Agenda

• Why do we sequence?
• Sequencing vs. execution
• Sequencer
  • Dos and Donts
  • Decentralized design goals
  • Today's landscape vs. tmw
  • Interaction with MEV

Why do we sequence?

• Txs can be ordered by the parent chain
  • Not economical
• Aggregate off-chain, batch, and commit on-chain under a single tx
  • Compression
  • Minimizes user cost
• At the very least, users can still use parent chain
  • Censorship prevention
  • Worse UX and higher cost

Sequencing vs. execution

• Separation of concern is a feature, not a bug!
• Once tx is sequenced, (& posted on parent chain) it's final
• Why separate?
  • Because they are!
  • Proposer requires the sequence
  • Sequencer doesn't require the state

Sequencing vs. execution

ref

Sequencer main role

• Receive txs from users
• Emit ordered and timestamped sequence from users txs
• Emit soft commit (ms)
• Emit hard commit (parent chain finalization time)
• Proposers take sequenced txs and propose L2 blocks

Sequencer cannot do

• Change the result of the txs
• Can not censor you forever
• Invariants:
  • Collect execution fee
  • How much to charge for gas
• Protocol only trusts sequencer for one thing, and that is order txs

Sequencer Design goals

• Liveness
• Minimize the following
  • Tx latency
  • Toxic MEV (front-running)
• Reduce co-location incentive
• Resolve latency by bidding
• Censorship resistance

Sequencer designs

• Centralized
• Partial/full decentralized
• Shared/outsourced

Outsourced designs

• Your sequencer can be outsourced to another
  • Sequencer
  • L2 chain
  • L1 chain

Break down the problems

Sequencer committee is just a set of computers[1] that implements some ordering policies[2] through some consensus algorithms[3]

Ordering policy

• First come, first serve
• MEVA (full block auction)
• Time boost
  • Continuous time
  • Discrete time

Ordering policy: FCFS

• Easy to understand
• Minimize TX latency
• Minimize Toxic MEV (front-running)
• Can't resolve race by bidding

Ordering policy: MEVA

• Anyone can become a sequencer by bidding
• Highest bid wins to sequence at a future time
• Rational profit-maxi actor will maximize value
• Bid should be as close as the value extracted
• Unknowns: timing & censorship

Ordering policy: Time boost

• Allow bidder to buy time / bid up time for adjusted timestamp
  \(t_\mathrm{adjusted}(T) = t_\mathrm{arrival}(T) - \frac{gB(T)}{B(T)+c}\)
• No tx can be held for more than \(g\) time
• Resolve race by bidding, no front running if sequencer is honest
• Dist time vs. cont time
  • Under analysis which is more efficient

Ordering policy comparisons

Sequencer consensus policy

• Leader auction
• Random leader election
• Economic competition
• Threshold cryptography

Consensus + ordering policy

• Ordering policy can be applied to any design
• Committee reaches consensus on ordering
• Pre-determined safety assumption
• Tradeoffs between latency & size

Decentralize via committee

• No longer a single sequencer
• Committee can be elected by gov
• Ordering policy is voted through protocol
• Front run can be detected and slashed out of band
• Reserved sequencer for liveness
• Requires manual intervention

Decentralize via BFT

• Round-based single-leader selection
• Txs are gossiped through p2p network
• Better liveness
• Likely slower
• Manual intervention is no longer required

Decentralize via committee + threshold decryption

• Leaderless, anyone can batch post
• Encrypted tx goes to all parties
• Parties work together to decrypt a tx
• Parties reach a consensus on ordering
• Require automatic broadcast protocol. Non-trivial latency

Comparisons

Shared sequencing

• Can achieve efficient data packing
• Cross-domain value extraction
• Automatic inclusion, not execution!
  • How to achieve cross-rollup composition?
  • Unless it runs every \(STF\)?
• How to distribute value extraction back to individual rollup?

Finally. What's next❓

• Sequencer will be decentralized
• Ordering policy will be adopted
• Proposals will go through governence vote
• May the best one win (multiple winners?)

Thank you! Enjoy rest of ethCc!

Find me @terencechain