BloXroute: The Dragon-Slaying Sword for DeFi Traders

BloXroute is a scalable, trustless Blockchain Distribution Network (BDN) provider that offers on-chain transaction acceleration BDN services for DeFi traders across multiple public chains such as Ethereum, Polygon, and Binance Smart Chain.

In the blockchain industry, BloXroute BDN is considered a type of infrastructure. BDN stands for Blockchain Distribution Network, and BloXroute is the first and fastest BDN. After using BloXroute BDN, the transaction propagation speed can be improved by 400-1000 milliseconds, block propagation speed can be up to 2 seconds faster, and the mempool service can be 50-400 milliseconds faster. Overall, it can be understood as a non-congested blockchain highway.

Who created BloXroute?

The inspiration for the BloXroute project originally came from the paper by Uri Klarman, a former PhD student of Professor Aleksander Kuzmanovic (Alae). They formed a team in 2017, established the company in January 2018, and secured their first round of funding the same year, with headquarters in Chicago.

Uri Klarman is the founder and CEO of BloXroute. He holds a PhD in Computer Science from Northwestern University, studying under Professor Alae.

Professor Alae is a co-founder of BloXroute. He is a full-time professor and an expert in network neutrality at the Computer Science Department of Northwestern University, specializing in computer networks. In previous years, during BloXroute's official outreach in China, Professor Alae often gave public speeches and participated in interviews. Additionally, Professor Alae is the initiator of Google's M-Labs and the designer of Akamai's DDoS defense system.

Eyal Markovich is a co-founder and COO of BloXroute. Many of the external communications regarding BloXroute's product progress and strategic partnerships on Medium over the past few years have been disclosed by him. He is the Vice President of Research and Development at Kaminario Storage Systems in the U.S., an IPO expert, and a startup incubation expert.

Emin Gün Sirer is the Chief Scientist of BloXroute and the Founder and CEO of Ava Labs, which is the core developer of AVAX. He is also a former professor at Cornell University and a former co-director of The Initiative for CryptoCurrencies and Contracts (IC3).

Robert Kaplan is the former investment director at SoftBank, who joined the BloXroute board after leading the Series B round at SoftBank. Additionally, there are CTO Offer Markovich, CBO Curtis Polt Mak, and others.

As of now, the team has grown to nearly 50 people, based in Chicago, with employees in Europe, Israel, Singapore, Hong Kong, and other locations.

Regarding the project's positioning, the BloXroute team initially believed that there was significant room for improvement in network technology within the blockchain industry, so they built the BDN using global cloud nodes, applying internet thinking to solve blockchain challenges. Later in the development process, the team discovered that this product was quite helpful for users engaged in DeFi on-chain transactions, which gradually led to the current state of BloXroute.

Basic Architecture of BloXroute BDN

BloXroute BDN consists of relay servers, gateways, and a control plane.

Relay servers are a core component of the BDN backbone and are distributed globally to provide optimal paths for the BDN. Currently, BloXroute rents servers from Amazon Web Services (AWS) and Alibaba Cloud, and also has the capability to utilize Google Cloud servers.

Gateways serve as the bridge connecting blockchain nodes and relay nodes, as well as the entire BDN network. Users need to install the BloXroute gateway and match it with their blockchain nodes to use the BDN.

Control plane is middleware embedded within the BDN that formulates and selects the optimal and fastest propagation paths based on the status of relay servers across the network and the locations of sending and receiving user nodes.

How does BloXroute achieve acceleration?

This involves BloXroute's caching technology and direct routing technology.

The time for information propagation is proportional to the size of the data, so blockchains generally control latency by limiting block sizes. In a typical peer-to-peer network, each blockchain node must verify the complete information received before initiating the next round of broadcasting and then broadcast the same information to other nodes. If the block data is large, a significant amount of time can be wasted during the sending and receiving process, causing delays. BloXroute simplifies the process of synchronizing blockchain node information, primarily by compressing and decompressing data. The BDN gateway uses internal caching technology to compress the information and transactions within the block, achieving the effect of a compressed block. When all blockchain nodes with BDN installed receive a new block, the BDN gateway decompresses the block.

BloXroute's application of direct routing technology adopts an internally trusted approach. In a typical blockchain peer-to-peer network, each node is trustless, requiring repeated reception and verification of content from other nodes before broadcasting. This method is secure but inefficient. BloXroute BDN's relay nodes are self-operated, so the transmission between internal BDN nodes does not require verification; each node can focus solely on content distribution, thus increasing data transmission rates.

In the BDN network, as long as the block data from one node reaches a relay node through the BDN gateway, that relay node can immediately distribute it externally without waiting to gather all or a certain number of block data (no need to wait for consensus to be triggered) before starting distribution. This allows blockchain nodes connected to the BDN to synchronize new blocks faster than typical blockchain nodes.

So, how does BloXroute ensure the neutrality of relay network nodes? How does it prevent them from acting maliciously?

There are two types of nodes in the BloXroute BDN network: one is relay nodes (operated by the team), and the other is blockchain nodes (components of the blockchain network itself). Ensuring the neutrality of BDN relay nodes is key to maintaining the efficiency and security of the BloXroute BDN network, which BloXroute addresses through block encryption technology.

When blockchain nodes upload blocks to the BDN gateway, the gateway encrypts the block before it enters the BDN, and BloXroute cannot see its contents during propagation within the BDN. When the block reaches other blockchain nodes that also use the BDN, the "receiving node" sends a signal to the "sending node" indicating that it has received the block, after which the "sending node" sends the private key to the "receiving node," allowing it to decompress the block.

In other words, the block is in an encrypted state during transmission within the BloXroute BDN, and only after leaving the BDN and reaching the blockchain node is the information in the block decompressed back into the original transaction data, so BloXroute has no opportunity for malicious actions.

Blockchain nodes also have no opportunity for malicious actions. This is easy to understand because they are essentially still part of the blockchain network, and the blocks they package must ultimately reach consensus within the blockchain network (Bitcoin network/Ethereum network). BloXroute BDN simply allows these blockchain nodes within the BDN network to package new blocks faster or receive new blocks earlier.

It is not the case that packaging an incorrect block can pass through the Bitcoin network/Ethereum network; consensus cannot be reached in such cases, and the blockchain nodes themselves would not receive rewards. Some PoS-type blockchains even have penalty mechanisms, providing no benefits.

In summary, BloXroute has no opportunity for malicious actions, and blockchain nodes have no motivation or capability for malicious actions, so BloXroute can ensure the neutrality of relay network nodes.

What does BloXroute specifically offer?

1. Mempool Data

BloXroute's mempool is 50-200 milliseconds faster than other mempool services. Utilizing this 200 milliseconds can help identify new liquidation or arbitrage opportunities in the Mempool, discover whale operations about to occur in the next block to gain tracking trading opportunities, and detect impending gas fee wars to set reasonable gas fees in advance to successfully complete trading goals.

2. Block Streaming

BloXroute BDN's Block Streaming is 1000 milliseconds faster than typical P2P networks. It can receive blocks faster than other providers, allowing for the detection of price changes in new blocks, potentially enabling order cancellations before incurring losses.

3. Transaction Propagation

BloXroute BDN's transaction propagation speed is 400-600 milliseconds faster than other providers, allowing for quicker sending and delivery of transactions and blocks. Since BloXroute BDN connects directly with miners and validators in a peer-to-peer manner, using BloXroute BDN to send on-chain transactions significantly increases the likelihood of these transactions being included in the next block by miners.

4. Frontrunning Protection

BloXroute BDN uses private transaction routing to avoid predatory attacks in the dark jungle. In the Ethereum mining space, there is a term called MEV (Miner Extractable Value), which refers to predatory bots that exploit transactions in new blocks for profit through front-running, sandwich attacks, and other means. These bots will use higher gas fees to front-run, resulting in losses for the original traders/users. Because BloXroute BDN uses private transaction routing, it can mitigate these risks by directly connecting users with miner nodes to securely hand over users' transactions (preventing front-running).

5. Flashbots MEV Relays

Many Flashbots bundles are sent through BloXroute, and using BloXroute can increase success rates because BloXroute BDN has relays distributed globally.

Who benefits from BloXroute BDN?

Mining Pools (Blockchain Nodes): Blockchain nodes (mining pools) are direct users of the BDN and can send and receive blocks faster. However, mining pools can use BloXroute permanently for free and are encouraged to do so.

Market Makers: Market makers on DEX benefit from being ahead of competitors in understanding current prices, allowing them to react quickly to changes. Understanding the pending transaction pool enables market makers to see price changes before they occur and cancel orders before incurring losses.

Arbitrageurs: Being aware of the current state when arbitrage opportunities arise gives traders an advantage in discovering these opportunities.

On-chain Traders: For example, quantitative institutions in DeFi funds can greatly benefit from using BloXroute BDN during extreme market conditions when network congestion occurs. Monitoring gas price changes in the mempool allows traders to quickly realize gas price increases and adjust their transaction gas fees, enabling them to complete trades even during network congestion.

Compared to when BloXroute first started its BDN business, BloXroute has now stabilized the BDN network and identified a profitable point—serving DeFi users. In terms of BDN network users, 90% of mining farms on the Ethereum chain, 45% on the Polygon chain, and 50% on the BSC chain have already connected to BloXroute's BDN network. Regarding services for DeFi traders, the product and its pricing have been accepted by users, with daily trading volumes through BloXroute reaching as high as $1.5 billion, and achieving continuous profitability for several consecutive quarters. In 2021, it realized profits of $4-6 million, and in Q1 2022, it achieved a profit of $1.9 million, with an expected annual profit of $10-15 million for 2022.

What are BloXroute's competitors?

In a precise sense, BloXroute currently has no competitors. There are only some early exploratory cases in the field of blockchain network acceleration.

Bitcoin Fast Relay Network (BFRN): This is the first relay network deployed in the Bitcoin system, utilizing multiple gateways globally to quickly forward blocks and reduce miners' block propagation time. It also aims to reduce block propagation time through low-latency connections and block compression.

FIBRE: Later, Fibre replaced BFRN. The architectures of these two are similar, primarily utilizing fiber optic lines and error correction techniques to further reduce latency and packet error rates, aiming to optimize the RTT during block propagation to a minimum.

Falcon: The Falcon network is an idea initially proposed by Professor Alae and Uri. It employs direct forwarding technology, meaning that relay nodes start forwarding as soon as they receive the first byte of a block rather than waiting for the entire block to be received, thereby optimizing block propagation time.

None of these three projects have developed well. One very important reason is that they are primarily focused on solving network acceleration issues without considering neutrality and scalability. These centralized systems can decide which transactions to include in the network and which miners can participate. This hands control over to the network operators, who can refuse to include certain blocks on-chain based on their policies, business preferences, or legal requirements. This is very un-Web3. In contrast, BloXroute does not recognize the content, source, or recipients of blocks, and its services can be audited by a global peer network.

If we look for a counterpart in the internet field, BloXroute is comparable to Akamai. Professor Alae is also the designer of Akamai's DDoS defense system. Akamai is a pioneer and leader in the CDN field, addressing the scalability issues of the World Wide Web. By deploying hundreds of thousands of servers globally, it brings servers closer to end users. The low latency and global influence of CDNs enable millions of users worldwide to achieve seamless video streaming or instant social network connections, greatly promoting the scaling of the internet and the explosion of application layers.

Extended Thoughts: Blockchain Scalability

Blockchain scalability cannot be solved solely by Layer 0 network layer scaling; it requires the combined use of Layer 1 and Layer 2 scalability solutions. The scalability approaches and entry points of these different layers vary but do not conflict.

However, the real dilemma of scalability in the blockchain field, especially Ethereum's scalability, is that the parallel computing capacity and throughput are insufficient to support the demands of the application layer. Therefore, Ethereum needs scalability and Layer 2 solutions. The essence of BloXroute's BDN solutions is the competition between blockchain networks (such as who receives the block first, who is more likely to include transactions in the latest block), not solving the overall scalability dilemma (the block size remains unchanged, and only a limited number of blocks can be packaged within a time period, with each block still containing a limited number of transactions).

Ultimately, blockchain scalability may require the combined use of improvements in Layer 0 network layers, innovations in Layer 1 consensus layers, and enhancements from Layer 2 off-chain/on-chain processing solutions.