Centralization Issues of Ethereum Scaling Solutions: Exploring Decentralized Sequencers

1. Key Points

• Transaction ordering has become an increasingly serious issue in the second layer (L2) domain. The main purpose of L2 rollup is to provide a secure place for cheap transactions, submitting transaction data to the first layer (L1).

• The sorter is responsible for organizing transactions into groups. Currently, most L2 projects use centralized sorters, which introduces risks such as censorship, MEV extraction, and single points of failure.

• The solution is a decentralized shared sequencer network. This can address censorship, MEV, and validity issues while providing interoperability across rollups.

• Projects like Espresso, Astria, and Radius are developing decentralized sequencer solutions, each with its own characteristics. Espresso utilizes EigenLayer, Astria collaborates with Celestia, and Radius employs a cryptographic mempool.

• Existing L2 projects face the choice of continuing to use centralized sorters, integrating third-party solutions, or developing in-house solutions. Each option has its pros and cons.

• Decentralization and interoperability are the two key factors driving the development of sorters. The future of the sorter field will be more competitive and is worth ongoing attention.

2. Introduction

With the popularity of the Ethereum L2 ecosystem, the role of the sequencer is becoming increasingly important. Sequencers optimize rollups by providing a better user experience, lower fees, and faster confirmations. However, currently mainstream L2 projects use centralized sequencers, which contradicts the spirit of decentralization in cryptocurrencies.

Although most projects include the decentralization of sequencers in their roadmap, actual progress has been limited. This report will delve into the role of sequencers, their current status, and the decentralized shared sequencer solutions under development, as well as reflect on the impact this has on the Ethereum L2 ecosystem.

3. Overview of the Sorter

Blockchain is essentially a distributed ledger composed of transaction data sorted by blocks. L2 rollup provides users with an execution layer, and then submits the transaction data to L1. The sorter is responsible for processing unordered transactions into groups, generating compressed ordered transaction batches.

Although rollups do not necessarily require sequencers, using sequencers can provide a better user experience, lower fees, and faster confirmations. However, centralized sequencers also bring some issues:

• Review Risk: The sorter may exclude specific transactions
• MEV Extraction: Miners can reorder transactions to capture value
• Single point of failure: If the only sequencer encounters an issue, the entire rollup will be affected.

Currently, mainstream L2 projects use centralized sequencers, which is inconsistent with the decentralization principle of cryptocurrencies. Although users can submit transactions directly to L1 to bypass the sequencer, this increases costs and delays.

4. Decentralized Shared Sorter Solution

Espresso

Espresso is developing a Decentralization shared sorting network aimed at providing secure, high-throughput, low-latency transaction sorting and data availability for rollups.

Main features:

• Based on the HotShot consensus protocol
• Utilize Ethereum validator set through EigenLayer
• Use Tiramisu data availability solution
• Integrated with multiple partners, such as Polygon zkEVM, Injective, etc.

Astria

Astria is building a shared sequencer network that allows multiple rollups to share a decentralized sequencer network.

Main Features:

• Use CometBFT consensus
• Work closely with Celestia to achieve data availability
• Develop Astria EVM as the first rollup to use this network.

Radius

Radius is building a trustless shared sorting layer, using cryptographic technology to decentralize the sorter.

Main Features:

• Use encrypted mempool to prevent MEV extraction and censorship
• PVDE-based encryption scheme
• Propose optimized block space design and MEV market

5. Outlook

Existing L2 projects face three choices:

1. Continue using centralized sorter:

   • Simple and financially prudent
   • However, there are risks of censorship, MEV, and single points of failure.

2. Integrate third-party shared sorting networks:

   • Access to professional solutions
   • Improve interoperability
   • but may affect income

3. Develop internal proprietary solutions:

   • Maintain control and income
   • But the cost is high and it takes a long time.
   • May affect interoperability

The future of the ranking field will become more intense. Decentralization and interoperability are two key driving factors. Some large projects may tend to develop their own solutions, but shared networks may gain advantages through network effects.

6. Conclusion

Decentralized sorters are crucial for the L2 ecosystem, as they can address issues brought by centralization while enhancing interoperability. Although challenges are present, this field is rapidly evolving. In the future, more participants will join, and it is worth keeping an eye on the choices and developments of various projects.