The execution layer is a commodity. Rollups like Arbitrum and Optimism compete on identical EVM semantics. The differentiating factor is the sequencer, the centralized component that orders transactions before execution. This creates a single point of failure and value extraction.
layer-2-wars-arbitrum-optimism-base-and-beyond
Blog
Why Shared Sequencing Will Define the Next Era
The fight for the modular stack is over. The new war is for the ordering layer. Shared sequencing is the critical infrastructure that will determine MEV capture, censorship resistance, and the ultimate winners in the L2 ecosystem.
introduction
THE NEW BATTLEGROUND
The War for the Stack is Over. The War for the Queue Has Begun.
Execution layer competition is commoditized; the strategic value now resides in controlling transaction ordering.
Shared sequencing is the inevitable response. Projects like Espresso and Astria are building neutral sequencing layers that multiple rollups can use. This separates the critical function of ordering from execution, creating a new, independent market for block space.
The queue is the new moat. Whoever controls the transaction ordering controls MEV flow, cross-rollup atomic composability, and user experience. This is a more fundamental choke point than any single virtual machine.
Evidence: The $700M+ in MEV extracted on Ethereum annually proves the value of ordering. Shared sequencers like Espresso's Hyperlane integration demonstrate that cross-rollup atomicity is the killer app, enabling transactions that span Arbitrum and Optimism in a single block.
thesis-statement
THE ARCHITECTURAL SHIFT
Shared Sequencing is the Network Effect Moat for L2s
The battle for L2 dominance will be won by the networks that control the ordering of transactions, not just the execution.
Sequencing is the bottleneck. Every rollup today operates a centralized sequencer, creating a single point of failure and extracting MEV. This is the primary architectural weakness in the modular stack.
Shared sequencing creates a new market. Projects like Astria, Espresso, and Radius are building decentralized sequencer sets that multiple rollups can plug into. This commoditizes execution while making sequencing the defensible layer.
The moat is atomic composability. A shared sequencer enables cross-rollup atomic transactions without slow bridges. This is the network effect: apps deploy where users can interact with other apps atomically, locking in liquidity and developers.
Evidence: Arbitrum BOLD and Optimism's Superchain are explicit bets on shared sequencing. Their goal is not just scaling Ethereum, but becoming the coordination layer for hundreds of chains, capturing value at the sequencing tier.
market-context
THE LIQUIDITY TRAP
The Rollup Fragmentation Problem
The proliferation of isolated rollups creates a fragmented user experience that undermines the core value proposition of a unified blockchain.
Rollup proliferation fragments liquidity. Each new L2 creates its own isolated state, forcing users and protocols to manage assets across dozens of siloed environments. This defeats the purpose of a global settlement layer.
Atomic composability is impossible. A user cannot atomically swap an asset on Arbitrum for an NFT on Optimism without a slow, trust-minimized bridge like Across or a risky third-party solution. This kills complex DeFi interactions.
Shared sequencing is the solution. A neutral sequencer network, like those proposed by Espresso or Astria, orders transactions across multiple rollups. This enables secure cross-rollup atomicity without centralized intermediaries.
The alternative is a worse user experience. Without shared sequencing, the ecosystem defaults to centralized sequencing cartels or the cumbersome UX of existing L2 bridges like Hop Protocol and Stargate, which add latency and cost.
key-trends
THE NETWORK EFFECTS TRAP
Three Trends Making Shared Sequencing Inevitable
The current fragmented rollup landscape is creating unsustainable economic and user experience drag, forcing a consolidation of sequencing power.
01
The MEV Fragmentation Tax
Every isolated rollup sequencer creates its own mini-MEV market, leaking value that could subsidize user fees. Shared sequencers like Astria and Espresso aggregate this value, creating a cross-rollup MEV auction.
- Recaptures ~$100M+ annually in fragmented MEV for protocol/ user rebates.
- Neutralizes predatory arbitrage between L2s (e.g., Arbitrum <> Optimism flows).
- Enables atomic cross-rollup arbitrage as a native primitive.
$100M+
Value Recaptured
-90%
Arb Latency
02
The Atomic Composability Crisis
Users and dApps cannot execute transactions across rollups atomically, breaking DeFi and forcing risky bridging. A shared sequencer provides a guaranteed execution environment across chains.
- Enables native cross-rollup transactions without external bridges like LayerZero or Axelar.
- Unlocks new app designs (e.g., a single limit order across Arbitrum, Base, and zkSync).
- Solves the "liquidity fragmentation" problem at the execution layer.
Atomic
Cross-Rollup TXs
~500ms
Settlement Finality
03
The Centralization > Decentralization Pipeline
Rollups today are centralized sequencers masquerading as L2s, creating a single point of failure and censorship. Shared sequencing is the only viable path to credible decentralization.
- Pools security and liveness assumptions across many rollups.
- Creates a natural migration path from a single operator to a decentralized validator set (akin to EigenLayer restaking).
- Mitigates regulatory capture risk by distributing control.
1 -> N
Operator Set
>100
Rollups Served
THE ARCHITECTURAL BATTLEGROUND
Shared Sequencing: Protocol Landscape & Strategic Goals
A feature and strategic goal comparison of leading shared sequencer implementations, highlighting their core trade-offs in decentralization, interoperability, and economic models.
| Feature / Strategic Goal | Espresso Systems | Astria | Radius | Shared Sequencer Alliance (Metis) |
|---|---|---|---|---|
Core Architecture | Decentralized PoS Sequencer Set | Centralized Sequencer, Decentralized Rollup | Encrypted Mempool (PBS) | Federated Committee (EigenLayer AVS) |
Time-to-Finality (L1 Inclusion) | < 4 min (optimistic) | < 2 min (optimistic) | N/A (requires builder) | ~12-20 min (full challenge period) |
Cross-Rollup Atomic Composability | ||||
Proposer-Builder Separation (PBS) Support | ||||
Forced Inclusion / Censorship Resistance | L1 Finality Fallback | L1 Finality Fallback | Threshold Encryption | Committee Slashing |
Primary Revenue Model | Sequencer Fees + MEV Capture | Sequencer Fees | Builder Bid Auctions | Sequencer Fees + AVS Rewards |
Key Strategic Goal | Neutral, Ethereum-aligned infrastructure | Turnkey sequencing for rollup-as-a-service | Minimize harmful MEV via encryption | Rapid ecosystem bootstrapping & alignment |
deep-dive
THE STAKES
The Three Battlegrounds: MEV, Censorship, and Sovereignty
Control over transaction ordering is the new infrastructure war, with MEV, censorship resistance, and chain sovereignty as the primary vectors of conflict.
Sequencer control is state capture. The entity ordering transactions captures all MEV value and dictates censorship policy. Rollups like Arbitrum and Optimism currently operate trusted, centralized sequencers, creating a single point of failure and rent extraction.
Shared sequencers unbundle execution from ordering. Protocols like Espresso, Astria, and Radius decouple the sequencer role, creating a competitive marketplace for block building. This shifts MEV profits from a single entity to a decentralized set of builders and proposers.
Censorship resistance becomes a service. A decentralized sequencer layer, like the one proposed for EigenLayer, provides credible neutrality. Applications can opt into censorship-resistant ordering that no single jurisdiction or entity can control, countering OFAC compliance pressures.
Sovereignty is the ultimate prize. Rollups sacrifice sovereignty for convenience by using a parent chain's sequencer. A shared sequencer network returns sovereign control; a rollup's community governs its sequencer set and ordering rules without vendor lock-in to L1s like Ethereum or Celestia.
risk-analysis
THE REALITY CHECK
The Bear Case: Why Shared Sequencing Could Fail
Shared sequencing is not a guaranteed win; its core value propositions face existential challenges from competing architectures and economic realities.
01
The Centralization Trap
A single, dominant sequencer set becomes a single point of failure and censorship. The economic model risks devolving into a winner-take-all market where smaller rollups are priced out or forced to accept weaker security guarantees, replicating the L1 problem it aims to solve.
- Security vs. Sovereignty Trade-off: Rollups cede control of their transaction ordering, a critical state function.
- Regulatory Attack Surface: A centralized sequencing entity presents a clear target for enforcement actions, jeopardizing all connected chains.
1
Critical Failure Point
High
Regulatory Risk
02
Economic Viability & The MEV Question
The business model is unproven. Revenue from cross-domain MEV extraction and sequencing fees must outweigh the costs of running a high-performance, decentralized network. If MEV is efficiently captured by searchers via intent-based systems (UniswapX, CowSwap), the sequencer's primary revenue stream evaporates.
- Fee Market Collapse: Without sufficient MEV, sequencing becomes a low-margin commodity service.
- Validator Incentive Misalignment: Guarantees of fair ordering conflict with the profit motive for sequencer operators.
Unproven
Revenue Model
Variable
MEV Capture
03
Technical Fragmentation & Integration Debt
Achieving atomic composability across heterogeneous rollups (Optimism, Arbitrum, zkSync) requires solving immense technical coordination problems. Each rollup has unique VM logic, proving systems, and upgrade schedules, making a universal sequencer a integration nightmare that could bottleneck innovation.
- Latency vs. Finality: Guaranteeing cross-rollup atomicity may require slower block times, negating the speed benefit.
- Vendor Lock-in: Deep integration with a shared sequencer like Espresso or Astria creates massive switching costs for rollups.
High
Integration Cost
Complex
Coordination
04
The Alt-L1 & Appchain Counter-Attack
Monolithic L1s like Solana and Sui offer superior native atomic composability and avoid the complexity of a multi-sequencer network. Sovereign appchains via Celestia or Avail with their own sequencers can achieve better economic alignment for their specific application, making shared sequencing an unnecessary middleman.
- Performance Benchmark: A monolithic chain's ~400ms slot time is a tough target for a decentralized cross-chain sequencer to beat.
- Sovereignty Premium: Top-tier applications will pay more for dedicated, controllable infrastructure.
~400ms
Monolithic Benchmark
Rising
Appchain Trend
future-outlook
THE CONTROL POINT
Prediction: The Sequencing Layer Will Be More Valuable Than the Execution Layer
The entity that orders transactions will capture more value than the entity that processes them.
Sequencing is market-making. The sequencer determines transaction order, which dictates MEV extraction, front-running, and finality. This control is the primary profit center for rollups like Arbitrum and Optimism today.
Shared sequencing unbundles this monopoly. Protocols like Espresso and Astria create a neutral marketplace for ordering. This commoditizes execution, forcing rollup clients to compete on price and performance alone.
The value accrual flips. In a shared future, the sequencing layer captures fees from every rollup and L2. The execution layer becomes a low-margin utility, similar to AWS regions versus the global internet backbone.
Evidence: Arbitrum sequencer profits from MEV exceed its base transaction fees. Shared sequencers like Espresso are already being integrated by rollup-as-a-service platforms like Caldera and Conduit to avoid vendor lock-in.
takeaways
SHARED SEQUENCING
TL;DR for Busy Builders
The monolithic sequencer is a single point of failure and rent extraction. Shared sequencing unbundles this critical layer, creating a new market for block space and interoperability.
01
The Problem: Rollup Fragmentation
Every rollup today is a sovereign island with its own sequencer, creating a terrible UX for cross-chain activity. MEV and liquidity are trapped in silos.
- User Experience: Bridging between Arbitrum and Optimism requires multiple steps and ~10-20 minute delays.
- Capital Inefficiency: Billions in TVL sit idle, unable to be used as collateral or liquidity across chains.
- MEV Fragmentation: Searchers must run infrastructure for each chain, missing cross-domain arbitrage opportunities.
10-20 min
Bridge Delay
$10B+
Fragmented TVL
02
The Solution: A Unified Block Space Market
Shared sequencers like Espresso, Astria, and Radius create a neutral, auction-based marketplace for ordering transactions across many rollups.
- Atomic Composability: Enable cross-rollup transactions within a single block, unlocking new DeFi primitives.
- MEV Redistribution: Capture and redistribute cross-domain MEV back to rollups and users via mechanisms like MEV-Share.
- Infrastructure Leverage: Rollups plug into battle-tested, decentralized sequencing instead of building their own.
~500ms
Finality
0
New Infrastructure
03
The Killer App: Intents & Solving
Shared sequencing is the prerequisite for intent-based architectures (like UniswapX and CowSwap) to operate at the L2 level. It turns sequencing into a coordination layer.
- Expressiveness: Users submit desired outcomes ("get me the best price for ETH"), not explicit transactions.
- Efficient Solving: Solvers compete across rollups in a shared environment, finding optimal execution paths.
- Native Interoperability: Removes the need for canonical bridges like LayerZero or Across for simple swaps, reducing trust assumptions.
>50%
Better Price
-90%
Gas Complexity
04
The Economic Shift: From Rent to Revenue Share
Monolithic sequencers capture 100% of sequencing fees as rent. Shared sequencers introduce competition, turning a cost center into a revenue-sharing engine.
- Fee Market Dynamics: Rollups can auction their block space to multiple sequencers, driving down costs.
- Protocol Revenue: Projects like SharedSequencer.org propose redistributing fees to rollup DAOs and stakers.
- Validator Economics: Decentralized sequencer networks (e.g., based on EigenLayer) create a new staking asset class.
-50%
Sequencing Cost
New Asset
Staking Yield
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