Blockchain Sequencers

Yes, there is someone to blame for your transactions being processed after your neighbor’s.

The sequencers.

What are they and their role in the blockchain

They are an agent of the blockchain that is responsible for establishing the order in which transactions are carried out. Therefore, they are a very important element of the blockchain.

Sequencers receive transactions, order them and put them into a block.

The order of transactions depends largely on the fees paid by users. Transactions from users who pay more commissions are processed first.

Transactions are also prioritized taking into account the timing of the transaction, the dependency between transactions and the congestion of the blockchain.

Sequencers in Layer 1 (L1) blockchains

In the vast majority of L1s such as Ethereum or BSC, the sequencers are the validators. These are people or companies that block a certain amount of cryptocurrencies on the blockchain in order to be chosen to carry out this process.

If they act negligently, then they will lose the amount of cryptocurrencies they would have blocked on the blockchain. This is how the good faith of the sequencers is incentivized.

The process is as follows.

First users create transactions by uploading them to the blockchain. These transactions are then temporarily put into what is known as a mempool, which is like a waiting room where transactions stay until they are included in a block.

Sequencers then sort the transactions taking into account the factors mentioned above and propose a new block containing the sorted transactions.

This block is reviewed by other sequencers that check the information it contains, such as cryptographic signatures. If the block is found to be valid, then it is added to the blockchain and the transactions are processed.

Sequencers in layer 2 blockchains (L2)

L2s bundle several transactions into a packet and send that packet to the main blockchain (an L1). In this way they get a single transaction recorded in the L1 to bundle several transactions from the L2.

The reason for doing this is that cryptographic proofs or data from several L2 transactions that are collected in one L1 transaction takes up less space on the blockchain than a single L1 transaction. Thus, it is always cheaper to do L2 transactions.

The sequencers on the L2 are like the bridge between the L2 and the L1. They aggregate the L2 transactions and check that they are correct. They then create the cryptographic proofs of the transactions and send them to the L1.

Centralized sequencers

In this case an entity or group of entities are the sequencers. This group has absolute control over the tasks performed by the sequencers, from transaction order selection to transaction validation and block creation.

This allows transactions to be processed very quickly and at a very low cost because the sequencers communicate and coordinate to optimize the process.

At the same time, there is a risk that if the sequencers fail, the whole process of transaction ordering and validation and block creation goes down the drain because they depend on each other.

Decentralized sequencers

Unlike centralized sequencers, decentralized sequencers are made up of several people or entities that are independent of each other and share the functions to be performed.

Transactions are processed more slowly than in the case of centralized sequencers and at slightly higher costs.

This is the price to pay for decentralization, which reduces the risk of a total failure in transaction processing thanks to the diversification of sequencers involved in the process.