What is Unichain: Uniswap's Layer-2 solution for Ethereum scalability

The Uniswap decentralized exchange provided a simple and accessible route to token trading for users when it arrived in 2018. Now, Uniswap has launched Unichain, a platform that aims to address some of the growing pains of decentralized finance (DeFi) on Ethereum. The project's technology is considered by many to be an upgrade, and one that allows for smoother and more efficient transactions.

If you’re already familiar with Uniswap, Unichain is worth keeping on your Layer-2 radar. In this article, we'll walk you through what Unichain is in more depth, exploring how Unichain works and how you can get started with the platform.

TL;DR

• Unichain aims to advance DeFi with faster, cheaper, and smoother transactions,

• The platform adopts optimistic rollups, which reduce congestion and gas fees.

• Unichain speeds up and secures Ethereum scaling with verifiable block building and fast state updates.

• Decentralized validation and economic finality ensure reliable cross-chain transactions on Unichain.

• Future Unichain features include encrypted mempools, scheduled transactions, and secure trusted execution environment (TEE) coprocessors.

How does Unichain work?

Unichain's platform is designed to make DeFi faster and cheaper. Why should you wait ages for a transaction to go through, or be stuck with an astronomical fee when the network gets busy? One tool supporting this is optimistic rollup technology. Think of an optimistic rollup as a system that bundles (or “rolls up”) multiple transactions together offchain, processes them quickly, and then submits them to the Ethereum mainnet.

This way, you get the same level of security brought by Ethereum but without the bottlenecks that typically slow things down. It’s “optimistic” because it assumes transactions are valid and only checks them if there’s a dispute, saving a lot of processing time.

Traditional blockchains often deal with high latency because they need to validate every transaction in real-time. However, Unichain has a feature called “fast state updates” to address this. The feature can quickly update the network's state (or current status) without waiting for every transaction to be processed individually.

Another key aspect of Unichain is its economic finality. This feature is a way of making sure that transactions are settled quickly and with certainty across different chains. Economic finality is especially useful for DeFi applications where you might want to trade, swap, or lend assets across multiple platforms. Economic finality also makes sure that once a transaction is processed, it can’t be easily reversed, giving users confidence that their transactions are secure.

Unichain is built on the OP Stack, a modular framework that makes it easier to deploy and scale rollups. The OP Stack allows developers to integrate Unichain features into their projects without having to build everything from scratch. This makes it easier to create scalable solutions that benefit from Unichain’s efficient transaction processing and finality.

What issues does Unichain tackle in the DeFi space?

DeFi has opened doors to new innovation to make our lives easier when managing our digital assets. But sometimes, with different protocols, there can be a disconnect and roadblocks. Unichain helps address these hurdles to improve the overall user journey in the DeFi space. Let’s now break down the key issues and how Unichain tackles them.

High gas fees

It’s no secret that when dealing with Ethereum, you’re sometimes faced with the unpredictability of gas fees. When the network gets congested, transaction costs can spike, making simple actions like swapping tokens or staking digital assets relatively expensive.

• Unichain’s solution: By using an optimistic rollup, Unichain processes transactions offchain in bulk before confirming them on the Ethereum mainnet. This reduces congestion and helps lower gas fees, making transactions more affordable and predictable for the community.

Liquidity fragmentation

Liquidity is everything, especially in the DeFi space. And, liquidity needs to be pooled together for a protocol to have the best rates. However, traditional blockchains often have liquidity scattered across different platforms, which can lead to higher trading costs.

• Unichain’s solution: Unichain connects to Superchain, a network of rollups on the OP Stack. This network lets liquidity move easily between platforms, which reduces fragmentation and gives you better rates.

MEV (Maximal Extractable Value) concerns

MEV is the additional gain that can be earned by rearranging or front-running transactions. This practice has become a significant issue, leading to a less fair trading environment for individuals. Think of it like someone cutting in line at a store just because they can pay more for a product.

• Unichain’s solution: Unichain uses verifiable block building to prevent MEV exploitation. It prioritizes benefits over profit, reducing the impact of MEV.

Slow and unpredictable Ethereum scaling

Scaling is another challenge Ethereum developers continue to grapple with as the network advances. During peak times, the network can become sluggish, leading to delayed transactions for users.

• Unichain’s solution: Unichain uses the OP Stack and its rollup technology to speed up transaction processing without compromising security. This helps scale Ethereum’s capabilities, enabling faster and more reliable operations.

What is verifiable block building?

Waiting for transactions on busy blockchain networks can be frustrating due to slow processing, failed transactions, and security concerns. Verifiable block building changes how transactions are processed, offering a smoother and more secure user experience.

Verifiable block building creates a transparent environment for processing transactions. It uses specific tools and decentralization, rather than relying on a single entity, to keep things moving smoothly and predictably. There are two key components of verifiable block building — flashblocks and trustless revert protection.

Flashblocks: speeding up transactions

One innovation in verifiable block building is flashblocks. These are pre-confirmations of transactions that allow you to view your finalized actions faster. Instead of waiting for an entire block to be built, transactions can be confirmed in smaller batches.

• How it works: Transactions are streamed to a trusted environment, which then groups them into flashblocks. These are like mini-blocks that get confirmed quickly, reducing the wait time and making onchain interactions feel more instantaneous.

• How does it benefit you: Fast transactions reduce waiting time. Whether trading tokens or using DeFi protocols, flashblocks ensure near real-time actions.

Trustless revert protection: no more failed transactions

Another important aspect of verifiable block building is trustless transactions with built-in revert protection. If you’ve ever paid gas fees for a transaction only to have it fail, you know how frustrating that can be.

This makes sure that transactions are simulated before they’re processed, so any issues can be flagged and addressed upfront.

• How it works: The network uses a trusted execution environment (TEE) to simulate transactions. If the system detects a transaction that might fail, it removes it from the block, so you don’t end up paying for something that doesn’t go through.

• How does it benefit you: With trustless revert protection, you can feel confident that your transactions won’t randomly fail, saving both time and money. This makes interactions on the blockchain much more predictable and user-friendly.

How verifiable block building improves blockchain security

Beyond just making things faster and smoother, verifiable block building improves blockchain security. By making sure that transactions follow a set order and are transparently processed, this approach prevents tampering and makes it harder for bad actors to manipulate the system. Put simply, it allows developers to allocate MEV in ways that benefit community members rather than exploit them.

What is Unichain Validation Network (UVN)?

Blockchain relies on trust. Users need to know their transactions are secure, fast, and on time. The Unichain Validation Network (UVN) helps here. It’s designed to decentralize block validation, which is crucial for maintaining the integrity of the Unichain ecosystem.

Decentralized validation: a key feature

Unlike other blockchains that rely on a single entity, the UVN distributes validation across multiple nodes. This approach prevents any single entity from controlling the blockchain, improving block security and reliability.

Why is decentralized validation important?

• Increased transparency: Since multiple validators check the blocks, users can trust that the process is fair and transparent.

• Reduced single points of failure: With decentralized nodes, the risk of the network going down or being compromised by a single bad actor is significantly lower.

Mitigating risks with UVN

Certain risks with UVN can disrupt blockchain operations. Two common issues are block equivocation and invalid blocks.

Block equivocation

This occurs when a sequencer proposes multiple conflicting blocks at the same height. It creates confusion about which block is the “real” one, leading to delays.

• UVN solution: Validators in the UVN independently check and verify proposed blocks. If any inconsistency is detected, it can be flagged and corrected, enabling the network to maintain a clear and consistent state.

Invalid blocks

Sometimes, sequencers might attempt to add blocks that don’t meet the network’s rules, either by mistake or malicious intent. If these blocks aren’t caught, they can lead to chain reversion and further delays.

• UVN solution: The UVN validators screen blocks before they're finalized, verifying that all transactions meet the necessary criteria. This prevents invalid blocks from being added to the chain, ensuring smoother operations and economic finality.

Faster finality and cross-chain transactions

The UVN also speeds up the process of achieving finality. When transactions are validated quickly and accurately, you don’t have to wait long to know your transaction is confirmed and secure. This economic finality is particularly important for applications, DeFi, and gaming.

Meanwhile, UVN’s approach to validation supports cross-chain transactions. Unichain can move assets across different chains without worrying about inconsistencies or delays by verifying each transaction properly. This makes it easier for developers to create DApps for different chains and for people to use multiple chains without problems.

What can we expect from Unichain in the future?

Unichain’s white paper touched upon future DeFi innovations. What does this mean for Unichain and your digital assets?

Encrypted mempool

An encrypted mempool boosts privacy and security. Transactions waiting to be processed are currently visible to everyone. This openness can lead to front-running, where someone sees a pending transaction and submits a competing one to get ahead.

• Unichain’s vision: Transactions stay secret until confirmed, preventing exploitation and providing enhanced security and privacy.

Scheduled transactions

Ever wished you could set up a transaction to happen at a specific time or under certain conditions? That’s exactly what scheduled transactions will enable. This feature would allow you to automate trades, recurring payments, or smart contract actions without manually initiating them each time. Doing so would help streamline user interactions and make DeFi applications more versatile.

• Unichain’s vision: By improving its blockchain technology, Unichain aims to support planned and recurring transactions. This will make it easier for individuals and developers to do business.

TEE coprocessors

TEE coprocessors are about taking security and processing capabilities to the next level. Trusted execution environments allow certain computations to be performed privately and securely, even if the surrounding environment isn’t trusted. Imagine a situation where a smart contract could request private computations without exposing sensitive details. This opens the door to a whole new range of applications in DeFi, where privacy and trust are important.

• Unichain’s vision: By integrating TEE coprocessors, Unichain can enable secure and verifiable computation within its network. This might include private computations that don’t reveal sensitive data or complex operations that need extra layers of security.

How do I connect my wallet to Unichain Sepolia Testnet?

Setting up your wallet to connect with Unichain Sepolia Testnet is easy. Below is a walk through of the steps to take.

Adding Unichain Sepolia Testnet to your wallet

1. Open your wallet app: Start by opening your Ethereum-compatible wallet.

2. Navigate to settings: Go to the settings menu, and find the option for “Networks” or “Add Network.”

3. Add new network: Select “Add Network” and enter the following information:

4. Chain name: Unichain Sepolia

5. Chain ID: 1301

6. RPC URL: sepolia.unichain.org

7. Currency symbol: ETH

8. Block explorer: sepolia.uniscan.xyz

9. Save: Click “Save” or “Add” to complete the setup.

After completing these steps, your wallet can interact with the Unichain Sepolia Testnet. When switching networks in your wallet, you’ll see the Unichain Sepolia network as an option.

How to fund your wallet on Unichain Sepolia Testnet

Before testing, you’ll need some ETH on the Unichain Sepolia Testnet. Here’s how you can get funds:

1. Switch to Unichain Sepolia: Make sure your wallet is set to the Unichain Sepolia network you just added.

2. Get Testnet ETH: Head over to Unichain’s official documentation to learn how to get test ETH. Typically, testnets use faucets, which are platforms that dispense free, test-only ETH.

3. Use a faucet: Follow the steps in the documentation to access a faucet. You might be required to connect your wallet and verify your identity through a simple action (like signing a message or proving you're not a bot).

4. Receive test ETH: After verification, the faucet will send a small amount of ETH to your wallet. It’s not conventional ETH, but you can use it to test the Unichain Sepolia Testnet features.

Tips for getting started

• Always double-check: Make sure you’re on the right network, especially when working between testnets and mainnets.

• Testnets are for testing: The ETH you receive on Unichain Sepolia has no real-world value, so feel free to experiment and explore.

• Explore with Uniscan: Use the Unichain Sepolia Block Explorer to track transactions and explore activity on the network.

The final word

Unichain is more than just another Ethereum Layer-2. It aims to improve the DeFi experience by addressing issues like network congestion, high gas fees, and security challenges. Put simply, the project offers another way to interact with decentralized finance.

Building on the success of Uniswap, Unichain takes the principles of accessible, decentralized trading and improves them with more tools for scalability and efficiency. It’s not about flashy features — it’s about refining the essentials. As the DeFi space grows, protocols like Unichain show there’s always room for improvement.