The Future of Sequencer Revenue Models

Arbitrum's BOLD proposal aims to decentralize its sequencer while creating a direct revenue stream for stakers. The model ties sequencer profits to the security of the chain itself.

• Revenue Source: 100% of priority fees and MEV are distributed to stakers.
• Key Benefit: Aligns economic security with profitability, moving beyond simple token inflation.
• Market Position: Aims to secure its $18B+ TVL with a more credible, decentralized sequencer set.

Espresso is building sequencing infrastructure as a neutral, shared public good for multiple rollups. This turns sequencer revenue from a rollup's monopoly rent into a competitive market for ordering services.

• Revenue Source: Fees from rollups for sequencing services and potential cross-chain MEV sharing.
• Key Benefit: Enables atomic cross-rollup composability, a key unlock for a multi-chain ecosystem.
• Market Position: Partnered with rollups like Frax Ferrum and Lorenzo to bootstrap its network effect.

Today, most rollups use a single, centralized sequencer run by the founding team. This creates a critical vulnerability and captures all value in a black box.

• The Flaw: Creates censorship risk and represents a massive regulatory liability.
• The Cost: Rollups leak $100M+ annually in MEV to external searchers, capturing none of this value for protocol development or token holders.
• The Shift: The market is forcing a move from a cost center to a transparent, decentralized profit center.

Astria is constructing a decentralized shared sequencer network that exclusively serves rollups, decoupling execution from consensus and ordering. It commoditizes sequencing to drive down costs for rollup operators.

• Revenue Source: Transaction fees paid by rollups for fast, firm inclusion and ordering.
• Key Benefit: Rollups maintain sovereignty over execution and settlement while outsourcing the hard part of decentralized sequencing.
• Market Position: Aims to be the fastest path to decentralization for new rollups, competing directly with in-house solutions.

Fuel's unique UTXO-based architecture allows for parallel transaction execution. Its sequencer doesn't just order; it optimizes for maximum throughput, creating value through superior performance.

• Revenue Source: Transaction fees from users demanding the highest possible throughput in a competitive execution market.
• Key Benefit: Parallel execution enables fee markets based on computational complexity, not just simple bidding wars.
• Market Position: Targets high-throughput applications (games, DeFi) where performance is the primary revenue driver.

The endgame is a competitive market for block space where searchers bid for favorable ordering. Protocols like SUAVE envision this future, turning the sequencer into an auctioneer.

• Revenue Maximizer: Auctions for transaction ordering (e.g., front-of-block, sandwich positions) capture maximal value.
• Key Benefit: Transparently captures MEV for the protocol and its users, reducing extractive leakage.
• Market Position: This model will be adopted by rollups with sophisticated DeFi activity, following the lead of CowSwap and UniswapX on the application layer.

Centralized sequencers become de facto MEV gatekeepers, extracting billions in value from users. This creates a toxic incentive to censor or reorder transactions for profit, undermining L2 neutrality.

• Regulatory Risk: Classified as a financial service or exchange operator.
• User Cost: 10-30% of transaction value can be extracted via MEV.
• Network Risk: Single point of censorship and failure.

Shift from a single operator to a permissionless set of sequencers, similar to Ethereum's validator set. Projects like Espresso Systems and Astria are building shared sequencing layers.

• Economic Security: Revenue distributed across hundreds of nodes.
• Censorship Resistance: No single entity can block transactions.
• Regulatory Defense: Classified as a decentralized protocol, not a service.

Auction block-building rights to a competitive marketplace of builders. This democratizes MEV extraction, redirecting revenue to the protocol treasury and stakers instead of a single operator.

• Revenue Redistribution: >50% of MEV can be captured for public goods.
• Efficiency: Builders compete on inclusion, improving user execution.
• Adoption Path: Proven model from Ethereum, adopted by Optimism and Arbitrum.

A centralized sequencer is a legal entity with known principals. Regulators (SEC, CFTC) can compel transaction freezing or blacklisting, violating crypto's core ethos. This is a direct existential risk.

• Precedent: Tornado Cash sanctions show regulator reach.
• Compliance Cost: KYC/AML on sequencer level destroys permissionless access.
• Investor Risk: Protocol token deemed a security due to centralized profit flow.

Bypass the sequencer entirely. Users express desired outcomes (intents) solved by a decentralized solver network. UniswapX and CowSwap pioneer this. SUAVE aims to be a universal preference chain.

• User Sovereignty: Control execution path, minimizing MEV leakage.
• Sequencer Obsolescence: Value shifts from block building to solving.
• Regulatory Arbitrage: No central transaction ordering entity to target.

Token incentives to secure a centralized sequencer are a Ponzi-esque subsidy. When emission schedules end, security collapses unless replaced by sustainable fees—which a centralized extractor already takes.

• Economic Misalignment: Token holders bear inflation cost, operator takes pure profit.
• Long-Term Security: Zero if fees don't flow to decentralized validators.
• VC Overhang: Early investors exit into token emissions, dumping on community.

Charging only base fees for sequencing is leaving billions on the table. This model subsidizes users at the expense of long-term protocol security and sustainability.\n- Forfeits $500M+ annual MEV to validators and searchers\n- Creates misaligned incentives where the L2's most valuable service is its biggest cost center\n- Forces reliance on token emissions or venture capital to fund operations

Adopt the UniswapX/CowSwap model. Let users express desired outcomes (intents) and let solvers compete to fulfill them optimally, paying the sequencer/protocol for the right.\n- Captures 80-90% of extractable value that currently leaks to Ethereum\n- Improves user experience through better pricing and guaranteed execution\n- Creates a native, sustainable revenue stream independent of L1 gas volatility

A single sequencer creates censorship risk, creates a regulatory honeypot, and limits throughput to a single node's capacity. This is the antithesis of decentralized blockchain values.\n- Introduces systemic risk for DeFi protocols with $10B+ TVL\n- Becomes a bottleneck, capping max throughput at ~10k TPS for a single machine\n- Makes the chain vulnerable to regulatory seizure or coercion

Move to a permissionless set of sequencers (like Espresso Systems or Astria) that stake tokens and are slashed for liveness failures or censorship. Sequencing rights are auctioned or rotated.\n- Eliminates single point of failure and regulatory attack surface\n- Scales throughput horizontally across multiple sequencer nodes\n- Aligns economic security with network security through staked slashing

Sequencer profits are a direct function of Ethereum's congested gas auctions. This creates unpredictable, boom-bust economics unsuitable for funding long-term R&D and security budgets.\n- Revenue can swing 1000%+ month-to-month based on meme coin activity\n- Makes financial planning impossible for core development teams\n- Disincentivizes building complex infra that requires steady capital

Upsell guaranteed latency (~100ms), privacy (Aztec), or compliance features to institutions. License the sequencer tech stack as a white-label service for app-chains and rollups-as-a-service (AltLayer, Conduit).\n- Creates recurring SaaS-like revenue decoupled from on-chain activity\n- Monetizes the software stack directly, not just the transaction ordering\n- Targets high-margin enterprise and institutional demand