The First: How does Puffer Finance solve the problem of LST/LRT track centralization?

On October 9th, The First launched an Ethereum-based protocol, EigenLayer, which introduces the concept of re-staking. On October 15th, Puffer Finance, a native liquidity re-staking platform built on Eigenlayer, announced that its native token PUFFER will begin airdrops on October 15th, 2024 at 07:00 (UTC + 8), and the airdrop activity will continue until January 15th, 2025 at 07:00 (UTC + 8). Of the total 1 billion tokens, 7.5% will be used for the first season airdrop of Crunchy Carrot Quest. The First Announcement states that Puffer Finance ecological token PUFFER will be launched at 16:00 on October 16th.

What is Puffer Finance?
After the completion of the Shanghai upgrade of Ethereum, the beacon chain opened withdrawals, and the ETH staking rate also increased from 14.13% to 21.46%. Currently, the beacon chain allows 2470 validators to exit or activate every day. With the emergence of node liquidity and gradual improvement, it provides a foundation for new LSD protocols to compete for market share. However, the track has not seen new LSD protocols grow, and the reasons are nothing more than the entry barriers brought by the complex product structure, the first-mover advantage brought by the cross-border Network Effect, and the technical and trust costs brought by the emphasis on security.
Targeting the pain points and crises of the current staking track, Puffer Finance has emerged. It is a decentralized liquid weight staking protocol (LRT) built on the foundation of EigenLayer, aiming to improve the proof-of-stake (PoS) rewards of Ethereum. By introducing native liquidity re-staking tokens (nLRT) to accumulate PoS and re-staking rewards, users can bet on ETH and obtain the platform's native token pufETH, thereby obtaining more rewards through Ethereum's PoS and restaking system. The protocol uses advanced anti-price cutting technology to protect bet assets and adopts capital efficiency strategies to maximize returns, making it an important participant in the Ethereum betting ecosystem.

To this end, the Puffer Finance protocol node Utilizes Puffer's anti-penalty technology to enhance the security of pledged assets, improve capital utilization efficiency, and allow validators to participate in Ethereum network verification with as little as 1 ETH It also introduces a new set of staking module system for re-staking strategy execution It provides a secure re-staking platform for liquid stakers to earn PoS rewards and re-staking rewards Puffer has received early support from well-known industry figures such as Eigenlayer founder, Coinbase staking business director, and Ethereum core researcher Justin.
II. Operating Mechanism of Puffer Finance
Puffer Finance is an innovative financial platform built around three pillars: liquidity re-staking, UniFi-based Rollups, and UniFi Preconf AVS (Advanced Validator Service). These technologies work together to ensure that the platform provides high-speed, secure, and efficient transaction processing capabilities while also maintaining the decentralized and secure core values of Ethereum.
Liquidity re-pledge
Liquidity re-pledging is a major innovation highlight of Puffer Finance. In the traditional Ethereum staking model, the ETH pledged by validators is locked as collateral, limiting its use in other DeFi activities. Puffer Finance breaks this limitation by introducing the PufETH conversion mechanism. Validators can convert staked ETH into PufETH and then re-pledge it across multiple protocols without additional collateral.
The benefits of this mechanism include:
Capital efficiency: Validators can maximize the utility of staking ETH and flexibly participate in various DeFi activities.
Reward increase: By participating in services such as UniFi AVS, validators can receive additional rewards while maintaining their staking status on Ethereum.
Lower threshold: No additional collateral is required, lowering the threshold for participating in multiple DeFi services.
Rollups based on UniFi
Based on UniFi, Rollups is another important component of Puffer Finance architecture. As a scaling solution, Rollups effectively alleviates the congestion problem of Ethereum L1 by processing multiple transactions off-chain and submitting them as a single batch to the Ethereum mainnet, while maintaining security and decentralization.
The main advantages of UniFi Rollups are:
Transaction acceleration: The transaction speed processed by Rollups is significantly accelerated, achieving almost instant confirmation time.
Cost reduction: By bundling transactions, users' gas fees are significantly reduced.
Security guarantee: Rollups inherits the security guarantee of Ethereum, ensuring the security of off-chain transactions.
Compatibility: UniFi Rollups seamlessly integrates with existing Ethereum infrastructure, achieving scalability without major protocol changes.
In addition, the economic consistency between UniFi Rollups and Ethereum L1 ensures that the value generated through Rollups can be reinvested in the Ethereum ecosystem, promoting greater integration and scalability of the network.
UniFi Preconf AVS (Advanced Authenticator Service)
UniFi Preconf AVS further enhances transaction speed and security through a pre-confirmation service built on the EigenLayer protocol. This service enables validators to confirm transactions almost immediately within about 100 milliseconds.
The core functions of UniFi AVS include:
Authenticator participation without permission: Any re-staking validator on EigenLayer can easily provide pre-confirmation services.
Transparent regedit: Maintain an on-chain transparent regedit of validators participating in the pre-confirmation service.
Reduction mechanism: Reduce validators who fail to fulfill pre-confirmed commitments to ensure accountability.
Fast confirmation: Transactions are confirmed in a very short time (about 100 milliseconds).
Economic security: The pre-confirmation service is supported by the security of Ethereum validators.
The integration of UniFi AVS and Puffer Finance provides the necessary speed and security for aggregation, making it suitable for high-throughput applications. Validators participating in UniFi AVS not only receive additional rewards, but also contribute to the overall scalability and security of the network.
Core Technology of Puffer Finance
In addition to the business logic of decentralization and re-staking, Puffer Finance uses its self-developed Secure-Signer (remote signature tool) and RAV technology to solve the problem of confiscation in the Ethereum and Eigenlayer networks, providing participants with low-risk dual returns. "Puffer Finance's open source technology Secure-Signer and RAV introduce the first'anti-confiscation 'technology to Ethereum."
Through the Trusted Execution Environment (TEE) provided by Intel SGX hardware, the validator key management and signature logic are transferred from the Consensus Client to the Enclave. By enforcing the signature logic and restricting the access rights of the validator's private key, verification errors can be prevented from leading to fund confiscation. Compared with DVT technology, Secure-Signer provides a more economical and easy-to-use solution to avoid fund confiscation. At the same time, the two technologies do not mutually exclude each other, and validators can adopt them at the same time. Due to the reduction of the risk of node fund confiscation, the Puffer protocol can also reasonably reduce the node margin to 2ETH, greatly reducing the participation threshold of individual pledges. The development and implementation of the above technology have been recognized and donated by the ETH Foundation.

In response to the current low yield of ETH staking, Puffer is built on top of Eigenlayer. Puffer nodes can re-pledge through Eigenlayer's AVS, improving hardware efficiency while increasing overall yield.
Overall, Puffer's protocol structure is similar to Rocket Pool, but it reduces the risk of fund forfeiture through its self-developed Secure-Signer security signature technology, allowing the node margin to be reduced to 2 ETH (currently the minimum node margin for Rocket Pool is 8 ETH). This helps to lower the participation threshold for individual pledges and increase fund leverage. The increase in fund leverage allows the protocol to set lower node pumping, thereby increasing the yield of user funds and helping Puffer compete for market share. At the same time, Puffer increases the overall yield by integrating with Eigenlayer.
Puffer Finance Team and financing information
The Puffer team has excellent technical strength and has received a $120,000 donation from the Ethereum Foundation. Justin Drake, a researcher at the Ethereum Foundation, serves as a team advisor. Jason Vranek and Amir Forouzani are the founding contributors to Puffer Finance.
Since its establishment in 2022, Puffer Finance has conducted four rounds of financing totaling $24 million. On April 16th, Puffer Finance announced the completion of a $18 million Series A financing led by Brevan Howard Digital and Electric Capital, with participation from Coinbase Ventures, Kraken Ventures, Lemniscap, Franklin Templeton, Avon Ventures (affiliated with Fidelity Investments), Mechanism, Lightspeed Faction, Consensys, Animoca, and GSR. The new round of funding will be used to help launch Puffer's mainnet.