Setting Up On-Chain Voting for Sequencer Parameters

On-chain governance for sequencer parameters moves critical decisions from a centralized operator to a decentralized community of token holders. This process typically involves a governance token (like $GOV) that grants voting power proportional to a user's stake. Key parameters controlled via this system can include the sequencer fee model, minimum stake requirements for operators, transaction ordering rules (e.g., First-Come-First-Served vs. Priority Gas Auction), and liveness slashing conditions. Implementing this requires a smart contract system that manages proposal creation, voting periods, vote tallying, and execution.

The core contract architecture usually consists of three main components: a Governor contract, a Timelock controller, and the target contracts holding the parameters. The Governor contract (e.g., using OpenZeppelin's Governor) handles proposal lifecycle. The Timelock introduces a mandatory delay between a vote's passage and its execution, providing a safety window for users to react to potentially harmful changes. The target contracts are the sequencer's core logic modules where parameters like baseFee or stakeThreshold are stored and can be updated via restricted functions.

Here is a simplified example of a proposal creation transaction, assuming a GovernorAlpha-style contract:

solidityCopy
// Assume `governor` is the deployed Governor contract
// `target` is the address of the sequencer parameter contract
// `signature` is the function signature to call, e.g., "setBaseFee(uint256)"
// `data` is the ABI-encoded data for the call, e.g., the new fee value
// `description` is the human-readable proposal details
governor.propose(
    [target],
    [0], // values (ETH to send)
    [signature],
    [data],
    description
);

This queues a proposal for voters to review. The voting period (e.g., 3-7 days) then begins, during which token holders cast their votes.

Voting mechanisms are crucial for security and fairness. Common patterns include token-weighted voting, where one token equals one vote, and vote delegation, which allows users to delegate their voting power to experts. To prevent manipulation from last-minute swings, many protocols use snapshot voting, where voting power is determined from a block snapshot taken at proposal creation. After the voting period ends, if the proposal meets a quorum (minimum participation) and a majority threshold (e.g., >50% for, or >66.6% for critical changes), it is queued in the Timelock for execution after the delay.

Security considerations are paramount. The Timelock delay is a primary defense, allowing the community to fork or exit if a malicious proposal passes. All parameter changes should be upgradeable via proxy patterns to allow for future improvements, but the governance contract itself should be immutable or have a very high bar for change. Audit the integration between the Governor, Timelock, and parameter contracts thoroughly. Real-world examples include Optimism's Governance for sequencing-related upgrades and Arbitrum DAO which governs parts of its Nitro stack, providing practical blueprints for parameter control.

Before implementing on-chain voting, you must establish a development environment with the necessary tools. This includes a local Ethereum node or connection to a testnet like Sepolia, a code editor, and Node.js (v18+). Essential libraries are the Ethereum development stack: Hardhat or Foundry for smart contract development and testing, Ethers.js or Viem for client-side interactions, and a wallet provider like MetaMask. You will also need a basic understanding of Solidity for writing the voting contracts and TypeScript/JavaScript for building the frontend or scripts to interact with them.

The system architecture is modular, separating concerns for security and upgradability. The core consists of three primary smart contracts: a Governance Token (ERC-20 or ERC-1155) that represents voting power, a Timelock Controller (like OpenZeppelin's) to queue and execute successful proposals, and the custom SequencerParameterGovernor contract that holds the voting logic and state. Off-chain components include a frontend dApp for proposal creation and voting, and optionally, a backend service or indexer (e.g., The Graph) to query proposal data and voter history efficiently.

The SequencerParameterGovernor contract is the heart of the system. It defines which parameters are governable—such as minStake, livenessWindow, or profitMargin—and manages the proposal lifecycle. A proposal is created with a target contract address (the sequencer manager) and encoded function calls to update parameters. Voting is typically token-weighted and follows a scheme like Compound's Governor Bravo, with phases for proposal creation, a voting period, a time lock delay, and finally execution. This structure ensures changes are transparent and have community consensus before affecting the live network.

Key security considerations must be addressed in the architecture. Use audited library code (e.g., OpenZeppelin Contracts) for base functionality. Implement access controls rigorously, ensuring only the Timelock can execute passed proposals. Consider vote delegation and snapshotting mechanisms to prevent last-minute token transfers from manipulating votes. For cost efficiency on L2s, design the contract to minimize storage writes and leverage calldata for proposal data where possible. Always deploy and test extensively on a testnet before mainnet launch.

The core of any on-chain governance system is a single source of truth for protocol parameters. For a sequencer, this includes critical settings like maxBatchSize, maxL2GasLimit, transactionFee, and whitelistEnabled. We design a ParameterStore contract to hold these values. This contract should have public view functions for reading parameters but restrict write access exclusively to a designated Governor contract. This separation of concerns is a security best practice, preventing unauthorized direct modifications.

Next, we implement the ProposalContract. This contract manages the lifecycle of a governance proposal, which is a structured request to change one or more parameters in the ParameterStore. A proposal should contain: a unique proposalId, the target ParameterStore address, a list of parameter keys and their proposed new values, a description (often an IPFS hash for longer text), and state variables like voteStart, voteEnd, and status (e.g., Pending, Active, Succeeded, Executed). The OpenZeppelin Governor framework provides excellent, audited base contracts for this pattern.

The proposal execution logic is the critical link. When a proposal reaches the Succeeded state (after passing vote and timelock requirements), anyone can call an execute function. This function performs a low-level call to the ParameterStore, invoking a privileged setParameters function that only the ProposalContract is authorized to call. This pattern ensures parameter changes are atomic and verifiable; they only happen if the full governance process is correctly completed. Always include event emissions (ProposalCreated, ProposalExecuted) for off-chain indexing and monitoring.

The Governor contract is the central smart contract that manages the proposal lifecycle, from creation and voting to execution. For managing sequencer parameters, you will typically use an implementation like OpenZeppelin Governor or a custom fork. The contract holds the voting token, defines proposal thresholds, and enforces quorum and voting delay/period settings. Before deployment, you must decide on key governance parameters such as the votingDelay (blocks before voting starts), votingPeriod (duration of the vote), and proposalThreshold (minimum tokens needed to submit a proposal).

Deployment requires configuring the contract with the address of the voting token (e.g., your project's ERC-20 or ERC-721) and the TimelockController address if you are using one for delayed execution. A common pattern is to use the GovernorSettings extension to manage parameters. Here is a simplified deployment script example using Hardhat and OpenZeppelin Contracts: const governor = await ethers.deployContract("GovernorContract", [token.address, timelock.address, 1, 7200, 50400, 10000e18]);. This deploys a governor with a 1-block voting delay, 7200-block voting period, and a 10,000 token proposal threshold.

After deployment, you must verify the contract on a block explorer like Etherscan to ensure transparency and allow users to interact with the verified source code. Next, configure the contract's permissions. The most critical action is granting the PROPOSER_ROLE to the Governor contract within the TimelockController, which authorizes it to queue successful proposals. You should also grant the EXECUTOR_ROLE (often to the zero address for public execution) and revoke the ADMIN_ROLE to achieve a trust-minimized, autonomous system.

Finally, integrate the Governor contract's address into your front-end application and documentation. Voters will need to know this address to delegate voting power and interact with proposals. It is also essential to write and publish clear documentation on the governance process, including how to create a proposal, the parameters being governed (like sequencer fees or whitelists), and the consequences of different vote outcomes. This completes the foundational on-chain setup for community-led sequencer management.

A timelock controller is a smart contract that acts as an intermediary executor for your governance system. When a proposal to change a sequencer parameter—like maxBlockGasLimit or feeRecipient—passes a vote, it is not executed immediately. Instead, the action is scheduled into the timelock, where it must wait for a predefined delay period before it can be executed. This delay is the core security feature, creating a window for the community to review the executed code of the proposal and react if a malicious proposal were to slip through.

The typical workflow involves three key roles: the Proposer (often the governance token holder contract), the Executor (the timelock itself), and the Admin (a multi-sig or governance contract that can manage roles). After a vote passes, the governance contract, as the Proposer, calls schedule on the timelock with the target address (e.g., the sequencer manager contract), the calldata for the function call, and a future timestamp. Only after the delay has elapsed can any address call execute to run the queued transaction.

Implementing this with OpenZeppelin's TimelockController is standard. You must define the minDelay (e.g., 48 hours for major parameter changes) and assign the roles during deployment. Your governance contract (like OpenZeppelin Governor) must be set as both a Proposer and an Executor. Here is a simplified deployment snippet:

solidityCopy
// Example: Deploying a TimelockController
uint256 minDelay = 2 days; // 48-hour security delay
address[] memory proposers = new address[](1);
proposers[0] = address(governor);
address[] memory executors = new address[](1);
executors[0] = address(governor);

TimelockController timelock = new TimelockController(
    minDelay,
    proposers,
    executors,
    msg.sender // Initial admin (should be a multi-sig)
);

The security benefits are significant. The delay acts as a circuit breaker, allowing time to detect and respond to a malicious governance attack. If a harmful proposal is scheduled, token holders can prepare defensive actions, such as exiting liquidity pools or, in extreme cases, the admin can use the cancel function (if the role is configured safely) to halt the transaction before execution. This makes a rug pull via governance vastly more difficult.

Finally, you must integrate the timelock with your sequencer management contract. The sequencer contract's onlyOwner or administrative functions should be transferred to the timelock address. This means the timelock becomes the sole entity with the authority to execute parameter updates. All governance proposals will then route through the timelock, ensuring every change is subject to the mandatory review delay, thereby significantly hardening your chain's operational security.

After community discussion, a governance participant must draft and submit a formal parameter change proposal. This is a structured transaction that includes the proposed changes, such as adjusting the maxBatchSize, maxL2GasLimit, or transactionFee parameters. The proposal payload is typically a call to the sequencer's management smart contract, like SequencerConfig.sol, using a function such as setParameter(uint256 paramId, uint256 newValue). The proposer must hold the minimum required governance token balance to submit and often must deposit a stake that is forfeited if the proposal fails.

Once submitted, the proposal enters a voting period, which lasts for a fixed number of blocks (e.g., 3-7 days). During this time, token holders cast their votes, usually weighted by their token balance. Voting options are typically For, Against, and Abstain. Voters should evaluate the proposal based on technical merit, economic impact, and alignment with the network's long-term health. Tools like Tally, Boardroom, or the protocol's native governance UI are used to interact with the voting contract.

For the proposal to pass, it must meet two key thresholds: a quorum (minimum percentage of total token supply participating in the vote) and a majority (e.g., more than 50% of votes cast in favor). These thresholds are set in the governance contract and prevent low-participation proposals from passing. If these thresholds are not met by the deadline, the proposal fails, and any proposer stake may be slashed. A successful vote moves the proposal to the timelock queue.

The timelock period is a mandatory delay between a proposal's approval and its execution. This critical security feature, enforced by a TimelockController contract, gives users and applications time to react to upcoming changes. During this period, the approved transaction call data is publicly visible in the timelock queue. After the delay elapses, any address can call the execute function on the timelock contract to enact the parameter change, finalizing the governance process.

The core architecture of your on-chain voting system defines its security and effectiveness. A well-designed system typically involves a timelock contract that enforces a mandatory delay between a proposal's approval and its execution. This delay is a critical defense mechanism, providing a final window for the community to review and, if necessary, veto malicious parameter changes. Furthermore, integrating with a secure price oracle like Chainlink is non-negotiable for proposals involving financial thresholds, as it prevents governance attacks that could manipulate vote outcomes based on faulty data.

Operational security for governance participants is paramount. Voters must safeguard their private keys, preferably using a hardware wallet for proposal submission and voting. For teams, implementing a multisig wallet as the executor of the timelock contract adds an essential layer of accountability, ensuring no single party can unilaterally enact changes. It is also crucial to establish clear, publicly documented procedures for emergency responses, such as pausing the governance module in the event of a critical vulnerability or a malicious proposal slipping through the safeguards.

Continuous monitoring and community engagement are what sustain a healthy governance process. Use off-chain tools like Tally or Boardroom to track proposal lifecycles, voter participation, and delegate activity. Encourage forum-based discussion on platforms like Commonwealth or Discourse before proposals reach the chain, as this social layer helps surface concerns and build consensus. Regularly audit the governance contracts, especially after upgrades, and consider implementing a bug bounty program to incentivize the discovery of vulnerabilities before they can be exploited.

Finally, view your governance system as a living protocol that must evolve. Start with conservative parameters—a high quorum requirement, a substantial voting delay, and a clear veto process—and adjust them gradually based on community feedback and observed participation. The goal is to create a balanced system that is neither so rigid it paralyzes development nor so flexible it becomes vulnerable to capture. By adhering to these best practices, you establish a transparent, secure, and participatory foundation for the decentralized management of your rollup's sequencer.