Why 'Fair Sequencing' Is an Economic Mirage

Sequencers that promise 'fair ordering' simply internalize MEV, becoming the new extractors. The economic value of transaction ordering doesn't vanish; it's captured by the protocol's own validators or a centralized operator.

• Creates a new rent-seeking entity within the protocol itself.
• Shifts, rather than eliminates, the economic centralization risk.
• See: Aptos, Sui, and other high-TPS chains with centralized sequencing.

True decentralized fair ordering (e.g., using consensus) adds ~100-500ms of latency, making it non-viable for high-frequency trading. To compete, chains inevitably centralize sequencing to a single, low-latency node.

• Fairness requires slowness that the market won't tolerate.
• Results in a single point of failure/censorship for speed.
• Real-world example: Solana's leader-based model prioritizes speed over ordering guarantees.

Using a VRF for 'random' ordering is manipulable by sequencers through transaction filtering. They can simply discard or delay unfavorable transactions before the VRF step, breaking the fairness guarantee.

• Pre-VRF censorship is the new attack vector.
• Requires a trusted, non-colluding operator set, which is a regression to Proof of Authority.
• Implementations like Chainlink VRF don't solve the input curation problem.

Proposer-Builder Separation (PBS), as seen in Ethereum, acknowledges the inevitability of MEV specialization. It separates the right to order from the act of ordering, creating a competitive market for block building.

• Credible neutrality is maintained at the consensus layer.
• Enforces fairness through competition, not naive ordering rules.
• The only viable path for decentralized chains (see: Ethereum, Cosmos).

The true solution bypasses the sequencer entirely. Users express desired outcomes (intents) and a decentralized solver network competes to fulfill them optimally, abstracting away transaction ordering.

• Eliminates the sequencer as a rent-extracting bottleneck.
• Shifts competition to execution quality, not priority gas auctions.
• Emerging standard powered by UniswapX, CowSwap, and Across.

A 'fair' sequencer operated by a legal entity is a single point of regulatory enforcement. Governments can compel transaction censorship, blacklisting, or KYC at the sequencing layer, destroying network neutrality.

• Turns the chain into a permissioned ledger with a legal wrapper.
• Directly contradicts the censorship-resistant ethos of Bitcoin and Ethereum.
• A primary risk for institutional-focused L2s with centralized sequencers.

Fair ordering at the L1 level is a political and economic non-starter. It requires validators to forgo billions in MEV revenue and introduces centralization pressure. The result is either a security-compromised chain or a dead one.

• Economic Reality: Validators are profit-maximizing entities.
• Centralization Vector: Enforcing fairness requires a trusted, centralized sequencer, defeating decentralization.
• Example: Solana's priority fees are a market, not a fairness mechanism.

Real user protection happens where value is extracted: at the application. Protocols like UniswapX and CowSwap use batch auctions and solver networks to internalize and redistribute MEV.

• Batch Auctions: Trades executed at uniform clearing price, eliminating front-running.
• Solver Competition: Solvers compete for the right to execute, driving efficiency.
• User Benefit: MEV becomes a refund or protocol revenue, not a loss.

Fair sequencing on one chain does nothing for cross-chain transactions, where the largest arbitrage opportunities exist. Bridges like LayerZero and Across are the new MEV hotspots.

• Arbitrage Nexus: Price differences between chains create $100M+ opportunities.
• Sequencer Capture: Bridge relayers/sequencers can and will extract this value.
• Builder Takeaway: Design bridges with explicit economic models for sequencers; don't pretend the MEV isn't there.

The next wave of infrastructure winners won't sell 'fairness'. They will enable intent-based transactions where users specify what they want, not how to do it. This shifts complexity to a solver/executor layer.

• Paradigm Shift: From transaction broadcasting to outcome fulfillment.
• Key Protocols: Anoma, SUAVE, UniswapX.
• Market Size: Encompasses all cross-chain and complex DeFi interactions.

If you're building a high-value dApp (e.g., a perpetual DEX, NFT marketplace), outsourcing transaction ordering is surrendering control. You must become the sequencer for your own domain.

• Vertical Integration: Bundle ordering, execution, and settlement.
• Revenue Capture: Convert leaked MEV into protocol fees or user rebates.
• Example: dYdX v4 moving to its own Cosmos app-chain to capture full value stack.

Chasing 'fairness' ignores the actual user pain point: slow finality. Projects optimizing for sub-second latency (Solana, Monad, Sei) will win, even with a purely economic ordering model.

• User Priority: Speed and cost beat abstract fairness.
• Trade-off: Accept some MEV leakage for orders-of-magnitude better performance.
• Metric to Watch: Time-to-finality for a swap, not the fairness of its queue position.