The Rollup of Ethereum Has Centralization Issues: A Deep Dive into Decentralized Sequencers

1. Key Points

• Transaction ordering has become an increasingly serious problem in the Layer 2 (L2) space. L2 rollups provide users with an execution layer, and then submit the transaction data to the upper Layer 1 (L1).

• The sorter is responsible for grouping these transactions. Currently, most major L2 rollup projects use centralized sorters, which brings risks such as censorship, MEV extraction, and single points of failure.

• Shared, decentralized sequencers are the solution. They can address issues such as censorship, MEV extraction, and validity, while also unlocking new possibilities for cross-rollup functionality.

• Projects like Espresso, Astria, and Radius are developing innovative shared sequencing solutions, each with unique features. Espresso leverages EigenLayer, Astria collaborates with Celestia, and Radius adopts a cryptographic mempool.

2. Introduction

As the Ethereum L2 rollup ecosystem becomes more popular, the often-overlooked aspect of sequencers is becoming increasingly important. Currently, the main Ethereum L2 projects use centralized sequencers, which may be seen as not in line with the spirit of cryptocurrency.

Although most companies plan to decentralize the sorter, consensus has not yet been reached. This report will examine the role of the sorter, the current status of Ethereum rollups, and the decentralized shared sorting network solutions being developed.

3. What is a sorter?

The sorter is responsible for processing unordered transactions into ordered groups, generating compressed ordered transaction batches to submit to L1. It can provide lower fees and faster transaction confirmations.

Although rollups do not necessarily require sequencers, using a sequencer can enhance the user experience. Currently, major L2 projects have found that running centralized sequencers is more convenient and cost-effective.

However, the problems caused by centralized sorters include:

• May review user transactions
• Extractable MEV can cause economic losses to users
• Single point of failure risk, affecting the entire rollup operation.

4. Solution: Decentralized Shared Sorter

Decentralized Shared Sorter is a new solution to the above problems. It can:

• Provide ordering services for multiple rollups
• Achieve Decentralization through Leader Rotation
• Prevent censorship and MEV extraction
• Improve effectiveness assurance
• Achieve cross rollup composability

Main projects include:

Espresso

• Use HotShot consensus protocol
• Achieve Ethereum validator security by re-staking through EigenLayer
• Adopt Tiramisu data availability solution
• Has collaborated with multiple projects, including Polygon zkEVM, Injective, etc.

Astria

• Use CometBFT consensus
• Work closely with Celestia to achieve data availability
• Developing Astria EVM as the first rollup to use its network.
• Launched the development cluster to simplify rollup development and testing.

Radius

• Use encrypted mempool to prevent MEV and censorship
• A single sorter is enough to solve the problem.
• Propose MEV market optimization block space

5. Outlook

Existing L2 rollups face three choices:

1. Continue using centralized sorter
2. Sharing sorting network integration with third parties
3. Develop internal proprietary solutions

Each choice has its pros and cons. We expect that at least some projects will choose to integrate with third-party networks, but there will also be projects that develop their own solutions, especially large projects that have issued native tokens.

Regardless, this is an important area that requires close attention and will impact the future development of the L2 ecosystem.

6. Conclusion

Decentralization and rollup interoperability are two key factors driving the development of shared sequencers. Despite facing challenges, shared sequencing networks are expected to achieve significant value through network effects. This topic will become more prominent in the coming months, and we look forward to seeing more project choices and developments.