[Issue] What is Preconfirmation for Based Rollups?

Table of Contents

Key Takeaways
1. Background – Based Rollups and Preconfirmation
1.1 Based Rollups: A Scalability Solution Aligned with Ethereum’s Vision
1.2 What’s Needed for the Expansion of Based Rollups
2. Takeaway - Can Preconfirmation Bring Taiko and Based Rollups into the Mainstream?
2.1 Preconfirmation: The Lubricant for Based Rollup Expansion
2.2 A New Market for Ethereum Block Production Participants
2.3 Limitations That Need to Be Addressed
3. Resource

Researcher

Ingeun

Related Projects

Taiko

Key Takeaways

Unlike traditional rollups, based rollups do not use a centralized sequencer. Instead, Ethereum block producers handle sequencing, inheriting decentralization and economic security. However, they are structurally limited by Ethereum’s 12-second block time. To address this, a method called preconfirmation is being introduced, which guarantees transaction inclusion in advance.
Preconfirmation enhances user experience in services that require fast processing—such as trading, gaming, and payments—by guaranteeing transaction finality. This can help onboard various services to based rollups, expanding the ecosystem. For Ethereum, it brings scalability; for based rollups, a chance to go mainstream.
Preconfirmation benefits both users and block producers, opening up possibilities for the expansion and activation of the Ethereum and based rollup-powered Taiko ecosystem.

1. Background – Based Rollups and Preconfirmation

1.1 Based Rollups: A Scalability Solution Aligned with Ethereum’s Vision

Source: Taiko X

At the Based Rollup Summit hosted by Taiko in March 2025, a panel discussion titled “The Future of Ethereum and the Role of Based Rollups” was held. Participants included Ethereum co-founder Vitalik Buterin, Taiko co-founder and CTO Brecht Devos, and Nethermind founder Tomasz Stańczak, who emphasized the importance of based rollups in solving Ethereum’s scalability challenges.

Vitalik Buterin particularly stressed the importance of expanding the user base while preserving Ethereum’s core principles, highlighting based rollups as a key enabler in this process.

Like existing rollup solutions, based rollups are designed to process transactions quickly and cheaply while posting the results to Ethereum. This ensures maximum verifiability and stability for transactions executed on the rollup.

However, unlike Optimistic or ZK Rollups, which rely on centralized sequencers, based rollups delegate the sequencing role to Ethereum block production participants (searchers, builders, proposers). This is a key distinction.

The fact that any Ethereum block production participant can act as a sequencer means that the power of sequencing is not concentrated in the hands of a few, but is instead distributed across all potential block producers within Ethereum. This structure allows based rollups to inherit much of Ethereum’s decentralization.

In addition, Ethereum validators provide economic security proportional to their stake in ETH through the Proof of Stake (PoS) system. Since the sequencer role in based rollups is tied to Ethereum’s block production participants, based rollups are able to fully leverage Ethereum’s economic security.

As a result, based rollups are rollups that leverage Ethereum’s security and decentralization to pursue scalability while aiming to onboard more users and builders.

1.2 What’s Needed for the Expansion of Based Rollups

However, there is a challenge to achieving the goals of based rollups.

Currently, based rollups operate under Ethereum’s Proposer-Builder Separation (PBS) structure, where Ethereum block producers handle rollup sequencing and include rollup data in Ethereum blocks. Under this method, the processing of based rollup transactions and blocks becomes effectively dependent on Ethereum. As a result, based rollup transaction finality is constrained by Ethereum’s 12-second block time.

To address the long block time, it's necessary to either decouple the relationship between Ethereum and the rollup or introduce an additional process for separate handling. Based rollups have chosen the latter approach—this solution is called preconfirmation.

2. Takeaway - Can Preconfirmation Bring Taiko and Based Rollups into the Mainstream?

Source: l2beat

Currently, based rollups are not yet considered mainstream among rollup solutions. Although Taiko is leading the based rollup market, the only projects actively utilizing based rollups so far are Taiko and Puffer Unifi.

According to l2beat, Taiko’s mainnet, Taiko Alethia, ranks 13th with a Total Value Secured (TVS) of $141.96M, while another based rollup, Puffer Unifi, is not listed in the rankings.

However, it's still too early to underestimate based rollups, especially since preconfirmation has not yet been fully implemented. For the based rollup ecosystem to expand, it must satisfy both users and participants—and preconfirmation could be the key to enabling such rapid growth.

2.1 Preconfirmation: The Lubricant for Based Rollup Expansion

Preconfirmation allows Ethereum block production participants to guarantee the inclusion and ordering of transactions in advance. Simply put, when a user sends a transaction, a preconfirmation provider acts as an insurer, promising to include the transaction in the next block.

To back this promise, the preconfirmation provider stakes collateral. If the promised transaction is not included in the next block, the provider is penalized through a slashing mechanism.

With this insurance, users can proceed with subsequent steps as if the transaction were already finalized, enabling near-instant transaction execution—comparable to centralized exchanges or Web2 financial systems—within the block time of based rollups.

This is particularly critical for trading scenarios such as large swaps or arbitrage, which require fast execution. In sensitive markets, if execution is delayed and not as fast as on centralized exchanges (CEXs), trading strategies can fail. For instance, in an arbitrage scenario where a user buys an asset on Taiko and sells it on Ethereum or another rollup nearly simultaneously, a delay in finalizing the Taiko transaction could result in price slippage, reducing profits or causing the trade to fail altogether.

Preconfirmation addresses this by guaranteeing the inclusion of the Taiko transaction in advance, allowing the user to confidently execute the arbitrage and realize risk-free profits.

Moreover, in use cases like payments or message processing on social networks—where transaction speed directly affects user satisfaction—preconfirmation can enhance the user experience. By leveraging preconfirmation effectively, a wide range of services can be onboarded to based rollups, fueling continuous ecosystem growth.

Ultimately, preconfirmation improves the user experience on Ethereum and based rollups by providing a smoother environment for services where immediate transaction finality is critical. This becomes a catalyst for broader adoption, positioning preconfirmation as a key enabler for the expansion of based rollups.

2.2 A New Market for Ethereum Block Production Participants

In addition to its benefits for users, preconfirmation also offers new revenue opportunities for Ethereum validators and block builders—those involved in block production. These participants can earn an extra "insurance fee" in return for guaranteeing that user transactions will be included in the block. This forms a new revenue stream distinct from traditional sources like transaction fees or MEV extraction.

While comprehensive data on additional fees from preconfirmation is not yet available, preliminary insights can be drawn from the Ethereum Holesky testnet.

According to Ethereum Research, between July 10 and July 29, 2024, a total of 807 preconfirmations occurred across 415 Holesky testnet blocks. The average preconfirmation fee was approximately 0.005 ETH—significantly higher than the average base transaction fee of 0.00016 ETH. On average, preconfirmation fees were over 30 times greater, and some transactions even recorded fees above 0.01 ETH.

Source: Rejamong.eth X

Further supporting this, data collected by Rejamong suggests that Ethereum mainnet validators using a preconfirmation add-on earned, on average, 5.95% more revenue than standard validators.

While the former data is from a testnet and the latter is based on a limited sample size, both indicate the potential for Ethereum block producers to earn additional income beyond their existing revenue streams. The possibility of increased earnings gives validators and builders a strong incentive to support and promote preconfirmation adoption—an outcome that aligns directly with the broader expansion of based rollups.

2.3 Limitations That Need to Be Addressed

Despite its advantages, preconfirmation is not without its limitations. In preconfirmation, the guarantee of transaction inclusion is backed by a slashing mechanism tied to the collateral staked by the provider. However, if the slashing amount is set too low and the MEV (Maximal Extractable Value) gains exceed the penalty, a provider may choose to disregard the preconfirmed transaction and exclude it from the block.

To prevent this, the slashing amount must be raised to an appropriate level, or the preconfirmation process must be further decentralized. However, setting the slashing amount too high could deter providers from participating due to increased risk. Therefore, finding a balanced slashing level that satisfies both users and providers is essential.

Alternatively, the creation of a preconfirmation marketplace could help. Such a platform would facilitate fair transactions between users who need preconfirmation and providers who offer it, serving as a potential solution to align incentives and improve trust in the system.

3. Resource

Related Articles, News, Tweets etc. :

The report is based on the independent research of the author sponsored/funded by Taiko. The author of this report may have personal holdings or financial interests in assets or tokens discussed herein. However, the author affirms that no transactions have conducted using material non-public information obtained in the course of research or drafting. This report is intended solely for general information purposes and does not constitute legal, business, investment, or tax advice. It should not be used as a basis for making any investment decisions or as guidance for accounting, legal, or tax matters. Any references to specific assets or securities are made for informational purposes only and should not be construed as an offer, solicitation, or recommendation to invest. The opinions expressed herein are those of the author and may not reflect the views of any affiliated institutions, organizations, or individuals. The opinions and analyses expressed herein are subject to change without prior notice. In addition, beyond the individual disclosures included in each report, Four Pillars, may hold existing or prospective investments in some of the assets or protocols discussed herein. Furthermore, FP Validated, a division of Four Pillars, may already be operating as a node in certain networks or protocols discussed herein or may do so in the future. Please see below links in the footer for FP Validated's participating network disclosures and for broader disclosure details.

What is Preconfirmation for Based Rollups?

Researcher

Related Projects

Key Takeaways

1. Background – Based Rollups and Preconfirmation

1.1 Based Rollups: A Scalability Solution Aligned with Ethereum’s Vision

1.2 What’s Needed for the Expansion of Based Rollups

2. Takeaway - Can Preconfirmation Bring Taiko and Based Rollups into the Mainstream?

2.1 Preconfirmation: The Lubricant for Based Rollup Expansion

2.2 A New Market for Ethereum Block Production Participants

2.3 Limitations That Need to Be Addressed

3. Resource

Disclaimer

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