Save costs by offloading onchain compute to cryptographically verified offchain compute.
Since its initial launch, the focus for Chainlink Automation has been on developing new features and introducing new sets of triggers that enable developers to build novel onchain applications without having to create and manage supporting infrastructure. With this focus, Chainlink Automation has helped bring reliable and decentralized automation to a wide variety of smart contract automation use cases.
Chainlink Automation 2.0’s verifiable compute introduces a new era for secure and trust-minimized smart contract automation, transitioning from a turn-taking mechanism to a consensus mechanism using Off-Chain Reporting (OCR) 3.0. Now, developers can leverage Chainlink Automation 2.0’s consensus model to offload computation, boost performance, and reduce onchain costs by accessing secure, reliable, and verifiable offchain computation with enterprise-grade reliability and the highest standard of cryptographic guarantees.
In this blog post, we’ll outline the benefits of Chainlink Automation 2.0’s verifiable compute layer and showcase novel use cases it enables for developers looking to gain a competitive edge.
This is the first post in a three-part series on Chainlink Automation 2.0.
The Importance of Secure Offchain Verifiable Compute
Smart contracts need a secure, transparent, reliable, and cost-effective way to be triggered. While onchain computation suits many scenarios, it’s not ideal for secure and reliable automation, necessitating the use of offchain computation. Some projects use centralized setups to perform the triggering compute offchain, and while these methods can be cost-effective, they are not secure, transparent, or reliable compared to decentralized standards.
Some automation services enable triggering smart contracts using decentralized networks of nodes, with only one node responsible at any given time, putting the cost-intensive responsibility of revalidating the calculation onchain on projects.
Automation 2.0 adds cryptographic consensus to decentralized offchain compute, removing the need for projects to do expensive onchain validation of the compute, and giving users the best combination of security, transparency, reliability, and cost-effectiveness of any smart contract automation solution. With Automation 2.0, developers are able to increase the uptime guarantees of their dApps, save on costs, simplify UX, and create complex, feature-rich verifiable applications that are fully automated end to end.
Chainlink Automation 2.0: A Verifiable Compute Layer for Web3 Automation
With the introduction of 2.0, Chainlink Automation is now more than a secure and reliable smart contract automation service—it is a fully fledged, gas-efficient verifiable computing service for onchain applications. Solidity computations can be offloaded to battle-tested Chainlink decentralized oracle networks (DONs) to achieve up to 10x savings on gas costs, effectively enabling developers to 10x their computation power for the same cost.
Chainlink Automation 2.0 enables projects to offload complex smart contract logic to offchain decentralized oracle networks.
Thanks to its core functions and composability capabilities, Automation 2.0 is a robust solution for building Web3 services following a trigger-compute-action workflow, unlocking new ways to connect multiple dApps.
The Quorum Mechanism Powering Chainlink Automation 2.0
Nodes in the Automation network continuously monitor jobs, come to consensus using OCR 3.0, and sign a report before the job transactions are sent. The signed report contains the performData that will be executed onchain, which is then validated on the Registry before execution to provide cryptographic guarantees. This ensures that job transactions and inputs are confirmed by multiple nodes before they are executed, providing a high degree of trust-minimization since users don’t have to trust any single node in the peer-to-peer network to execute their automation job.
The use of OCR 3.0 as a consensus mechanism means developers can perform complex, gas-intensive calculations offchain—now with a 10M gas limit—saving onchain gas cost, and send the results onchain knowing that multiple nodes have confirmed the same calculations. These offchain calculations are Geth simulations that use onchain logic and data, which introduces additional redundancy since jobs will not be affected in the case of a single node going offline. In addition, there’s no need to perform additional onchain validations of the results, further reducing gas costs.
Nodes successfully execute transactions by leveraging Chainlink’s transaction manager to take care of gas bumping, nonce management, block reorganizations, and gas spikes. This transaction manager has been battle-hardened over the course of multiple years and is continuously being improved upon for increased resilience. The end product is a hyper-reliable and trust-minimized automation service that can execute and confirm transactions even during intense gas spikes or on networks with block reorganizations or consensus inconsistencies.
Chainlink Automation 2.0 Verifiable Compute Use Cases
Automation 2.0’s verifiable compute capability optimizes gas efficiency and computation power. As Automation 2.0 leverages Chainlink’s OCR 3.0 protocol, jobs have to be confirmed by multiple nodes before they are executed, providing strong cryptographic guarantees and a high degree of trust-minimization for the execution of the automation job.
Developers can leverage Chainlink Automation 2.0’s consensus model to offload computation, boost performance, and reduce onchain costs by accessing secure, reliable, and verifiable offchain computation with enterprise-grade reliability and the highest standard of cryptographic guarantees. Leveraging OCR 3.0 as a consensus mechanism also unlocks new use cases, as onchain computations can be offloaded offchain.
These verifiable compute capabilities unlock a multitude of use cases for Web3 developers. Here are a few examples to get you started:
- Vault deposit/withdrawal calculations—When users deposit or withdraw in an ERC-4626 tokenized vault, Automation 2.0 can perform the intensive calculation that converts assets to shares of liquidity within the pool. Then, the same calculation can be repeated depending on the time elapsed since the last update or at a specified deviation threshold.
- Fisher-Yates shuffle on Chainlink VRF response—Shuffling an array of data based on a random seed input is a prohibitively expensive calculation to perform onchain. With Chainlink Automation, the cost of this computation can be pushed offchain, while only the data (new array) is written onchain. Projects can utilize this use case to help randomize an NFT mint or shuffle a set of data in a game.
- Limit orders and liquidations—DeFi projects can take advantage of OCR 3.0 and offchain computation for their conditional orders by doing constant checks against all open orders in a dApp to see if any orders need to be executed or liquidated. By having all nodes in the Chainlink Automation DON come to consensus on the execution of these orders offchain, projects can save on gas costs that would otherwise be incurred onchain.
In the following section, we’ll showcase a number of in-production Automation 2.0 use cases that demonstrate the verifiable compute service’s ability to enhance Web3 projects.
Verifiable Compute In Action
Automation 2.0 offers reduced gas costs by enabling users to offload complex computations to an offchain peer-to-peer network.
One example of this is Sommelier, a protocol that offers automated yield-generating vaults to users. When users deposit or withdraw, ERC-4626 tokenized vaults use a complex calculation to convert assets to shares of liquidity within a given pool. This calculation compounds as the number of vaults is increased in custom portfolio applications. By leveraging verifiable compute, the calculation can be performed offchain for the result to be sent onchain to Sommelier’s contract, saving up to ten times the cost for the end user.
“Sommelier is using Chainlink Automation 2.0’s secure offchain computation to drastically reduce user vault deposit/withdraw costs by shifting the gas burden to offchain calculations.”—Josh Kessler, Head of Growth at Sommelier Finance
Developers can drastically increase their compute to cost ratio by offloading work to Chainlink Automation DONs. By enabling more composability and scalability with log triggers, Automation 2.0 unlocks new ways of connecting smart contracts and building dApps that are automated end to end, along with massively increased computational power through verifiable compute.
When combined, the enhancements of Automation 2.0 create a powerful compounding effect.
Oku, an enhanced user interface for Uniswap v3, is using Chainlink Automation to enable DEX limit orders by performing regular heavy computations offchain to calculate whether any limit orders need to be executed.
“We’re excited to be using Chainlink Automation to help users post limit orders on Uniswap v3 across all of the top chains. Without the battle-tested automation service, we would need to maintain in-house infrastructure to enable limit order functionality. Chainlink Automation helps make our lives easier so we can focus on building more advanced tools for Uniswap v3 users and the broader DeFi ecosystem.”—Getty Hill, Founder of GFX Labs & Oku
Thena—a liquidity layer and automated market maker on BNB Chain—is using Chainlink Automation for seamless reward distribution for its users.
“Thena is looping through all pools to distribute the fees to veTHE holders three times per week. This loop requires the use of multiple arrays (memory) and storage for indexing. Thanks to OCR 3.0, we are able to loop on checkUpkeep and encode the required data for performUpkeep, greatly reducing our costs. The first run confirmed a reduction of ~40% of automation costs.”—Theseus, CEO & Co-Founder of Thena
An automated market-making solution for Uniswap v3, ICHI performs a continuous check on Uniswap v3 concentrated liquidity pools using Chainlink Automation to calculate computationally sophisticated algorithmic strategies. ICHI uses the result of this computation to decide when to perform necessary rebalances, saving on heavy computation and gas costs.
Developer Resources for Chainlink Automation 2.0
Chainlink Automation 2.0 represents a paradigm shift in Web3 app development. As a verifiable compute layer, Automation enables developers to access advanced offchain computation while maintaining the trust-minimization and cryptographic guarantees of the underlying blockchain. By enabling developers to offload any smart contract computation offchain in a verifiable and ultra-reliable manner, Automation 2.0 unlocks up to 90% savings in gas costs.
As of January 2024, Chainlink Automation is live on seven chains: Arbitrum, Avalanche, BNB Chain, Ethereum, Fantom, Optimism, and Polygon.
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