Ethereum Scalability Layer Centralization Issues: Exploring Decentralized Sorter Solutions

1. Key Points

• Transaction ordering has become an increasingly serious issue in the second layer domain. Second layer rollups mainly provide users with a secure place for low-cost transactions, submitting transaction data to the underlying first layer.

• The sorter is responsible for grouping transactions in order. It receives unordered transactions from users, processes them off-chain into groups, and generates compressed ordered transaction batches to submit to the underlying chain.

• Rollups do not actually require sequencers, this is just to provide a better user experience. Currently, most L2 projects use centralized sequencers because this is more convenient and cost-effective.

• Centralized order books pose risks such as transaction censorship, MEV extraction, and single points of failure, which contradict the spirit of cryptocurrency decentralization.

• Shared decentralized sequencers are the solution. They can address issues of censorship, MEV extraction, and validity, while also enabling cross-rollup functionality. Projects such as Espresso, Astria, and Radius are developing innovative shared sequencing solutions.

2. Introduction

As the Ethereum L2 rollup ecosystem becomes more widespread, the issue of sequencers is becoming increasingly prominent. Currently, major L2 projects are using centralized sequencers, which poses risks and is not in line with the spirit of Decentralization. Although most projects include the decentralization of sequencers in their roadmap, progress has been slow.

This report will delve into the role of sorters and the current state of Ethereum rollups, introduce projects that are developing decentralized shared sorting networks and their solution features, and reflect on the significance of this for the future development of Ethereum L2 rollups.

3. What is a sorter?

The sorter is responsible for organizing unordered transactions into groups and submitting them to the underlying chain. It can batch compress a large number of L2 transactions into a single L1 transaction, saving gas fees and providing fast soft confirmations.

Currently, the main L2 projects use centralized sequencers, as this is more convenient and cost-effective. However, centralized sequencers pose risks such as censorship, MEV extraction, and single points of failure, which contradict the decentralized spirit of cryptocurrencies.

4. Solution: Decentralized Shared Sorter

The decentralized shared sorter is a solution to the problems of centralized sorters. It can provide sorting services for multiple rollups, addressing issues of censorship, MEV extraction, and validity, and it can also achieve cross-rollup functionality.

Main projects include:

• Espresso: Uses the HotShot consensus protocol, combined with EigenLayer to reset contracts for Decentralization. Proposes the Tiramisu data availability solution.

• Astria: Building a middleware blockchain network, achieving consensus on transaction ordering using CometBFT. Focused on execution, utilizing Celestia for data availability.

• Radius: Using encrypted memory pools and the PVDE encryption scheme, even a single sorter cannot act maliciously. Proposing an auction-based MEV market design.

Other related projects include NodeKit, AltLayer, and so on.

5. Outlook

The existing L2 rollup faces three choices:

1. Continue using centralized sorters: simple but carries risks.
2. Sharing sorting network integration with third parties: It can obtain the advantages of Decentralization and interoperability.
3. Develop internal proprietary solutions: time-consuming and expensive but can maximize profits.

The future of sorting mechanisms and decentralization will continue to attract attention. We expect more projects to join this field, and existing L2 projects will also actively explore decentralized solutions.

6. Conclusion

Decentralization and rollup interoperability are key driving forces behind the development of sequencers. The challenge faced by shared sorting networks is how to address the issues of value accumulation and revenue distribution.

Whether in the field of rollups or shared sequencers, there will be more new players joining in the future. The choices of different projects will be very noteworthy. This topic will continue to heat up in the coming months, and we will closely monitor the developments in this area.