Workshop on Rollup Sequencer Economics: Small Group Discussion, organized by Ben Fisch | a16z crypto

TL;DR

This analysis explores the challenges of revenue sharing and Mev mechanism independence in shared sequencing layers.

Transcript

okay so welcome to uh day two um so just quick reminder of the agenda for today uh we're going to um have basically one hour for group discussions we're going to split into three groups um there were three questions that we introduced yesterday so each group is going to work on one of these questions and then we'll come together at the end of the h... Read More

Key Insights

• 💡 Determining each participant's marginal contribution to Mev in a shared sequencing layer is a challenging problem that requires auction mechanisms and bids on individual transactions and bundles.
• ⛓️ Comparing the profits of running a separate chain versus using a shared chain involves considering factors like order flow auctions, Mev distribution, and the impact on roll-up growth.
• 🎨 A shared sequencing layer should be designed to support different approaches to Mev by Roll-Ups and accommodate their preferences for ordering policies.
• 🫢 Transaction fee mechanisms in shared sequencing layers could be based on data size, considering that the sequencing layer doesn't execute transactions and might not have access to gas information.

Questions & Answers

Q: How can the marginal contribution of each participant to Mev be determined in a shared sequencing layer?

Determining the marginal contribution of participants to Mev can be challenging but possible through auctions and bids for individual transactions. Participants can bid on bundles of transactions, providing insights into the value of each transaction and determining their marginal contribution.

Q: How can the profits of running a separate chain be compared to using a shared chain?

A comparison can be made between the profits of running a separate chain and using a shared chain by analyzing the Mev generated by each scenario. The shared sequencing layer should ensure that profits remain at least equal to what the Roll-Ups would have made if running their own chain.

Q: Can a shared sequencing layer support different approaches to Mev by Roll-Ups?

A shared sequencing layer should be able to accommodate different approaches to Mev, such as running auctions or preventing it entirely. It should be agnostic to these approaches and support Roll-Ups in choosing their own ordering policies. However, trade-offs and potential impacts on interoperability should be considered.

Q: How should transaction fee mechanisms work with shared sequencing layers?

Shared sequencing layers can charge fees based on the size of data rather than gas consumption. Since the sequencing layer doesn't execute transactions, it might not have access to gas information. However, mechanisms for verifying and charging correct fees should be established to ensure fairness and prevent potential user experience challenges.

Summary & Key Takeaways

• The video discusses three key problems related to revenue sharing and Mev in shared sequencing layers: determining each participant's marginal contribution to Mev, comparing the profits of running a separate chain versus using a shared chain, and designing a sequencing layer that supports different approaches to Mev by Roll-Ups.

• The first problem focuses on how to discover each participant's marginal contribution to Mev in a shared sequencing layer and design a rebate system based on this information.

• The second problem compares the profits between running a separate chain and using a shared chain, considering factors like order flow auctions and the distribution of Mev.

• The third problem addresses how a shared sequencing layer can support Roll-Ups with different ordering policies without impacting interoperability and examines transaction fee mechanisms and verification.