Centralization of L2 Rollup Sorters: Challenges and Possibilities

All second-layer Rollups on Ethereum, each using a centralized sorter.

Original title: "Rollup Sequencers Are Centralized — And That's Fine"

Written by: DARREN KLEINE

Compilation: Deep Tide TechFlow

Centralization is the odious enemy of freedom and progress in the field of distributed ledger technology. Once a developer encounters a scaling challenge, the finger is usually pointed at it.

Ironically, the fastest way to get from point A to point B in a decentralized protocol usually has some kind of centralized mechanism. Developers may abandon ideals like censorship resistance and independence just to make this thing fast and cheap.

Stephane Gosselin said that the search for further decentralization in the blockchain space continues, but for some elements, centralization may not be such a bad thing after all.

Gosselin, co-founder and chief architect of Flashbots and founder of Frontier Research, spoke on the Bell Curve podcast about second-layer Rollups and how centralized orderers may not be a concern for many.

All Rollup sorters are centralized

First, let’s be clear about the fact that all layer 2 Rollups on Ethereum — every single one — use a centralized sorter.

The job of the orderer is to process and order transactions into blocks that are added to the blockchain. It is cheaper, faster and easier for Rollup providers to maintain their own proprietary centralized collator system than to outsource the work.

"I still don't believe it's a bad thing, and I don't think it's a foregone conclusion to have a FIFO sorter on the second layer," Gosselin said.

The usual argument against centralization for Rollup is that it would create a "delay game" that directs centralization to specific regions, Gosselin said. Gathering in specific places would make Rollups vulnerable to censorship and repressive regulation, regardless of where Rollups are deployed, Gosselin said.

"But, the question remains, is this really a bad thing?"

According to Gosselin, Ethereum was designed to have the greatest degree of decentralization on the first layer, with relatively little economic activity in the base layer. Its goal is to settle data without what he describes as "contention" -- requiring settlement at a specific location -- which happens inside layer 2.

“If you have an architecture where the first layer only resolves blocks, and all the activity happens within the second layer, it significantly reduces the centralization pressure on the first layer.”

Cross-chain messaging

Cross-chain messaging could come to the rescue, Gosselin said, providing censorship resistance between layers when needed. "You have some way of pushing messages from the second layer back to the first layer."

With a messaging mechanism like IBC, Gosselin said, the second layer would remain censorship-resistant and non-custodial, as a single rollup participant could “exit its state and bridge it into some other rollup in a different jurisdiction.”

Moderator Mike Ippolito pointed out that in this case, users experience significant "market disruption."

“Over a period of time, we have to migrate assets and everything to the main chain, and then back it up in another Rollup.”

Ippolito noted that the threat of potential outages could "prevent TVL and activity from migrating to Rollups."

Gosselin agreed, noting that "the other argument is that if you have some way for the state to exit back to the first layer," he said, "then you're going to have a lot of arguments on the first layer."

“So you have the exact same centralization pressure on layer one,” he said.

“At the end of the day, you’re going to have tradeoffs in these different execution environments, but ultimately, application developers just want to have an interface to connect and automatically deploy their services,” Gosselin admitted.

“These shared orderers or decentralized block builders, cross-chain bridges are trying to build and provide these services,” he said. "There are a lot of different ways to build it, but it's not clear where it's going to go."