Should Ethereum Layer 2s Urgently Decentralize Their Sequencers?

After Layer 2 community Linea halted block manufacturing this week, many demanded the sequencers be decentralized. However is it mandatory?

The latest momentary halt of block manufacturing on Consensys’ Linea community following a $6.8 million exploit on the Velocore DEX, has renewed the talk about decentralizing sequencers in Ethereum Layer 2 (L2) options. Amidst this, on Wednesday, Optimism passed a proposal to implement fraud proofs. Though this wouldn’t assist decentralize the sequencer, it will propel the blockchain to what’s known as “Stage 1” decentralization on layer 2s.

Sequencers in layer 2 options are entities that order and batch transactions earlier than submitting them to the layer 1 blockchain, enabling extra transactions per second at a decrease value. Nevertheless, the centralization of those sequencers has raised considerations about safety and censorship.

Be taught extra: What Are Sequencers in Layer 2 Protocols?

Steven Goldfeder, CEO of Offchain Labs, which develops Ethereum’s high L2, Arbitrum, instructed Unchained that it’s vital to correctly contextualize when discussing sequencers: “The time period ‘sequencer’ means various things in numerous protocols.” The sequencer’s position is to order transactions, thus the definition. Whereas this centralized element permits for sooner transaction processing, it might censor by delaying transactions, although it can not alter account balances or submit illegitimate transactions. This safeguard is ensured by a community of validators that may problem any incorrect actions through a fraud-proof mechanism. 

Due to this fact, in keeping with Goldfeder, whereas the sequencer is centralized, the validation course of shouldn’t be, involving entities like Offchain Labs, Consensys, and even Google. Nevertheless, Goldfeder highlighted that the “holy grail” is that everybody can validate. To realize that, within the subsequent couple weeks, they count on to roll out Arbitrum Bold, a brand new protocol for managing disputes on Arbitrum chains that permits permissionless validation. Goldfeder means that whereas decentralizing sequencers is a vital drawback, it’s a “bit smaller than what lots of people may count on.”

Christine Kim, VP of analysis at Galaxy Digital, believes that decentralization is a spectrum and that fault-proof mechanisms alone don’t guarantee decentralization. “Rollups typically are considerably much less decentralized and safe than the bottom layer, Ethereum.” Nevertheless, she thinks that having a working fault-proof mechanism doesn’t imply {that a} rollup is extra decentralized than one other as a result of “working fault proofs shouldn’t be the one mechanism that rollups want to realize larger ranges of decentralization and resiliency,” she instructed Unchained through e mail.

Haseeb Qureshi, managing accomplice at Dragonfly, concurs, noting that whereas Arbitrum has fault proofs, they’re presently whitelist-only. “The vital factor about sequencers shouldn’t be decentralizing a lot as making the sequencers extra sturdy. That just about definitely comes first,” he instructed Unchained.

Though fault proofs usually are not the one measure of decentralization for L2s, of the highest 5 L2s by TVL, solely Arbitrum has a fraud system in place. Optimism, Base, Blast and Mantle, presently lack fraud-proof mechanisms, which means their sequencers have extra energy over transaction outcomes. “Principally they’ve a dictator,” stated Goldfeder.

“We’d like fault proofs on OP Stack, after which we’d like fault proofs to be dependable sufficient that anyone ought to be capable to submit them, and transfer away from safety councils and multisigs,” Qureshi stated.

Kim argues that whereas optimistic rollups ought to work in direction of decentralizing their sequencers, they need to additionally construct working fault proofs, sturdy governance mechanisms, cut back reliance on admin controls, decrease charges, and enhance interoperability with different rollups. “A decentralized sequencer could also be one of many hardest initiatives for a rollup to work in direction of however definitely not the one vital one within the near-term to enhance a rollup’s decentralization and resiliency,” she added.

Be taught extra: A Beginner’s Guide to Ethereum Layers: Data Availability, Consensus, and Execution