How Can a Decentralized Sequencer Model Be Implemented to Mitigate MEV on L2?
A decentralized sequencer model can be implemented using a set of rotating sequencers selected through a consensus mechanism like Proof-of-Stake or a similar verifiable random function. This rotation prevents any single entity from perpetually controlling the transaction order.
Additionally, the sequencers can be required to use fair ordering mechanisms or commit-reveal schemes to ensure transparent and objective transaction sequencing.
Glossar
Decentralized Sequencer Model
Model ⎊ The Decentralized Sequencer Model represents an architectural evolution for Layer 2 rollups, distributing the critical task of transaction ordering and batch submission across a set of independent, verifiable nodes.
Sequencer
Function ⎊ A sequencer performs the critical function of ordering transactions on a Layer 2 network before submitting them to the Layer 1 blockchain for final settlement.
Decentralized Sequencer
Architecture ⎊ A Decentralized Sequencer fundamentally alters order flow management within cryptocurrency derivatives, moving from centralized exchange control to a network-based consensus mechanism.
Fair Ordering Mechanisms
Mechanism ⎊ Fair ordering mechanisms, within cryptocurrency derivatives, options trading, and broader financial derivatives, represent a suite of protocols designed to ensure equitable trade execution and price discovery, particularly in environments susceptible to front-running, order spoofing, or other manipulative practices.