A Deep Dive into Shared Sequencers: The Future of Decentralization in the Blockchain Ecosystem

Introduction

Shared Sequencers are a groundbreaking innovation in the realm of blockchain, aiming to enhance network security and promote better network decentralization. They form an integral part of the rollup and modular blockchain architecture, which is widely recognized for its superior scalability compared to traditional Layer 1s. The primary objective of shared sequencing is to eliminate the centralization and potential single point of failure that could lead to the censorship of transactions, thereby impacting the overall functioning of the sequencer and the rollup.

Sequencers play a crucial role in this architecture. They are responsible for processing and ordering transactions in blocks, which are then added to a specific chain. Sequencers aggregate transactions, order them based on a certain policy, and execute transactions in accordance with the underlying Virtual Machine (VM). Additionally, they produce pre-confirmation for a user transaction and commit the ordered transaction data to a Data Availability (DA) layer. However, centralized sequencers present several challenges. They can become a choke-point or could go completely unavailable. They also have the potential to censor user transactions, extract excessive rent, and frontrun user transactions, leading to bad Miner Extractable Value (MEV) and adversely affecting users. The goal of shared sequencing is to eliminate the centralization and central point of failure that could lead to censorship of transactions and affect how the whole sequencer as well as the rollup would work. Looking ahead, proponents of Shared Sequencers envision a new structure where the user can specify atomicity of inclusion. In other words, the sequencer can be forced to include certain transactions. This represents a significant step towards more user control and decentralization in the blockchain ecosystem.

The blockchain ecosystem is in a constant state of evolution, with new technologies and architectures emerging regularly. One such innovation is the concept of shared sequencers, which promises to enhance network security and decentralization. However, understanding this new architecture and its implications can be challenging, especially for those new to the blockchain space. This article aims to demystify shared sequencers, explaining their function, importance, and potential impact on the blockchain ecosystem. We delve into the workings of shared sequencers, the benefits they offer over traditional sequencers, and the market opportunities they present. We also highlight some of the pioneering projects in this space, providing insights into their unique contributions and advancements.This article will equip you with the knowledge you need to understand and navigate the world of shared sequencers.

Transaction Processing in Blockchain Rollups

A shared sequencer operates as a platform that supports rollups with credible neutrality, security, and interoperability. It functions as middleware between rollups and their underlying layer-1 (L1) platforms, handling the decentralized sequencing and data availability of rollup transactions. Any zk-VM or optimistic VM can be deployed on this platform.

The shared sequencer network is essentially a rollup-agnostic set of sequencers that can serve a cluster of different rollups. In a rollup, the sequencer or sequencer set has a primary requirement of censorship resistance or liveness, which means that a valid transaction submitted to the sequencer must be included in the chain within a finite amount of time. The shared sequencer set only needs to ensure that transactions are included in a block.

The shared sequencer network provides rollups with their liveness and censorship resistance. Rollups maintain their sovereignty because all transaction data is stored in the base layer, allowing them to fork away from the shared sequencer at any time. The state root from the state transition function (STF) on the rollup side is calculated from the transaction roots (inputs) sent to the DA layer from the shared sequencers.

The importance of having a decentralized sequencer over a centralized one lies in the fact that decentralized sequencers have better resistance to transaction censorship and enable fairness in opportunities for sequencing blocks. Anyone can join the decentralized sequencer network of nodes and get a chance to sequence (build) a rollup block and get rewarded by the network. Additionally, decentralized sequencers can support a higher level of censorship resistance and liveness, much like the validator network in layer 1. Centralized sequencers, on the other hand, are run by a single entity, which can lead to centralization and central points of failure that could lead to censorship of transactions and affect how the whole sequencer as well as the rollup would work. Decentralization of sequencers is the prime goal of many rollup projects, as sequencers are a major centralization risk in the rollup space.

Market opportunity

Shared sequencers are designed to bolster network security and enhance network decentralization. This is achieved through the shared usage of sequencers, as opposed to the current model where roll-ups maintain their own sets of sequencers, usually just one, which lacks censorship resistance and interoperability with other roll-ups. In the blockchain ecosystem, sequencers play a pivotal role by sorting transactions and recording them on their local blockchain platform. They are integral to the functioning of roll-ups, a relatively new tool in the quest to scale Ethereum’s ecosystem that has been gaining traction in blockchain developer circles lately.

The scalable blockchain sector stands to be significantly disrupted by shared sequencers. These offer several advantages over the current design, including censorship resistance, atomic cross-rollup composability, liveness (low/no downtime) guarantees, and plug-and-play solutions for existing and new roll-ups. The global blockchain market size was reasonably estimated to be approximately $7.4 billion in 2022 and is poised to generate revenue over $94.0 billion by the end of 2027, projecting a CAGR of around 66.2% from 2022 to 2027.

Investing in projects pushing shared sequencers could be a wise move at this time. They offer a solution to the centralization risk in the roll-up space, a major concern for the scalable blockchain sector. Decentralized sequencers offer better resistance to transaction censorship, enable fairness in opportunities for sequencing blocks, and can support a higher level of censorship resistance and liveness. Additionally, shared sequencers offer several benefits over the current design, including censorship resistance, atomic cross-rollup composability, liveness (low/no downtime) guarantees, and plug-and-play solutions for existing and new roll-ups.

Potential

Shared sequencers have the potential to disrupt the scalable blockchain sector by offering a solution to the centralization risk in the rollup space. Rollups are relatively new tools in the quest to scale Ethereum’s ecosystem that seem to be garnering attention in blockchain developer circles lately. Shared sequencers offer several benefits over the current design, including censorship resistance, atomic cross-rollup composability, liveness (low/no downtime) guarantees, and plug-and-play solutions for existing and new rollups.

Benefits

The benefits of shared sequencing include:

• Censorship resistance: Shared sequencers offer censorship resistance, which is a major concern in the scalable blockchain sector
• Atomic cross-rollup composability: Shared sequencers enable atomic cross-rollup transactions and synchronization, which can help create a sprawling ecosystem of interconnected rollups
• Liveness guarantees: Shared sequencers offer liveness guarantees, which means that there will be low or no downtime
• Plug-and-play solutions: Shared sequencers offer plug-and-play solutions for existing and new rollups

Challenges

The challenges of shared sequencing include:

• Decentralization trade-offs: Decentralizing the sequencer can address the issue of centralization, but it introduces trade-offs in scalability and vulnerabilities to attack vectors
• Sequencer form: Choosing the form of sequencer presents a challenge, as rollups must balance decentralization, security, and scalability while meeting their economic needs
• Economic specialization: The economics of a shared sequencer network allow for some interesting experimentation and bootstrapping strategies, but the benefits of decentralization of another part of the stack are hard to quantify.

Pioneering Projects in Shared Sequencing

Several projects are leading the charge in this space, each contributing unique solutions and advancements. Here's a closer look at some of these projects

Astria

Astria is a shared sequencing network that seeks to address the censorship issues often encountered by emerging blockchain networks. The project is built around the concept of "shared sequencing," which decentralizes the process of transaction ordering, thereby enhancing censorship resistance. Astria has recently secured $5.5 million in a seed funding round led by Maven 11, demonstrating significant investor confidence in its innovative approach.

Radius

Radius is another key player in the shared sequencing arena, pioneering the development of a trustless shared sequencing layer. The project recently raised a pre-seed investment of $1.7M in a funding round led by Hashed, with participation from Superscrypt, Lambdaclass (Ergodic Fund), and Crypto.com. This funding will support Radius's continued efforts to decentralize and secure the sequencing process in blockchain networks.

Espresso Systems

Espresso Systems is working on the Espresso Sequencer, a tool designed to support rollups in achieving decentralization without compromising scalability. The Espresso Sequencer aims to provide rollups with credible neutrality, enhanced interoperability, mitigation of negative effects of MEV (Miner Extractable Value), and long-term economic incentive alignment with Layer 1 (L1) validators.

Decentralizing the sequencer component of rollups

These projects are collectively working towards a common goal: to decentralize the sequencer component of rollups, thereby enhancing credible neutrality, security, reliability, and interoperability without sacrificing performance. By sharing the same sequencing layer, these projects aim to create a more decentralized and secure blockchain ecosystem, setting the stage for the next wave of innovation in the blockchain industry.

Final Thoughts

The advent of shared sequencers represents a significant leap forward in the blockchain space, promising to enhance network security and promote better network decentralization. By addressing the centralization risk inherent in the rollup space, shared sequencers are poised to disrupt the scalable blockchain sector, offering a host of benefits including censorship resistance, atomic cross-rollup composability, liveness guarantees, and plug-and-play solutions for existing and new rollups.

However, the journey towards widespread adoption of shared sequencers is not without its challenges. Decentralization trade-offs, the choice of sequencer form, and economic specialization are among the hurdles that need to be navigated. Yet, the potential rewards are substantial. With the global blockchain market projected to reach $94.0 billion by the end of 2027, the opportunities for projects pushing shared sequencers are immense.

Pioneering projects like Astria, Radius, and Espresso Systems are leading the charge, each contributing unique solutions and advancements in the shared sequencing arena. Their collective efforts are setting the stage for the next wave of innovation in the blockchain industry, creating a more decentralized and secure blockchain ecosystem.

As we move forward, it will be fascinating to watch how shared sequencers evolve and reshape the blockchain landscape. The journey is just beginning, and the potential for growth and innovation is limitless. The shared sequencer trend is one to watch closely, as it holds the promise of transforming the way we think about and interact with blockchain technology.