A sequencer is a critical technology in the cryptocurrency space used to sort transactions and create blocks. Prior confirmations will be sent to users before the block is confirmed.
The importance of a decentralized sequencer is that as more transaction volume and liquidity moves to layer-two solutions (L2), centralized sequencers may charge arbitrary fees and take advantage of user transactions. Therefore, finding a decentralized sequencing solution becomes very important.
What is a “sequencer”?
A sequencer aggregates many user transactions on L2 off-chain and submits them as a single transaction of the collection to the L1 main chain to make L2 work efficiently. In this way, the cost of this commitment can be shared among all user transactions in the collection. Sequencers can also compress collections to further save the cost of main chain data availability. Overall, it is an essential component of L2.
However, sequencers have control over the order of transactions in the collection. Sequencers can choose not to include user transactions, and they can extract MEV (Maximum Extractable Value) from transactions in the collection by standard reordering and insertion extraction methods. They actually have priority write access to expansion. It is noteworthy that since sequencers can interact with contracts, only error-free transactions can be reliably enforced through on-chain mechanisms. Errors may fail during forced sequencing.
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This makes sequencers a semi-trusted role for expanding users. Sequencers can delay user access and extract value from user transactions. Further restricting the behavior of sequencers through decentralization is an actively researched topic.
Overall, sequencers play an important role in the OP series L2. It improves the user experience by aggregating and submitting transaction collections and reduces user transaction costs. However, since sequencers have control over the sorting and value extraction of transactions, we need to continue researching how to limit the behavior of sequencers in a decentralized way to ensure user interests and expansion security.
Centralization risks of sequencers
Currently, there are still some problems with sequencing in optimistic expansion in terms of distribution. Since sequencers often play a centralized role, there are the following centralization risks:
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Weak anti-censorship: Unlike the almost infinite number of distributed nodes on the main chain, centralized sequencers may not ensure that user transactions are included on the chain. Centralized sequencers controlled by legal entities may selectively exclude certain transactions due to regulatory requirements. Although other mechanisms can solve the problem of weak anti-censorship in optimistic expansion (such as forced exit, escape channel, inclusion list, or threshold encryption), we still need to accept the assumption that centralized sequencers are likely to have weak anti-censorship capabilities.
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Weak liveness: The design of centralized sequencers may not be able to handle the computing processing and proof generation required to keep the system running. RPC or sequencer downtime caused by hardware failures or a large amount of spam from validators or bots (such as Arbitrum Token Launch, Optimism Delay) may result in weak liveness of expansion.
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MEV revenue: Current centralized sequencers usually follow the first-come, first-served transaction sorting rule. To ensure that they do not extract MEV from user transactions through node privileges, additional trust is required or it must be ensured that third-party sequencing services they adopt (such as Chainlink FSS) do not have malicious behavior.
Some shared, outsourced, or sortition-based solutions may be able to address these problems, but it is currently too early for such solutions. Additionally, many distributed sorter solutions (such as proof of authority, leader selection based on equity proof, MEV auctions, and energy proof) are still in the conceptual design stage.
The Map of Sorters
Vitalik Buterin has proposed several methods for building decentralized sorters, including sorter/block auctions, PoS-based random selection, and DPoS voting. However, most solutions focus on determining which participants have the right to propose the next block or block sequence, often overlooking the sorting mechanism itself.
The goal of PBS is to protect proposers from the centralized maximization of transaction value (MEV), promote competition among block builders, enhance the privacy of bidders, and eliminate negative external factors. However, unlike first-layer solutions (L1), L2’s PBS faces challenges such as privacy, latency, and cross-chain MEV. One way to address privacy issues is to use Flashbots’ SUAVE protocol, while combining SUAVE with a shared sorter is a potential L2 PBS solution.
For Aztec’s PBS-Prover-Builder-SeBlockingration (validator builder separation) instead of proposer-builder separation. Aztec’s proposers use pending transactions from the mempool to build blocks, which include sorting commitments, rewards for provers, and the amount burned by Aztec. It should be noted that Aztec’s proposers actually play the role of builder and proposer.
Aztec’s PBS separates the power of transaction sorting (builder) and block inclusion (validator) to prevent block generation monopolies. Subsequently, proposers collect votes and create a block record indicating the distribution of validator tasks in a specific block by multiple validators. This is important for ensuring the decentralization of validation tasks, as the participation of validators becomes a metric for winning blocks.
Additionally, they also use the TARGET_PROVERS count to increase the cost of attackers maintaining the manipulation mechanism. However, one problem with this pattern is that if attackers allow validators to be included and only generate proofs for a small portion of the block and leave most of them to a single validator, the attacker can avoid punishment.
Throughout the process, multiple proposed blocks will be ranked in a voting stage, and the block with the highest number of votes will become the head of the chain. However, this pattern may lead to “griefing” attacks, where validators vote for a block but do not generate proof. Aztec suppresses this by introducing the Slash and Redundancy mechanisms. Additionally, SUAVE, as the builder of Aztec, can provide privacy protection and potential decentralized block sorting.
There are other projects building shared sorters, including:
- Espresso, which plans to use EigenLayer’s ETH heavy pledge as a security model;
- Astria, whose sorter differs from Espresso in that it does not execute transactions, has built-in PBS, and builds a Rollup based on Celestia and Rollkit;
- Radius, whose sorter focuses on reducing harmful MEV through encrypted transactions, maintains a set of sorters, and randomly selects one in each epoch.
These projects aim to achieve decentralized sorters to improve the determinacy and security of transaction order and improve the user experience.
Summary
As blockchain technology continues to develop and innovate, the working mechanisms of decentralized sorters will continue to evolve and improve. This will provide users with a more secure, reliable, and efficient transaction experience while protecting them from manipulation and unfair behavior by centralized institutions.
In the future, we can expect to see more innovative solutions and projects emerging to address the challenges in the sorter field. With technological progress, issues such as privacy protection, transaction speed, and cross-chain compatibility will be better addressed.
The development of shared sorters will enable different Rollups to work together, providing composability and flexibility to meet the needs of different industries, applications, and use cases. With the continuous maturity and promotion of shared sorters, we can foresee the emergence of thousands of decentralized sovereign Rollups, providing users with more choices and better services.
In summary, through continuous research and innovation, we have reason to believe that future decentralized sorters will become a key component in building secure, efficient, and fair blockchain ecosystems. They will promote the further popularization and application of blockchain technology, bringing more open and inclusive financial and digital experiences to users worldwide.
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