made by Bowe et al. in 2019, which allows users to perform arbitrary computations off-chain and use zero-knowledge proofs to verify the correctness of the computations. The ZEXE system is a concrete implementation of this proposal, which can be seen as a "programmable Zcash," extending a single application system into a smart contract system while preserving privacy guarantees.

VERI-ZEXE improves transaction generation efficiency by approximately 9 times compared to existing technologies, and increases memory usage efficiency by about 2.6 times. It will be used in future versions of CAPE to support arbitrary user-defined asset strategies while maintaining configurability of asset privacy.

HotShot

HotShot is a consensus protocol that prioritizes high throughput and fast finality, designed based on the HotStuff protocol. It is an open and permissionless system that decentralizes the power of participants in the ordering network. HotShot ensures security and validity while providing high throughput and rapid final results.

The protocol adopts the Proof of Stake ( PoS ) security model. A key requirement of the Espresso team is to achieve strong performance without affecting the scale 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 an innovative data availability solution consisting of three novel layers:

1. Savoiardi: The base layer, it is an anti-bribery layer that provides the highest level of security.
2. Mascarpone: The middle layer ensures efficient data recovery by electing a small data management committee.
3. Cocoa: Top layer, providing a content delivery network for Tiramisu, helping to achieve "Web2 level performance".

Espresso Systems took flexibility and modularity into account when designing the protocol, allowing users of its rollup to choose alternative data availability solutions if they do not wish to use Tiramisu.

Espresso Sequencer

Espresso Sequencer is a system for decentralized transaction ordering for Layer 2 scaling solutions on Ethereum. It is designed around a single decentralized proof-of-stake security model, supporting consensus protocols for ordering transactions and data availability mechanisms that can achieve further performance advantages.

The system includes a summary contract system that is responsible for registering submitted ordered transaction blocks, verifying their consistency with the consensus protocol and availability certificates, registering updated state commitments for each zk-VM deployed to the Espresso Sequencer, and receiving and validating evidence of state updates.

The Espresso Sequencer supports decentralized processing of aggregated transactions with L2, providing decentralized ordering and data availability, acting as middleware between the aggregator and its underlying L1 platform. It is designed as a platform that can deploy any zk-VM or optimistic VM, and in the future, it may also serve as an interoperability layer by simultaneously replicating the VM across multiple L1s.

Development History

• June 15, 2022: Espresso enabled CAPE on the Goerli test network.
• November 28, 2022: Released Espresso Testnet 1 (Americano), first public Espresso Sequencer
• July 20, 2023: Launched shared Doppio testnet with Polygon zkEVM
• August 5, 2023: Doppio testnet opened to the public, showcasing the integration of Espresso Sequencer with the Polygon zkEVM stack.
• September 29, 2023: Launched Testnet 3 (Cortado), integrating OP Stack and Polygon zkEVM aggregation
• January 26, 2024: Launch of Testnet 4 (Gibraltar), showcasing integration with the Arbitrum technology stack.
• May 22, 2024: Launch of Testnet 5 (Cappuccino), expanding the HotShot final layer 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 into AltLayer Stack
• Catalyst: A cross-chain AMM platform dedicated to the Espresso Sequencer ecosystem.
• Spire: Plans to use Espresso Sequencer for ordering and data availability.
• Polygon zkEVM: Launched integrated testnet
• Caldera: Introducing decentralized sequencing into the OP Stack
• Offchain Labs: Collaboration will introduce a decentralized version of Timeboost transaction ordering into the Arbitrum ecosystem.
• Blockdaemon: Supports Espresso Systems by deploying external sequencer nodes.
• 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

Financing Situation

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

• March 2022: Raised $32 million, led by Greylock Partners and Electric Capital.
• March 2024: Completed $28 million Series B financing, led by A16zcrypto.

Project Outlook

Espresso Systems is committed to solving transaction ordering issues in the L2 space through a shared sequencer solution. The shared sequencer not only alleviates problems such as censorship, MEV extraction, and validity but also opens up new possibilities for cross-rollup functionality.

As middleware, Espresso provides shared ordering services, bringing new unity and efficiency to the Rollup and Ethereum ecosystems through the shared ordering market and powerful finality tools. With fair economic incentives and a sorting revenue distribution mechanism, Espresso not only addresses the current fragmentation issues of Rollups but also lays the groundwork for future cross-chain operations and broader ecosystem development.