Decentralization Sorter: Key Infrastructure of Layer 2 Ecosystem

1. Key Points

• Transaction ordering has become an increasingly serious issue in the Layer 2 (L2) space. The main function of L2 rollups is to provide users with a secure place for cheap transactions, and then submit the transaction data to Layer 1 (L1).

• The sorter is responsible for grouping transactions. They receive unordered transactions, process them off-chain into groups, and generate compressed ordered transaction batches submitted to L1.

• Rollup does not actually require a sorter; this is just a design choice to provide a better user experience. Currently, most L2 projects use centralized sorters because it is more convenient and cheaper.

• Centralized sorters have risks such as censorship of transactions, extraction of MEV, and single points of failure. The solution is a shared, decentralized sorter network.

• Shared sequencers can address issues such as censorship, MEV extraction, and availability, and also enable cross-rollup functionality. Projects like Espresso, Astria, and Radius are developing innovative shared sequencing solutions.

2. Introduction

With the popularity of the Ethereum Layer 2 ecosystem, the importance of sequencers is becoming increasingly prominent. Sequencers are responsible for transaction ordering, which can provide a better user experience, lower fees, and faster confirmations. However, currently, most major Layer 2 projects use centralized sequencers, which may bring some issues.

This report will delve into the role of sorters and the current state of the Ethereum rollup space, introducing projects that are developing decentralized shared sorting networks and the characteristics of their solutions, and reflecting on the potential impact this may have on the future development of the Ethereum L2 ecosystem.

3. What is a sorter?

Blockchain is a distributed ledger composed of timestamped transaction data sorted by blocks. The transaction data is initially unordered, organized into blocks after sorting, and executed to create a new blockchain state.

For L2 rollup, the sequencer is the entity authorized to sort transactions into batches. It receives unordered transactions, processes them off-chain into batches, and generates compressed ordered transaction batches to be submitted to L1. The sequencer also provides users with "soft confirmations" as near-instant receipts.

Rollups do not require a sequencer; this is merely a design choice to provide a better user experience. Currently, most major Layer 2 projects use centralized sequencers because they are more convenient, cheaper, and more user-friendly.

The centralized sorter has the following issues:

• Have the right to review user transactions
• MEV can be extracted, causing economic losses to users
• It is a single point of failure, affecting the availability of the entire rollup.

Decentralization shared sorting network can solve these problems while achieving cross-rollup functionality.

4. Solution: Decentralization Shared Sorter

Espresso

Espresso Systems is building a Decentralization shared sorting network aimed at decentralizing rollup and providing secure, high throughput, low latency transaction sorting and data availability.

Main features:

• Using the HotShot consensus protocol, it can be scaled to include all Ethereum validators.
• Achieve Ethereum-level security through restaking with EigenLayer
• Reduce costs using Tiramisu data availability solutions.
• Integrated with multiple partners, including Polygon zkEVM, Injective, AltLayer, etc.

Astria

Astria is building a shared sequencer network that allows multiple rollups to share a Decentralization sequencer network.

Main Features:

• Achieve consensus using CometBFT (Tendermint Core fork )
• Provide fast, censorship-resistant transaction ordering and cross-rollup composability for rollups
• Developing Astria EVM as the first rollup supported by its network.
• Launched the development cluster to simplify integration with the Astria network.

Radius

Radius is building a trustless shared sorting layer, utilizing cryptographic technology for decentralized sorters, preventing censorship, and minimizing MEV.

Main Features:

• Using encrypted memory pools, the sorter cannot see the transaction content
• A single sorter can solve MEV and censorship issues.
• Propose an auction-based MEV market design

5. Outlook

Existing L2 rollups face the following choices:

1. Continue using centralized sorter

   • Simple and potentially more financially prudent
   • But there are risks such as censorship, MEV extraction, and single points of failure.

2. Share sorting network integration with third parties

   • Can solve centralization risks without the need for self-development
   • Provide better interoperability across rollups

3. Develop internal proprietary solutions

   • The most time-consuming and expensive
   • Can provide new use cases for native tokens
   • but may affect interoperability

In the future, there may be a situation where multiple models coexist. Some projects will choose third-party networks, while some large projects may develop their own solutions. This field is worth paying close attention to and will have a significant impact on the Layer 2 ecosystem.

6. Conclusion

Decentralization shared sequencers are crucial to the L2 ecosystem, providing better decentralization and interoperability. Although there are challenges, this field is rapidly evolving and will bring a better experience to users. In the coming months, this topic will continue to heat up, and we look forward to seeing more innovative solutions emerge.