logos-execution-zone/lez/chain_state/DESIGN.md

# `lez/chain_state` — Two-Tier Chain State

Design doc for the shared block-apply engine and two-tier chain state that
backs decentralized sequencing. Status: **interface freeze** — the
`apply_block` signature and the `ChainState` tip/state shape below are the
contract the produce-on-turn and follow-blocks tracks build against. Changing
them after the tracks split forces rework in both.

Branch: `erhant/lez-two-tip-chain-state` (off `erhant/indexer-recoverable-invalid-blocks`).

---

## 1. Motivation

Decentralized sequencing requires every honest node — sequencer or indexer — to
converge on the same chain and the same state by running one deterministic
_validate-then-apply_ path over blocks pulled from the channel. That path today
lives only inside the indexer (`lez/indexer/core/src/block_store.rs`), where the
recoverability work built a park-and-skip ingest: `accept_block` validates a
block against the current tip, applies it to a scratch clone of state atomically,
and on any failure records a `StallReason`, freezes the tip, and marks the bad
block _processed_ without applying it. The sequencer has no equivalent — it only
produces blocks and reads peer inscriptions for finalization; it never executes
peer blocks into its own state.

This crate lifts that logic into a shared home and generalizes it into a
**two-tier** state machine so the sequencer can produce on the head while both
sequencer and indexer expose their exact current state.

## 2. Crate placement & layering

```
lee_core  ←  lee (owns V03State)  ←  common (owns Block, BedrockStatus, clock_invocation, recompute_hash)  ←  lez/chain_state  ←  { indexer/core, sequencer/core }
```

- **Not** `lee_core`: that is the RISC0 guest crate; a stateful host machine has
  no place in the zkVM circuit and does not know what a `Block` is.
- **Not** `lee`: the apply logic needs `Block`/`BedrockStatus`/`clock_invocation`
  from `common`, and `common` depends on `lee` — putting it in `lee` inverts the
  layer.
- `lez/chain_state` sits above `common`, depends on `common` + `lee`, and is
  consumed by both `indexer/core` and `sequencer/core`.

**Persistence boundary (decision: A).** `chain_state` holds the in-memory state
machine and the pure logic; it performs **no I/O**. Each consumer keeps its own
`RocksDBIO` and drives the `scratch → put_block → commit` ordering, exactly as
`accept_block` does today. This keeps the crate fully unit-testable without a DB.
A storage-trait abstraction (option B) is a possible later follow-up, not part of
this task.

## 3. The `apply_block` entry point

A single pure function, called identically whether the block was produced by us,
adopted from a peer, or read finalized from the channel:

```rust
/// Validate `block` against `tip`, then apply it to `state`. Pure: no I/O.
/// Mutates `state` only on success; on failure `state` is untouched and the
/// caller parks.
fn apply_block(
    tip: Option<&Tip>,
    block: &Block,
    state: &mut V03State,
) -> Result<(), BlockIngestError>;
```

Validation order (unchanged from the indexer): hash integrity
(`recompute_hash`) → block-id continuity → `prev_block_hash` linkage, with a
`None` tip expecting the genesis block. Application splits off the mandatory
trailing clock tx, executes user txs (genesis = public-only), applies the clock
last.

Shared types moved into the crate: `AcceptOutcome`, `BlockIngestError`,
`StallReason`, and `Tip`.

```rust
struct Tip { block_id: u64, hash: HashType, l1_slot: Slot }

enum AcceptOutcome { Applied, AlreadyApplied, Parked(BlockIngestError) }
```

`Tip` carries `l1_slot` (recorded atomically with the tip) because the anchor /
chain-consistency logic keys on the inscription slot, not just `(id, hash)`.

## 4. The two-tier `ChainState`

```rust
struct ChainState {
    final_state:  V03State,        // driven by finalized channel ops
    final_tip:    Option<Tip>,
    head_state:   V03State,        // final_state + applied head blocks
    head_blocks:  Vec<HeadEntry>,  // ordered, above final_tip
    stall:        Option<StallReason>,
}

struct HeadEntry { this_msg: MsgId, block: Block }
```

The **head** tier is a MsgId-keyed chain (adopted/orphaned reference
`this_msg`/`parent_msg`); the **final** tier is block-id-keyed. `apply_block`
validation stays LEZ-level (`block_id` + `prev_block_hash`) — the two chains run
in parallel and must agree, so we validate via `apply_block` _and_ track `MsgId`
for revert correlation.

Operations:

- `apply_adopted(inscription) -> AcceptOutcome` — dedup by `this_msg` against our
  outbox, else `apply_block` on the head tip; on success push `HeadEntry`; on
  failure record stall + park (head tip frozen).
- `apply_channel_update(orphaned, adopted)` — revert every `orphaned` by
  `this_msg`, re-derive `head_state` (clone `final_state`, replay survivors),
  then apply every `adopted` in order. Atomic per event.
- `finalize_up_to(block_id)` — move `head_blocks` up to `block_id` into
  `final_state` (already validated; a move, not a re-apply).
- `apply_finalized(inscription)` — steady state: if present in head by
  `this_msg`, `finalize_up_to`; cold-start backfill (not in head):
  `apply_block` directly to `final_state`, mirror into head.
- `rollback_orphan(this_msg)` — drop from that entry forward, re-derive head.
- `status() -> { final_height, head_height, stall }` — for RPC/UI.

For the **indexer** (finalized-only `next_messages` stream), `head_blocks` stays
empty and `head == final`; it exercises only `apply_finalized`. The **sequencer**
uses both tiers from day one.

## 5. Event → tier mapping

`Event::BlocksProcessed { checkpoint, channel_update: { orphaned, adopted }, finalized }`:

| Input                 | Source                                         | Effect                                              |
| --------------------- | ---------------------------------------------- | --------------------------------------------------- |
| adopted inscription   | `channel_update.adopted`                       | validate + apply to **head**                        |
| orphaned inscription  | `channel_update.orphaned`                      | revert from **head**, return txs to mempool         |
| finalized inscription | `finalized[].ops` (`FinalizedOp::Inscription`) | move head→**final**, or apply directly on backfill  |
| own publish           | publish-return                                 | optimistically apply to **head**, record `this_msg` |

**Golden rules:** (1) validation is deterministic, so every honest node makes the
same accept/park decision. (2) An invalid block is _processed but discarded_ —
never applied, never halts the node. (3) Finalized is never reverted. (4) We
rebuild orphaned blocks ourselves; we do not trust the SDK's republish (it keeps
stale LEZ contents — prev-hash, tx selection, and resulting state were all
computed against the old parent).

---

## 6. Scenarios

### Processing one `BlocksProcessed` event

```mermaid
flowchart TD
    EV["Event::BlocksProcessed"] --> ORPH{"orphaned<br/>non-empty?"}
    ORPH -->|yes| REV["For each orphaned by this_msg:<br/>drop from head_blocks,<br/>return its txs to mempool"]
    REV --> RED["Re-derive head_state:<br/>clone final_state, replay survivors"]
    ORPH -->|no| ADO
    RED --> ADO{"adopted<br/>non-empty?"}
    ADO -->|"yes, in order"| DEDUP{"this_msg in<br/>our outbox?"}
    ADO -->|no| FIN
    DEDUP -->|"yes (our own)"| SKIP["skip: already applied optimistically"]
    DEDUP -->|no| VAL["apply_block on head tip"]
    VAL --> OUT{"AcceptOutcome"}
    OUT -->|Applied| APP["append this_msg+block to head,<br/>advance head tip, clear stall"]
    OUT -->|AlreadyApplied| SKIP
    OUT -->|"Parked(err)"| PARK["record StallReason,<br/>freeze head tip,<br/>mark processed — do NOT apply"]
    SKIP --> FIN
    APP --> FIN
    PARK --> FIN
    FIN{"finalized<br/>inscriptions?"}
    FIN -->|"already in head (steady state)"| MOVE["finalize_up_to:<br/>move head→final, trim head_blocks"]
    FIN -->|"not in head (cold-start backfill)"| DIRECT["apply_block directly to final,<br/>mirror into head"]
    FIN -->|none| CP
    MOVE --> CP
    DIRECT --> CP
    CP["persist checkpoint atomically"]
```

### Park / recovery status

```mermaid
stateDiagram-v2
    [*] --> Syncing
    Syncing --> CaughtUp: stream drained, no stall
    CaughtUp --> Syncing: new adopted / finalized arrives
    Syncing --> Parked: apply_block returns Parked(err)
    CaughtUp --> Parked: invalid block adopted
    Parked --> Parked: further non-chaining blocks (orphans_since++)
    Parked --> Syncing: valid successor chains on frozen tip → stall cleared
    note right of Parked
        head tip frozen at last valid block.
        Producer (on our turn) builds on this
        frozen tip, same as honest peers,
        so the invalid block is skipped.
    end note
```

### Scenario table

**Normal flow**

| #   | Scenario                                 | Handling                                                      | Expected                            |
| --- | ---------------------------------------- | ------------------------------------------------------------- | ----------------------------------- |
| 1   | Adopted block chains cleanly on head tip | `apply_block` → `Applied`; append `{this_msg, block}` to head | head advances; converges with peers |
| 2   | Our own block comes back in `adopted`    | dedup by `this_msg` against outbox → skip                     | no double-apply                     |
| 3   | Adopted block later finalizes            | `finalize_up_to` moves head→final, trims `head_blocks`        | final advances; no re-apply         |
| 4   | Re-delivery of an already-applied block  | id ≤ tip & stored hash matches → `AlreadyApplied`             | idempotent, no state change         |

**Reorg / orphan**

| #   | Scenario                                                   | Handling                                                                                     | Expected                                        |
| --- | ---------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ----------------------------------------------- |
| 5   | Our block orphaned at turn handoff (stale-parent race)     | revert by `this_msg`, return txs to mempool, **rebuild** on new head tip (not SDK republish) | our txs re-queued; next block on correct parent |
| 6   | Batch reorg: some `orphaned` + some `adopted` in one event | revert all orphaned, re-derive head, then apply all adopted in order                         | deterministic convergence                       |
| 7   | Orphan chain (parent transitively off canonical)           | SDK surfaces all affected as `orphaned`; revert each, replay survivors                       | head_state matches new canonical branch         |

**Invalid / bad block**

| #   | Scenario                                                            | Handling                                                                                 | Expected                                        |
| --- | ------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | ----------------------------------------------- |
| 8   | Authorized sequencer posts a block with an invalid state transition | `apply_block` → `Parked(StateTransition)`; freeze head tip, record stall, mark processed | park-and-skip; no apply, no halt                |
| 9   | Broken chain link / hash mismatch / unexpected id in adopted        | `Parked(BrokenChainLink / HashMismatch / UnexpectedBlockId)`; same park                  | frozen tip; peers park identically              |
| 10  | Undeserializable inscription payload                                | park with `Deserialize` (no header); processing advances                                 | recover when a valid block chains on frozen tip |
| 11  | Valid successor after a park (recovery)                             | block chaining on frozen tip → `Applied` → clear stall                                   | head resumes automatically; no divergence       |
| 12  | Further non-chaining blocks while parked                            | keep first `StallReason`, bump `orphans_since`                                           | original cause preserved; still parked          |

**Producing while parked**

| #   | Scenario                                        | Handling                                                                                        | Expected                                                                                   |
| --- | ----------------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ |
| 13  | It's our turn but head is parked on a bad block | producer builds on the **frozen valid tip** (head tip = last valid), skipping the invalid block | we emit the next valid block on the same parent honest peers use — chain moves on our turn |

**Startup / backfill**

| #   | Scenario                                            | Handling                                                                                           | Expected                              |
| --- | --------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------------------- |
| 14  | Cold start / reconnect backfill                     | history via `finalized`, empty `channel_update`; apply directly to final + mirror head             | head == final until live deltas start |
| 15  | Local store belongs to a different chain (L1 reset) | anchor-based `chain_consistency` check at startup: wipe+reindex if `allow_chain_reset`, else error | no silent divergence                  |

## 7. Invariants

Should-never-happen conditions — assert/log, don't silently absorb:

- An `orphaned` entry never references a block at or below the **final** tip —
  finalized is irreversible. If seen, it is a bug.
- `head` tip ≥ `final` tip at all times; `head_blocks` holds exactly the blocks
  between them.
- After processing any event, `head_state == final_state` replayed through
  `head_blocks` (the re-derivation is the source of truth).
- A parked node's frozen tip is identical across all honest nodes for the same
  invalid block (deterministic validation).