Exploring Layer 2 Sequencers: Principles, Current Status, and Development Trends

The main source of income for Layer2 is the Gas fees paid by users during transactions. After deducting the costs of submitting data to Layer1, the remaining portion is basically pure profit. Data shows that in the second half of 2023, OP Mainnet's profit was approximately $5.23 million, Arbitrum's annual profit was $16.5 million, and zkSync Era's profit from March to December reached $22.24 million.

The substantial profits behind this are closely related to the sequencer operating in Layer 2. So, what is a sequencer? How does it work in Layer 2? What challenges do centralized sequencers face? How will it develop in the future? This article will delve into these questions.

How the Sorter Works

The sorter is a key role in Layer 2, primarily responsible for receiving user transactions and executing them, then submitting the sorted and compressed batch to Layer 1.

The sorter can be compared to a bus driver. Users do not need to drive into the city themselves ( Ethereum ); they only need to pay a small fee, and the driver will take everyone to their destination. In order to maximize the use of space inside the bus, the driver will try to fill it with as many passengers as possible and rearrange the passengers.

Who can run the sorter?

Common solutions include:

1. Centralized Sorter: Operated by the Layer2 team, high efficiency and low cost.

2. Permissionless Sorter: Anyone can participate, but it may lead to resource waste.

What is the sorting criteria?

There are usually two ways:

1. First come, first served

2. Sort by Gas Fee

Mainstream Layer 2s mostly adopt the first method, but in reality, the sorter can decide the sorting method by itself.

How to Prevent Malicious Behavior by Sorters?

Different Layer 2 solutions adopt different constraint methods:

• Optimistic Rollup uses fraud proof
• ZK Rollup adopts validity proof

The Problem of Centralized Sorters

Currently, mainstream Layer 2 solutions often use centralized sequencers, which, although efficient, also raise some concerns:

1. Weak censorship resistance
2. There is a risk of single point of failure
3. Possible improper acquisition of MEV profits

The Future of Decentralized Sorters

Mainstream Layer 2 has proposed decentralized sequencer solutions, including:

1. Geographical Decentralization
2. Sorter Auction
3. Leader Election
4. Based Rollup

Shared Sorter

Refers to multiple Layer 2 solutions sharing a third-party sequencer network, which is beneficial for cross-chain interaction and preventing MEV, among other things. Currently, there are several projects building shared sequencer networks.

Summary and Reflection

Whether decentralized orderers can perfectly solve existing problems remains to be seen. The MEV issue has become quite serious on Ethereum; will Layer 2 face similar challenges after decentralization? Will shared orderers trigger new centralization issues? These are all worth further consideration.

Decentralization of blockchain is a long-term process. I believe that through continuous exploration in the future, the problems faced by sorters will eventually be reasonably resolved.