L1-Enforced Sequencing vs. L2-Autonomous Sequencing

Guaranteed L1 Finality: Transaction ordering is cryptographically enforced by the base layer (e.g., Ethereum). This eliminates sequencer censorship risk and provides the strongest liveness guarantees. This matters for protocols handling high-value assets (>$1B TVL) or requiring maximal decentralization, like Lido or Aave.

Fee Transparency: Users pay L1 gas directly for sequencing, with no opaque L2 operator markup. This creates a verifiable cost structure and aligns sequencer incentives purely with L1 security. This matters for financial applications where fee predictability is critical for user experience and arbitrage strategies.

High Throughput & Low Latency: A dedicated sequencer (e.g., Optimism, Arbitrum) can batch transactions and order them locally, achieving 10,000+ TPS and sub-second latency for user confirmations. This matters for consumer dApps, gaming, and high-frequency DeFi where user experience is paramount.

Custom Fee Markets & MEV Management: The sequencer can implement priority fee auctions, fair ordering (e.g., Flashbots SUAVE), and profit-sharing mechanisms. This matters for protocols seeking to optimize revenue, mitigate negative MEV, or create novel economic models unavailable on L1.

Bottlenecked by L1: Throughput is capped by the underlying chain's block space and gas limits, leading to higher and more volatile fees during congestion. This is a poor fit for mass-adoption dApps requiring consistent, low-cost transactions.

Centralized Failure Point: Users must trust the sequencer's liveness. While fraud/validity proofs protect assets, a single-point outage (e.g., Arbitrum Sequencer downtime) halts all transactions. This adds operational risk for time-sensitive applications.

Maximizes L1 Security & Censorship Resistance: Transaction order is determined by Ethereum consensus (e.g., via inclusion lists). This provides strong liveness guarantees and prevents sequencer-level censorship. This matters for protocols like MakerDAO or Aave that require maximal security for high-value DeFi transactions.

Inherently Limits Throughput & UX: Every transaction must be proposed to the L1 mempool, creating a hard bottleneck (~15-45 TPS per rollup, depending on L1 congestion). This increases latency and fees for users, as they pay for L1 gas for sequencing. Not suitable for high-frequency applications like Web3 gaming or micro-transactions.

Enables High Throughput & Low Latency: A dedicated sequencer (e.g., Arbitrum's Sequencer, Optimism's Single Sequencer) can order thousands of transactions per second off-chain with sub-second finality. This enables near-instant user experiences and lower fees (batching). Critical for scaling dApps like Uniswap, dYdX, and social apps.

Introduces Centralization & Censorship Risk: A single sequencer creates a trusted liveness assumption and can censor or reorder transactions. While users can force transactions via L1 (e.g., Arbitrum's delayed inbox), this is a poor UX fallback. Decentralized sequencer sets (like Espresso, Astria) are nascent solutions to this trade-off.

• Maximal Security Applications: Bridges holding >$1B TVL (e.g., Polygon zkEVM), institutional DeFi.
• Censorship-Resistant Protocols: Where liveness is non-negotiable (e.g., prediction markets, governance).
• When L1 Latency is Acceptable: Batch processing, non-interactive settlements.

• Consumer dApps & Gaming: Requiring <1s latency and <$0.01 fees (e.g., Immutable zkEVM, Arbitrum Orbit chains).
• High-Frequency Trading: DEX aggregators and perps like Hyperliquid.
• When Rapid Iteration is Key: Fast sequencer upgrades enable new features (pre-confirmations, account abstraction).

Sequencing is a core L1 function: Transactions are ordered by the base layer (e.g., Ethereum proposers). This provides cryptographic finality and inherits the full security of the L1's consensus (e.g., Ethereum's ~$50B+ staked). This matters for protocols where censorship resistance and trustlessness are non-negotiable, such as high-value DeFi settlement layers or cross-chain bridges.

No separate sequencer consensus needed: The L2 relies on the L1 for liveness and ordering, simplifying its state transition logic. This reduces protocol complexity and attack surface. This matters for general-purpose rollups (like Arbitrum One, Optimism) that prioritize correctness and auditability over peak throughput, allowing them to leverage battle-tested L1 client software.

Decoupled from L1 block times: A dedicated sequencer (single or committee) can order transactions at high speed (e.g., 10k+ TPS potential) with instant soft confirmations. This matters for consumer applications and high-frequency trading where sub-second latency and high throughput are critical, as seen in gaming rollups (e.g., Immutable zkEVM) and orderbook DEXs.

Sequencer controls transaction ordering: This enables local fee markets and allows the L2 to capture and potentially redistribute MEV, creating a sustainable revenue stream. This matters for app-specific chains and high-volume rollups (e.g., dYdX v4, Fuel) that need to subsidize user fees or fund protocol development without relying solely on L1 gas costs.

Throughput is capped by L1 data availability costs and block time: Even with compression, posting data to Ethereum (~30-100 KB per block) creates a hard limit on TPS and makes fees volatile during L1 congestion. This matters for mass-adoption applications that require consistently low, predictable costs, a challenge for many general-purpose rollups.

Introduces a new trust assumption: Users must trust the sequencer(s) for liveness and fair ordering. A single sequencer can censor transactions or go offline. While decentralized sequencer sets (e.g., Espresso, Astria) are emerging, they add consensus complexity. This matters for permissionless protocols that cannot tolerate a single point of failure or censorship.