Crypto researcher Haotian has expressed his views on the decentralization of sequencers, an important component of rollups. He believes that while the development of decentralized sequencers has stagnated in most mainstream projects, the Metis ecosystem has the opportunity to rapidly grow due to its successful decentralization of sequencers.
Background: Stagnation in the Decentralization of Rollup Sequencers
Potential Risks and Benefits of Decentralized Sequencers
Technical Challenges in Decentralizing Sequencers
Decentralized Sequencers as the Beginning of Rollup Narrative
Decentralized Sequencers Driving Token Utility
Token Liquidity Staking to Drive Native DeFi Growth
Decentralized Sequencers and the Value of Native Tokens as Key to Ecosystem Development
Initially, decentralized sequencers were a crucial feature of almost all rollups. However, due to various considerations, the development of decentralized sequencers has stagnated in most mainstream general-purpose rollups such as Optimism and zkSync.
Taking Optimism as an example, it has already gained the majority of the market share, and its strategy of promoting growth through the OP Stack ecosystem has been successful. At this stage, implementing decentralized sequencers hastily would bring potential crises and challenges to the overall Layer2 ecosystem, such as MEV and malicious node issues. Therefore, delaying the narrative of decentralization is reasonable.
However, compared to Optimism, Metis, as a new competitor in Layer2, does not have the burden of market dominance and can implement decentralized sequencers more easily and efficiently, making it the foundation for future ecosystem development.
Don’t think that decentralizing sequencers in Layer2 is straightforward. It brings about MEV issues. When the sequencer is centralized, the space for MEV is small. However, when the sequencer is decentralized, MEV will inevitably become a challenge.
Effectively addressing the MEV issue in a decentralized architecture is a significant challenge. Looking at Ethereum’s roadmap, the development of PBS has many technical difficulties. During the transition period, incentives such as MEV-Boost and MEV Router introduced by the Flashbots team are used to eliminate the negative impact of MEV on the Layer2 ecosystem.
To address the MEV issue in decentralized sequencers, Metis has introduced a validation mechanism, where validators have the authority to remove specific states from the virtual machine when anomalies are detected. This is also a compromise.
Many people believe that Metis’ decentralized sequencer is just a “technical narrative” generated by the competition within Rollups. However, Haotian believes that decentralized sequencers are the foundation and prerequisite for the future explosion of the Layer2 ecosystem. The reasons are as follows:
Decentralized sequencers are just the beginning; the highlight is the token economic model design after Rollups. By giving Layer2 native tokens the use case of paying network gas fees, the value of tokens can be increased, allowing them to play a motivating role in the process of decentralizing sequencers.
Although the original design of using ETH as the gas fee for the Layer2 network is more in line with Ethereum’s orthodox development direction, it would make Layer2 tokens purely governance tokens, unable to generate value and continuous empowerment in the actual economic structure.
Native tokens need value capture to foster the emergence of native Layer2 DeFi. For example, if a new chain only circulates wrapped versions of the main chain tokens, it can only enjoy the overflow effect of main chain liquidity and lacks the potential for the explosion of native Layer2 DeFi.
In contrast, two years ago, Metis used the METIS token as the gas fee, which seemed like an “unorthodox” innovation at the time but actually contained long-term planning for the Layer2 economic model.
Once Layer2 tokens have use cases (such as gas fee payment), the next challenge is the subsequent ecosystem development.
The DeFi on the Ethereum mainnet has evolved from staking to restaking. The prerequisite for the DeFi tower to soar is liquidity staking.
It is crucial to let incentivized sequencer nodes and projects see the incentivized tokens as the starting point for building a brand-new native DeFi ecosystem, rather than just wanting to mine and sell tokens. It is essential to participate in the ecosystem construction and expand the pie together.
If you carefully observe the Metis ecosystem, you will find many similar structures emerging, such as TheHercules, a decentralized derivative exchange, and ENKI, a liquidity staking protocol. Although they may appear as new faces, for a Layer2 token with value capture, these infrastructures may be the key to unlocking the development of native Layer2 DeFi. And there will be more potential projects emerging.
In conclusion, decentralizing sequencers and relinquishing control is just the beginning. The real challenge lies in how to coordinate the interests of all parties in the ecosystem through the decentralization of sequencers:
How can participants be incentivized to actively build the ecosystem rather than passively speculating on mining and selling tokens?
To be able to answer the above questions perfectly, it is necessary to give native tokens full value, which requires coordination with the architecture of decentralized sequencers. Only then can Layer2 truly bring users and ecosystem to the mainnet, rather than being just an option for bears.
Layer2
Metis
Rollups
Sequencer