Why Sequencer Revenue Will Diverge from User Activity

Public mempool sequencing is a commodity. Real value accrual shifts to sophisticated MEV extraction strategies and private order flow auctions (PFOFs).\n- Revenue Source: MEV-Boost-style auctions and Jito-like bundles, not base fees.\n- Market Shift: ~80%+ of Ethereum MEV is captured via private channels, a model migrating to L2s.\n- Outcome: Sequencer revenue becomes a function of strategy alpha, not raw TPS.

Users express goals, not transactions. Solvers (like those in UniswapX and CowSwap) compete to fulfill them off-chain, batching execution.\n- Revenue Shift: Fees move from the sequencer to the solver network and intent infrastructure (e.g., Anoma, Essential).\n- Throughput Illusion: High user activity can correlate with lower sequencer revenue as solvers optimize across venues.\n- Outcome: The sequencer becomes a utility, capturing a thin margin on settled batches.

Decoupling execution from sequencing (via Espresso, Astria, Radius) turns sequencing into a low-margin, high-throughput utility.\n- Revenue Dilution: Shared sequencer pools distribute fees across many rollups, capping individual upside.\n- Cost Center: Sequencing becomes a user acquisition cost for the execution layer, subsidized by app-layer revenue.\n- Outcome: Revenue growth must come from cross-domain MEV and interoperability premiums, not vanilla ordering.

The Problem: Rollups are locked into a single sequencer, creating a revenue monopoly and a single point of failure.\nThe Solution: A decentralized, shared sequencer network that sells finalized block space as a commodity. Rollups bid for inclusion, and sequencers earn via MEV capture and ordering fees, not just gas.\n- Key Benefit: Enables cross-rollup atomic composability (like a shared mempool).\n- Key Benefit: Democratizes sequencer revenue, attracting capital from professional block builders.

The Problem: Running a high-performance, decentralized sequencer is operationally complex and capital-intensive for individual rollups.\nThe Solution: A dedicated, shared sequencing layer that acts as neutral infrastructure. It provides soft-confirmation finality and a streaming data availability layer, charging rollups a subscription or usage fee.\n- Key Benefit: Rollups get instant, decentralized sequencing without the overhead.\n- Key Benefit: Revenue scales with the number of integrated rollups, not just their individual activity.

The Problem: Transparent mempools allow predatory MEV extraction, which is a tax on users and a sequencer revenue leak.\nThe Solution: A practical verifiable delay encryption (PVDE) layer that encrypts transactions until they are included. Sequencers commit to blocks without seeing contents, forcing fair ordering via commit-reveal auctions.\n- Key Benefit: Transforms MEV from a dark forest into a visible, auction-based revenue stream for the sequencer.\n- Key Benefit: User transactions are protected, improving UX and attracting more volume.

The Problem: A sequencer's security is only as good as its own stake, limiting trust and the value of its blockspace.\nThe Solution: Projects like EigenLayer and Babylon enable sequencers to restake capital from established ecosystems (e.g., Ethereum stakers, Bitcoin). This slashes their cost of security.\n- Key Benefit: Sequencers can offer cryptoeconomic security guarantees as a service, charging a premium.\n- Key Benefit: Decouples revenue from needing to bootstrap a native token's security from scratch.

The Problem: Sequential execution limits throughput and makes block space a scarce, undifferentiated good.\nThe Solution: A parallelized execution environment (UTXO-based) that treats state access as a solvable constraint. This allows the sequencer to sell guaranteed parallel execution slots at a premium over serialized chains.\n- Key Benefit: Revenue scales with compute utilization, not just transaction count.\n- Key Benefit: Attracts high-frequency, complex applications (e.g., on-chain CEX, games) willing to pay more for performance.

The Problem: Sequencer profits are captured by a centralized entity, failing to align with or reward the community.\nThe Solution: A decentralized sequencer where profits are funneled directly into a community-owned treasury. The sequencer role is permissionless, and revenue is distributed via governance (e.g., buybacks, grants).\n- Key Benefit: Aligns sequencer profitability with protocol growth and token value accrual.\n- Key Benefit: Creates a sustainable, on-chain fiscal policy independent of token inflation.

Base transaction fees are becoming a commodity. Real revenue will come from capturing and redistributing the information asymmetry inherent in transaction ordering.

• Key Insight: Revenue per user can grow exponentially even as fees per tx fall, driven by sophisticated cross-domain MEV extraction.
• Builder Implication: Design sequencers as MEV-aware systems (like Flashbots SUAVE) not just fast block builders.
• Investor Lens: Value accrual shifts from who processes most tx to who controls the most valuable order flow.

A monolithic sequencer bundles execution, settlement, and data availability value. A modular stack (using Celestia, EigenDA) forces each component to monetize independently.

• Key Insight: Sequencer revenue becomes a fee-for-service model for execution ordering, competing purely on latency and reliability (~100-500ms).
• Builder Implication: Specialize or perish. Compete on provable liveness or embedded preconfirmations, not bundled subsidies.
• Investor Lens: DA layer tokens (TIA) and shared sequencer networks (Astria, Espresso) become the new infrastructure bets.

Users declare what they want, not how to do it. Solvers (UniswapX, CowSwap) compete off-chain, submitting only optimal solutions. The sequencer becomes a passive settlement layer.

• Key Insight: High-value user activity migrates to application-layer solvers, stripping sequencers of their premium order flow.
• Builder Implication: The winning "sequencer" may be a solver network or intent-centric rollup (like Anoma).
• Investor Lens: Follow the solver economics and intent infrastructure, not generic sequencing middleware.

Decentralized sequencer sets (like those proposed by Stackr, Espresso) create a competitive market for block production. This drives margins to zero, similar to Ethereum block builders post-PBS.

• Key Insight: Revenue shifts from sequencer profits to staking yields for sequencer node operators, akin to Proof-of-Stake validators.
• Builder Implication: L2 protocols must own their shared sequencer stake or partner deeply to capture value.
• Investor Lens: The investment is in the staking token of the dominant shared sequencer network, not individual rollup tokens.

Jurisdictional sequencing (offshore, compliant, privacy-focused) will segment the market. Sequencers will charge premiums for regulated asset settlement or sanctions-compliant order flow.

• Key Insight: Compliance-as-a-Service and geographic specificity create non-commoditizable, high-margin revenue streams.
• Builder Implication: Architect for legal modularity—sequencing rulesets that can be swapped based on user jurisdiction.
• Investor Lens: Value accrues to sequencers with bulletproof legal frameworks and banking partnerships, not just tech.

As activity fragments across hundreds of rollups, the sequencer that provides the fastest, most reliable cross-chain atomic composability (via LayerZero, Axelar, Chainlink CCIP) commands a tax.

• Key Insight: The sequencer is the natural coordinator for cross-rollup transactions. This role is more valuable than processing isolated tx batches.
• Builder Implication: Integrate native interoperability messaging into the sequencing logic itself.
• Investor Lens: The interop-aware sequencer captures value proportional to the cross-chain DeFi TVL it enables ($10B+).