Progress on building an encrypted mempool for the OPstack: Finalized architecture and requirements

We are thrilled to announce that the first two deliverables of our OP Grant have been finished. The approved proposal will tackle the challenges of front-running and Maximal Extractable Value (MEV) within the decentralized landscape. With the first two deliverables completed, we are on our way toward integration of a shielded/encrypted mempool using threshold encryption into the OP Stack. It's important to emphasize that our current focus is on the feasibility study rather than active implementation.

We aim to elevate the decentralized platforms' foundation by enhancing OP Stack-based rollups with our efforts. We are creating a feasibility study for an integration that would provide DeFi users with a safer trading environment without front-running and bolster censorship resistance - even for centralized sequencers. It would also help OP Stack-based rollups to become better, more neutral base layers.

Additionally, it would foster a more profitable trading space for users as malicious MEV losses are lessened. Notably, sequencers could argue that they no longer can front-run nor censor transactions based on their content by design. They would still maintain the prowess to manage back-running related MEV, such as arbitrage and liquidations. This could lead to compliance, image, and regulatory benefits for the sequencer operators.

Outlining Our Grant Proposal

Shutter's proposal for the OP Grant revolves around enhancing the OP Stack, an initiative rooted in Optimism's scaling solution. The core mission is to tackle prevailing inefficiencies in decentralized finance by introducing innovative approaches.

This proposal consists of five deliverables:

1. Creation of requirements for front-running mitigation in Optimism rollup.

2. Basic economic analysis and IT viability of Shutter <> Optimism rollup. An example of this would be to estimate the trade-off between a fee for the front-running protection vs. the avoidance of loss due to front-running for a typical user.

3. Creation of architecture diagram of Shutter + Optimism rollup.

4. Creation of blog post including deliverables above + showcase of Shutter with mock rollup sequencer.

5. Preparing a decision-making document with the trade-offs of implementing Shutter, which provides options for MEV mitigation in the later stages.

Collectively, these deliverables present a blueprint to enhance the OP Stack, leading to enhanced security, privacy, and user experience.

Initial Milestones Achieved

Shutter has recently finished the first two milestones in its grant proposal to advance the OP Stack ecosystem:

1. Front-running Mitigation Requirements: In the ever-evolving digital world, ensuring secure and transparent transactions is paramount. Shutter has reviewed and established the requirements to mitigate front-running in the Optimism rollup to address this. This step means that a clear roadmap has been set, outlining what needs to be done to prevent unfair advantages by potential adversaries in the transaction process.
2. Creation of Architecture Diagram of Shutter + Optimism Rollup: To visualize and understand the integration of Shutter within the Optimism ecosystem, a detailed architecture diagram has been crafted. This visual representation delineates the flow of transactions, the role of Shutter, and how it interacts seamlessly with Optimism rollup. By providing a comprehensive view, it offers both developers and stakeholders an insight into the synergy and functionality of the combined systems.

By completing these two deliverables, we have laid down a robust foundation for the future of finishing the remaining deliverables for the OP Stack ecosystem.

Conclusion

We'll delve deeper into each deliverable in subsequent updates, elaborating on its unique significance and the underlying technology.

Our next milestone involves unveiling an architecture diagram, showcasing the synergy between Shutter and the Optimism rollup.

Following that, we're eager to share a detailed blog post encapsulating our progress thus far, complemented by a showcase featuring Shutter within a mock rollup sequencer. Lastly, a comprehensive decision-making document awaits, articulating the trade-offs of Shutter's incorporation and potential strategies for MEV mitigation. It's crucial to understand that, at this stage, our focus remains firmly on feasibility.

An encrypted mempool could also serve as a unique piece in a "Lego box" filled with various modular components, each having its distinct purpose and function. Just as one can combine different Lego pieces to form unique structures, blockchain developers could select from this box to design their very own custom OP Stack rollups.

With the broader objective of enhancing decentralized platforms, this "Lego box" approach provides the flexibility to elevate the OP Stack-based rollups' foundation. The concept allows OP Stack rollups to be highly differentiated, catering to diverse needs in the crypto space.

The essence of this proposal isn't active development but assessing viability, ensuring that the transition is seamless and robust when, and if, the time comes for integration.

Stay Tuned for More from Shutter

Subscribe to the Shutter Blog below, follow us on X (formerly Twitter), and be sure to sign-up at the Shutter Forum for more updates on the grant proposal and other news!