Timeboost for beginners — Offchain Labs’ latest transaction ordering policy protocol

Timeboost is a transaction ordering policy protocol designed for Arbitrum chains, which allows anyone to bid for the right to have their transactions sequenced faster than other transactions.

When it comes to Layer 2 scaling, various moving parts work together to help ensure that transactions are cheap, can be confirmed quickly, and remain secure from harmful forms of Maximum Extractable Value (MEV) while avoiding reorganization after confirmation. While some forms of MEV can negatively impact users, other types of MEV can contribute to market efficiency, generating profits without necessarily harming regular users.

For example, MEV can help ensure that token prices across DEXes accurately reflect market demand and allow validators to execute rapid liquidations, helping ensure that lenders are repaid when a borrower’s collateral falls below the required ratio. Though not the case for Arbitrum, on some blockchains, such as mainnet Ethereum, block producers that follow a block-building methodology can maximize their profits through MEV by ordering transactions based on the highest gas prices.

A key component of the Arbitrum transaction lifecycle is the sequencer. In most L2 solutions, the sequencer is responsible for aggregating incoming transactions and batching transactions offchain before posting the compressed version of the data to an immutable parent chain like Ethereum. This process is crucial for increasing transaction speed and reducing costs because the L2 can rely on the parent chain’s immutability for security.

On Arbitrum today, the sequencer applies a First-Come, First-Serve (FCFS) policy for transactions in a block. This policy is unique to Arbitrum and was an intentional design choice made by the original developers behind the technology: Offchain Labs. FCFS enables fast blocktimes of up to 100ms and protects users from harmful types of MEV. This method is currently the default for all Arbitrum chains, with Arbitrum One and Arbitrum Nova operating at 250ms block times.

On the flip side, FCFS can lead to latency races, where arbitrageurs spam the sequencer to get their transactions in as soon as possible. This is because opportunistic traders, or “MEV Searchers,” want to be first in a transaction to execute a liquidation opportunity or make an arbitrage profit across exchanges. These latency races place stress on chain infrastructure, contributing to congestion and incentivizing searchers to invest wastefully in hardware.

A proposed solution to this issue is “Priority Gas Auctions,” which will allow entities to bid against one another through gas fees and re-prioritize the order of their transactions. However, this approach can expose Arbitrum users to harmful types of MEV. This is because allowing entities to control transaction ordering opens the door for exploitation, as it provides opportunities to manipulate the sequence for unfair gains. Additionally, it will slow down block production times, as allowing users to reorder transactions fully will be more time-consuming compared to the current FCFS method. This extra step will negatively impact the amazing UX that Arbitrum chains are known for.

Timeboost, however, is intentionally designed to be different. The tool preserves fast block times, reduces spamming on the network, and allows MEV protection to remain on-chain while allowing the chain owner to capture MEV.

What is Timeboost, and how does it work?

Timeboost is designed to balance the various complex tradeoffs, such as speed, security, and decentralization, in the MEV space. It retains the benefits of FCFS and simultaneously reduces network spam.

With Timeboost incorporated, users will be offered two different ways to submit a transaction to the sequencer. One will be the normal path transaction (unchanged from today), and the other path will be to submit transactions to a special “Express Lane” endpoint on the sequencer. Control over the Express Lane is determined by an auction using a smartcontract alongside an autonomous auctioneer.

The autonomous auctioneer is a piece of software that runs in isolation from the sequencer. It operates by receiving bids, validating the legitimacy of the bids, then sorting the bids into descending order before calling an endpoint on the sequencer to resolve the auction using the on-chain auction contract.

Once an auction is won, the winning bidder can take control of the “Express Lane” for a time advantage of 200ms. Transactions signed by the express lane controller will be sequenced as soon as the sequencer receives and verifies their transaction. The bid itself is not designed to determine whether or not the transaction should be included in the block; rather, it is designed to determine who will control the Express Lane for an upcoming round.

The express lane controller will have the sole right to control the Express Lane for one minute — including transferring those rights and signing transactions for others to gain the time advantage afforded to those who wish to use the Express Lane. Although transactions signed by the Express Lane controller will have a head start, the Express Lane controller does not have the right to re-order transactions, nor will the sequencer guarantee that their transactions will always be first in a block. This is similar to buying concert tickets for a famous artist. For example, having a slight time advantage over others does not guarantee that you will be able to purchase the ticket. A similar analogy could be made for competing in a sports race. You and other competitors are all participating in the same race. After you win a bid, only you will have 200ms subtracted from your finish time. Only one athlete will win the race, but this “200ms advantage” does not guarantee that you will be the athlete who always wins.

The Arbitrum DAO will vote on whether or not to collect Timeboost auction bids in ETH and impose a “speed bump” of 200ms on non-Express Lane transactions. The exact setup is subject to change based on the Arbitrum DAO’s decisions. It is important to note that Timeboost’s design allows for bids to be made using any ERC20 token and at any minimum.

Who is Timeboost made for?

For the majority of users, transactions will be submitted through the normal path. Express Lane transactions will likely only be used by a handful of sophisticated actors. These include:

• On-chain traders — The primary goal of these traders would be to make a profit from onchain financial activities and
• Sophisticated MEV actors — These sophisticated actors may or may not have specific hardware and software designed to execute these trades.

Private bids are submitted to the autonomous auctioneer up until the auction closing time, which is set to 15 seconds before the start of the next round. Once the deadline for bid submission has elapsed, the autonomous auctioneer will automatically sort the bids and submit the top 2 highest bids on-chain to the auction contract to determine the winner. The highest bidder will pay the second-highest bid amount and will be declared as the Express Lane controller for the upcoming round.

Traders and searchers will not be the only ones who benefit from Timeboost.

Orbit chain owners will also be able to adopt the technology at their own discretion.

If Orbit chain owners choose to implement Timeboost, they can use Timeboost to generate potential revenue from express lane bids, add utility to their token, and reduce spam. This is because sophisticated actors and searches can choose to spend their resources on buying rights for the Express Lane rather than allocating them to winning latency races that congest and spam the network.

What’s Next?

There are various ways in which Timeboost can be implemented, and the team at Offchain Labs is currently exploring the different specifications for each of these setups:

• Centralized sequencer: This spec exists, and engineering is underway. This is also known as centralized Timeboost.
• Decentralized sequencer: This spec was recently published with Espresso. This is called Decentralized Timeboost, where the “decentralized” part refers to the sequencer.

For the time being, if Timeboost is approved to be implemented, it will first be available for a centralized sequencer setup. Engineering for the centralized sequencer is currently well underway and publicly available for review, and implementation subject to DAO’s approval on Arbitrum One and Nova.

As mentioned above, Offchain Labs is working closely with Espresso Systems to make Timeboost compatible with decentralized sequencers. Offchain Labs and Espresso Systems recently released the full specification for a Decentralized Timeboost, which researchers, developers, and community members are highly encouraged to review and provide feedback on.

As Timeboost is still in its foundational period, extensive monitoring, analysis, and potential corrective action are required to ensure that the tools are effective in the near term. In addition, Timeboost upgrades are also being explored to ensure its long-term sustainability.

We would love to hear from you if you are interested in assisting Offchain Labs and the Arbitrum ecosystem in building Timeboost and the Timeboost ecosystem. Participants are encouraged to comment on DAO forums, propose alternative design solutions based on our published specifications, and ask questions in forums.