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NodeKit

What is NodeKit?

NodeKit is a cross-chain communication protocol designed to enable synchronous communication between blockchains through a system called Javelin, which is referred to as the first Superbuilder.

Overview

In the current modular blockchain landscape, fragmentation is a growing issue, leading to potential isolation for users, applications, and rollups. NodeKit addresses this challenge by promoting composability across various chains through atomic execution.

By utilizing NodeKit, developers can achieve faster liquidity bootstrapping and create cross-rollup use cases that were previously restricted to single-chain environments. The core of this capability is Javelin, the superbuilder that enables atomic execution across multiple chains and facilitates synchronous communication for SEQ, a decentralized shared sequencer on Layer 1 (L1).

Key Features

  • Synchronous Communication: NodeKit enables real-time communication across different blockchains, ensuring that transactions and operations can be executed simultaneously across multiple networks.

  • Atomic Execution: Through Javelin, NodeKit facilitates atomic execution across chains, allowing for seamless and secure transaction processing that completes in a single operation across different rollups.

  • Cross-Rollup Liquidity: NodeKit supports liquidity sharing across multiple rollups, enabling faster and more efficient capital deployment in decentralized finance (DeFi) ecosystems.

  • Decentralized Shared Sequencer (SEQ): NodeKit integrates with SEQ, a decentralized sequencer that supports cross-chain transactions while preserving the decentralization and security of individual blockchains.

  • Revenue Optimization for Rollups: Rollups can retain 100% of their sequencing fees and explore additional revenue streams through cross-chain activities and Maximum Extractable Value (MEV) opportunities.

  • Composability: NodeKit enhances blockchain composability by enabling decentralized applications (dApps) to interact across different chains, facilitating broader access to users and liquidity.

Atomic Composability

Composability in blockchain refers to the seamless interaction with all protocols, smart contracts, and decentralized applications (dApps) within a network. This characteristic gives developers the freedom to build applications across different platforms without limitations.

Historically, composability through smart contracts has driven significant innovations, such as Yield Aggregators, Decentralized Exchanges (DEXs), Lending protocols, Flash Loans, and other essential DeFi primitives. These innovations have reshaped how users engage with blockchains.

Atomic composability among rollups enhances these capabilities by enabling primitives, which were previously confined to individual chains, to be accessed across multiple rollups within a single block. This approach aims to provide a unified user experience while allowing each Layer 2 (L2) solution to maintain its unique optimizations.

For decentralized applications (dApps), this means broader access to users and liquidity across various chains, supporting growth without the constraints of being tied to a single blockchain.

Sequencing and MEV Revenue

Rollup Revenue

NodeKit offers rollups the potential to generate higher revenue compared to operating a centralized sequencer. Rollups retain 100% of the sequencing fees generated on their chain, gain revenue from cross-chain transactions, and can opt to earn through Maximum Extractable Value (MEV). NodeKit’s design ensures that rollups can maintain their existing revenue streams while opening up new opportunities for earning through MEV and cross-chain activities, thus preserving their operational sovereignty.

MEV Revenue

Rollups have the ability to monetize MEV by selling the building rights for specific rollup chunks. The revenue-sharing arrangement between rollups and Javelin operators can be adjusted to create a sustainable and incentivized system. This approach modifies the traditional Proposer-Builder Separation (PBS) model seen on Ethereum, where the builder includes a payment to the validator and redirects the fee recipient to their own address. On NodeKit, rollups can modify builder payouts to incentivize block construction, and similar mechanisms are used to distribute rewards from cross-chain top-of-block fees among participating rollups.

Revenue Preservation & Settler Nodes

NodeKit separates the processes of sequencing and settlement, allowing rollups to preserve the revenue previously earned through sequencing fees.

Rollups function by purchasing Layer 1 (L1) gas and selling Layer 2 (L2) gas to users, generating profit from the margin charged for providing users with cheaper transactions secured by Ethereum. The fees generated by this mechanism are commonly referred to as sequencer fees. However, the entity responsible for ordering transactions does not necessarily have to receive these fees. Instead, the entity that settles the block to the L1 can receive the fees. Rollups may use a round-robin system or leader election to determine which entity settles the block and collects the associated fees.

This model supports the adoption of shared sequencers by enabling a decentralized network of settler nodes to settle rollup transactions to the L1, earning sequencing and execution fees while still outsourcing block production to a shared sequencer like NodeKit SEQ. This approach aims to preserve rollup revenue from transaction fees.

Learn more at Nodekit Documentation