Demystifying Shared Sequencing

Demystifying Shared Sequencing

Demystifying Shared Sequencing

Demystifying Shared Sequencing

Demystifying Shared Sequencing

Read Time: 7 minutes

Introduction

In the rapidly evolving sphere of blockchain technology, a significant spotlight has been cast on Layer 2 scaling solutions, particularly as a response to the pressing scalability challenges inherent in decentralized networks. Among these innovative solutions, optimistic rollups have carved out a niche for their effectiveness. At the core of these rollups is an integral mechanism known as the “Sequencer.”

Recently, a novel and transformative concept, dubbed “Shared Sequencing,” has entered the scene, opening up new avenues in the field of rollups. This emerging idea promises to revolutionize the way these systems operate, potentially leading to substantial improvements in the efficiency and interoperability of blockchain networks.

A Brief about Sequencer

In the framework of optimistic rollups, the sequencer plays a pivotal role. This entity gathers transactions, assembles them into rollup blocks, and then posts these blocks onto the Ethereum main chain. Additionally, the sequencer is charged with addressing any fraud proofs presented by participants.

This component is essential in the optimistic rollup structure as it ensures harmony between the rollup chain and the Ethereum main chain. While its functions bear a resemblance to those of a proof-of-stake blockchain’s validator, the sequencer possesses a higher degree of authority and influence over the rollup chain.

Directly ordering transactions on the host chain can be less economical, a problem the Sequencer adeptly navigates. It accomplishes this by bundling several user transactions off-chain, then recording them on the host chain as one collective transaction. This method not only cuts down on expenses but also enhances the effective use of available resources.

Power of Sequencer

The Sequencer holds substantial power in managing the transaction sequence in optimistic rollups. Their role encompasses:

1. Transaction Order Control: The Sequencer plays a pivotal role in determining the sequence of transactions within the rollup. By aggregating several user transactions off-chain and then committing them as a single transaction to the main chain, the Sequencer dictates the order of these transactions. This ordering can significantly impact how transactions are executed and interact within the rollup.

2. Selective Transaction Inclusion: The Sequencer has the discretion to exclude specific user transactions from the aggregated batch. This exclusion can force users to individually submit their transactions to the main chain, often at a higher gas fee cost, granting the Sequencer influence over which transactions are part of the rollup.

3. Extracting MEV: Through rearranging the transaction order in the batch before committing to the main chain, the Sequencer can extract Miner Extractable Value (MEV). MEV is the potential profit obtained from transaction order manipulation or front-running by miners or Sequencers. Controlling the transaction sequence allows the Sequencer to potentially gain from certain transaction arrangements.

4. Aggregation Duty: The Sequencer is tasked with collecting multiple off-chain user transactions and combining them into a batch for the main chain. This process reduces individual transaction costs for users by spreading out the overall commitment costs.

5. Compression Responsibility: In addition to aggregation, the Sequencer might compress the transaction set before committing to the main chain. This compression further reduces data availability (DA) costs on the host chain, enhancing the rollup’s efficiency in terms of storage and processing.

6. Semi-Trust Position: Although the Sequencer has significant control and duties in transaction aggregation and commitment, they are considered a semi-trusted entity. Users need to trust the Sequencer for fair and efficient execution of these tasks. The Sequencer can’t block user access to the rollup but can delay it or impose extra costs.

Some More Context: Sequencing vs Execution

In optimistic rollups, the concepts of Sequencing and Execution represent two distinct stages in handling transactions:

1. Sequencing: This phase involves organizing and grouping transactions off-chain prior to their collective submission to the main chain. A key player here is the Sequencer, who receives individual transactions from users and bundles them into a single transaction set for the host chain. This method significantly cuts down on costs, as the expenses on the main chain are spread across all transactions in the batch.

However, the Sequencer holds the power to decide the order of transactions, potentially excluding some or manipulating the order for extracting maximum extractable value (MEV). This places the Sequencer in a position of semi-trust, as they can influence the cost and priority of user transactions on the rollup.

It’s crucial to understand that the Sequencer’s job is limited to ordering transactions for submission; they don’t compute the state of the rollup.

2. Execution: Contrasting with Sequencing, Execution is about establishing the legitimate history of the rollup and updating its state based on the Sequencer’s ordered transactions. Once the Sequencer submits the batch to the main chain, rollup nodes process this data, ensuring it forms a coherent history that reflects the state changes due to transaction execution.

This process is deterministic, meaning all nodes will reach the same conclusion from the Sequencer’s ordered set. Subsequently, Proposers finalize this state and commit it to the rollup contract on the host chain, rendering it immutable. This final state incorporates the user transactions and is effectively reflected on the main chain.

Both Sequencing and Execution are independent yet interlinked processes, essential for the scalability and efficiency of optimistic rollups, though they introduce certain compromises in terms of trust and control dynamics.

Enter Shared Sequencing

Shared Sequencing in Optimistic Rollups

Shared Sequencing is a technique in optimistic rollups where multiple rollups share a single Sequencer. This Sequencer, a semi-trusted entity, manages the off-chain ordering of transactions and aggregates them, eventually committing them as a single batch on the main blockchain. This method lowers user costs by distributing the transaction commitment expenses over many transactions.

The Sequencer can manage each rollup’s sequence individually or link multiple rollups’ histories atomically. In atomic linking, the Sequencer ensures that all transactions from various rollups are either collectively confirmed on the main chain or not at all. This allows for simultaneous transaction execution across different rollups.

Atomic Inclusion in Multi-Rollup Control

With Shared Sequencing, the Sequencer’s power extends to sequencing transactions across several rollups at once. This leads to a concept known as “atomic inclusion.”

Atomic inclusion allows a shared Sequencer to include a set of transactions across multiple rollups simultaneously. Users can specify that these transactions should be included in all the rollups together or in none. When employing atomic inclusion, the Sequencer commits to sequencing certain transactions across various rollups concurrently. The objective is to ensure that all transactions in the atomic set are included in each rollup’s history or excluded from all. This mechanism aims to guarantee either full success or total failure of a set of actions across different rollups, avoiding incomplete or inconsistent execution.

Atomic inclusion is particularly appealing for cross-rollup DeFi composability, as it promises more certainty and reliability for complex interactions. However, it has limitations: only non-failing or “infallible” transactions can be part of this process. Infallible transactions are those that always succeed without generating an invalid state. Consequently, atomic inclusion might not be effective for transactions prone to failure, like certain DeFi swaps or complex operations.

While atomic inclusion offers significant benefits for specific scenarios, it’s not universally applicable, particularly for transactions with higher failure risks. Achieving true atomic execution across rollups may necessitate different strategies or further innovation to overcome these challenges and ensure consistency and reliability in cross-rollup operations.

Challenges in Shared Sequencing:

1. Atomic Execution Difficulty: Ensuring atomic execution across various rollups through shared sequencing is complex. The Sequencer can commit to including transactions atomically but ensuring their atomic execution is problematic, especially with fallible transactions common in DeFi operations, which may fail and disrupt true atomicity.

2. Dependence on Sequencer Trustworthiness: Shared sequencing necessitates trust in the Sequencer’s reliability and honesty. This reliance introduces a central point of trust, as users depend on the Sequencer not to create conflicting or invalid sequences.

3. Limitations in Cross-Rollup DeFi: Facilitating cross-rollup DeFi transactions via shared sequencing is challenging. Complex DeFi processes often involve transactions prone to failure, which cannot be assured of atomic execution solely through inclusion.

4. Complex Contingency Relationships: Incorporating explicit contingency links between transactions and different rollup states can address some issues but adds complexity for Proposers, who must evaluate varied states based on assumptions about other rollups.

Opportunities in Shared Sequencing:

1. Reduced Costs: By batching and compressing transactions into a single host chain transaction, shared sequencing can significantly lower gas fees, enhancing the cost-efficiency of rollup transactions.

2. Streamlined Cross-Rollup Transactions: Shared sequencing offers a way for users to transact across multiple rollups without direct host chain interaction, streamlining the process through a single Sequencer.

3. Easier Cross-Rollup State Management: The shared Sequencer can simplify the computation of rollup states by pre-computing and providing execution guarantees for transactions across different rollups.

4. Potential for Future Enhancements: The challenges associated with shared sequencing invite further research and development, aiming to enhance efficiency and security in cross-rollup interactions.

Conclusion

Shared Sequencing represents a significant advancement in optimistic rollups, enhancing scalability and interoperability among various rollups. While there are hurdles in achieving seamless atomic execution, its potential in transforming blockchain technology is evident. Ongoing research and development in this area hold the promise of significantly evolving the blockchain ecosystem, offering new ways for decentralized networks to interact and expand.

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