The Future of Rollups Is Tied to MEV Management

Sequencer centralization creates a single point of failure for censorship and value extraction. Without proper management, ~90% of rollup profits can be MEV, not transaction fees, creating misaligned incentives and user harm.

• Liveness Risk: A single sequencer can censor or reorder transactions.
• Value Leakage: Billions in MEV are extracted from users, subsidizing centralized operators.
• Fragmented Liquidity: Each rollup becomes its own isolated MEV pool.

Decoupling block building from proposing via Proposer-Builder Separation (PBS) and shared sequencer networks like Espresso, Astria, and Radius is the architectural fix.

• Credible Neutrality: Builders compete for the right to order, preventing censorship.
• MEV Redistribution: Auctions can fund public goods via protocols like EigenLayer and direct revenue to rollup treasuries.
• Atomic Cross-Rollup Composability: Enables native intents and shared liquidity across chains.

The endgame is removing toxic MEV at the source. Encrypted mempool protocols like Shutter and universal auction houses like SUAVE aim to make transaction content private until execution.

• Front-Running Resistance: Encrypted intents prevent predatory arbitrage.
• Optimal Execution: Builders compete on execution quality, not information asymmetry.
• Unified Liquidity Layer: SUAVE aspires to be a decentralized block builder for all chains.

The core trade-off for rollup architects is between fast, centralized finality and secure, MEV-optimized finality. Shared sequencers add ~1-2s latency but enable sustainable economics.

• Fast Lane: Centralized sequencers offer ~500ms finality but capture all MEV.
• Optimized Lane: Decentralized sequencing offers ~2-4s finality but redistributes value.
• User Choice: Future stacks may let users select their security/MEV preference per transaction.

Permissionless sequencing is a myth. Today's dominant rollups use a single, centralized sequencer to guarantee liveness and order transactions. This creates a single point of failure and a multi-billion dollar MEV honeypot.

• Liveness Risk: A single sequencer can be censored or fail.
• Economic Capture: The sequencer captures all MEV, disincentivizing decentralization.
• User Harm: Opaque ordering leads to front-running and sandwich attacks.

The only viable path is to separate block building from proposing. A shared sequencer network (like Espresso, Astria) or Proposer-Builder Separation (PBS) creates a competitive market for block space.

• Decentralized Liveness: Multiple sequencers can propose blocks.
• MEV Redistribution: PBS auctions MEV revenue back to the rollup's treasury or stakers.
• Cross-Rollup Composability: Enables atomic execution across different rollup stacks.

Solving ordering requires hiding information. Encrypted mempools (like Shutter Network) and generalized MEV markets (like SUAVE) are critical infrastructure.

• Prevention: Encrypted transactions prevent front-running until execution.
• Democratization: SUAVE creates a neutral marketplace for block building, separating it from chain allegiance.
• Interoperability: Enables MEV-aware cross-chain intents, competing with UniswapX and Across.

If MEV isn't managed at the sequencing layer, it will fragment to the application layer. Users will flee to intent-based protocols that abstract away the toxic environment.

• User Exodus: Platforms like CowSwap and UniswapX already protect users by outsourcing order flow.
• Liquidity Silos: MEV-optimized LPs will cluster on specific chains, harming general composability.
• Protocol Siphoning: Value accrues to intent solvers and private order-flow auctions, not the base layer.

Unmanaged MEV is a direct, opaque tax on user transactions, eroding trust and adoption. It's not just about sandwich attacks; it's about front-running governance votes and extracting L2-to-L1 bridge withdrawals. This creates a negative-sum game where value leaks to searchers instead of staying with users and the protocol treasury.

Build MEV management into your core stack from day one. This isn't optional infrastructure. Use a solution like Espresso Systems or Astria for shared sequencing with MEV resistance, or implement proposer-builder separation (PBS) like Ethereum. This allows you to:\n- Capture MEV revenue for the protocol treasury.\n- Guarantee fair ordering to protect users.\n- Enable fast pre-confirmations for a better UX.

The endgame is moving from transaction processing to intent fulfillment. Protocols like UniswapX, CowSwap, and Across demonstrate that users should declare what they want, not how to do it. This shifts MEV from a threat to an optimization problem solvable by solvers, creating:\n- Better prices for users via competition.\n- Native cross-chain UX without bridges.\n- Predictable, minimized fees.

If a single entity controls sequencing and MEV extraction, you've built a centralized toll bridge. This creates systemic risk and regulatory scrutiny. The solution is decentralized sequencing and MEV smoothing via mechanisms like MEV-Share or MEV-Burn. Failing to plan for this leads to:\n- Single point of failure for the rollup.\n- Censorship resistance degradation.\n- Vulnerability to regulatory action.

Investors: stop just looking at TVL and TPS. The key ratio is Value Captured vs. Value Extracted. A healthy rollup minimizes extracted value (user loss) and maximizes captured value (protocol revenue). Track:\n- Proposer/Builder rewards flowing to treasury.\n- Frequency of malicious attacks (sandwich, time-bandit).\n- Integration with shared sequencers like Espresso or Radius.

The playbook is written. Ethereum's post-merge evolution—PBS, Danksharding, Proposer-Boost—is a masterclass in managing MEV at scale. Rollups should directly implement these primitives. This isn't copying; it's adopting battle-tested, credibly neutral infrastructure. Key moves:\n- Enshrined PBS in the sequencer design.\n- In-protocol MEV burning to democratize value.\n- Data availability sampling to prevent MEV data withholding.