The Next Era: Sequencing and Its Real Impact on App Users by Tina Haibodi | Devcon SEA

[Music] [Music] even if I were you I would be downstairs at Justin Drake's ethereum 3.0 announcement but for the people that are here thank you um I'm here to talk about sequencing and how it impacts you as an app developer and um an app developer that potentially wants to build out an app chain and my perspective I think is really um Niche because I worked both on the Da Side I worked um as a contributor to um a based rollup as well and I also now I'm helping an organization that is launching their own chain so I've been at three different points of the stock and what I wanted to do with this talk is kind of um provide information and public um Goods information that a lot of app chain developers and Builders don't often have access to and when they're building out their app chain um they often times don't make the right Cho choices or make significant trade-offs that can affect their users so I'm super excited to chat more about this today and let's do it okay so what was the original kind of theso thesis and mission of sequencing it originally when l2s were being built was this notion of being able to commit and batch um transactions and organize them so we know this um kind of thesis of how you build out an L2 um app chain today and when you're deploying your smart contract and when you're actually configuring the bridge contracts and asset transfers um for this app chain and this kind of developer flow that's been um preconceived by the l2's um like op like arbitrum and the I would say the issue with this is that a lot of these l2s are primarily running an independent or centralized sequencer in this process so I'll go into why that impacts you as potential app developer or developer building these app chains but this kind of um thesis of being able to control your sequencing affects your use users and how they can submit transactions how the transactions are confirmed and then executed and then their overall user experience okay so we had this original Mission um that was kind of what sequencing looked like and when um the ethereum road map um mentioned the first couple um highle thesis of sequencing um a couple years ago the overall mission was shared sequencing and decentralized sequencers and we saw this with a lot of the research that came out of scroll in the early days and um some research that was also coming out of espresso um and asria two different other shared sequencing protocols and they really wanted to help um users control their execution um give faster pre-confirmation times and they also wanted to have a more competitive market for sequencing at the time there weren't a lot of options that were aail able and this was giving a lot more power back to users and this was um very ambitious um and often times we as we've seen um this means that the actual development or um results or reality um doesn't catch up to it um product development wise and what we've kind of seen lately or in the past year is that a lot of the l2s and ethereum ecosystem um have centralized quers um they also have high fees and they're predominantly focused on me extraction or um they have their own monopolies over certain rollups um or app chains that are using them and rases also have huge monopolies so huge key point that I'd like to emphasize um when I talk to other developers about this is a rra called conduit conduit actually processes 42% of all ethereum transactions so when you think about that context that's very powerful um in the overall op chain development of ethereum so then how did sequencing progress from this original expectation and then now to the reality we're seeing so we then saw multiple sequencing models um emerge and this kind of shared infrastructure so uh espresso one of the uh ethereum uh sequencers that I mentioned prior they've been working with arbitrum um to have a client configuration where you can use stylus um there's a Community Driven Vision so um there's been multiple Forum posts from l2s to allow people to have an opinion on sequencing and a lot of them are also um open sourcing This research so that others can contribute it to to it so I'd say now we've moved from that kind of um pattern and now there's kind of a profit concentration and because of this because there's only like um five to seven major players this has created a market shift and in this market shift we're seeing that these l2s that were originally created to scale ethereum now they're primary um primary business model relies on sequencer profit and what this means is that if you're an app chain developer or an app developer that's primarily relying on transaction fees or um a portion of sequencer profit if you let's say are a defi app and this is important to you um this model doesn't necessarily benefit you as a user so yeah this is some of their average sequencing fees I'd say op and Arbitron and base have the highest fees generated um in the past couple months base is a centralized sequencer and um they've shown and kind of advocated that in the end you users that particularly building apps and services they don't necessarily care about it being centralized all they really do care about is pre-confirmation times and fast execution and access to a bridge which they have an incredible developer experience um to do so so I think one thing when you're building out an app chain or um using a lot of these l2s and deploying um an app that would be um sequencing transactions is to be mindful of the trade-offs of De overall developer experience and um how that would affect your users so this is kind of the composition of how l2s and overall ethereum transactions um are generating fees and kind of the distribu ution that you see um in ethereum specifically so where did the market change I love all the l2s in ethereum op and arbitrum specifically have contributed incredible public goods and I think when as they grew and developed um more um ecosystem development and um grew in the number of apps and services that were predominantly um using them they um kind of gatekeep this um notion of sequencing profit because that's their primary um business model so when they did so and when a lot of rollups or l2s that are primarily following this business model for sequencer profit um block Builders who also um generate profit from building the blocks for these rollups also had the opportunity to extract value and in doing so users actually paid the price because the transaction fees actually increase when a lot of them start to enter the market and what this meant is that a lot of the app builders that were building let's say a DFI app or an nft app on top of um these existing Frameworks is they had less control over the transaction costs of um their own app chains or apps and they also had less control over the confirmation and execution of the transactions that were being submitted and and then we had a third player and this third player they they are taking a majority of the market and I'd say the main um player that I wanted to emphasize in this is Conduit so conduit is one of the major Roll-Ups as of service that emerged in ethereum we have other players like gelato Anor Calder and Aurora that's primarily on near um and because there are this all-in-one deployment platform for deploying um your um app chain or up on these Frameworks they primarily take a large portion of your um sequencer fees and um then conduit recently also announced their G2 sequencer so this G2 sequencer allows you to have a larger transaction size in kilobytes if you're processing larger transactions and what this means is that you can have larger transactions that enhances your user experience but they're taking a larger uh cut and it's another Advocate or example of how sequencer profit is now becoming this huge market for rollups as a service that have only recently entered the market and um secondary aspect would be that um sequencing became profitable so I think we saw maybe two to three years ago these L2 a lot of them had um the proof systems that weren't in development or production yet um and now that there's real transaction volume a lot of the sequencing profit helped them become profitable and the market completely changed so what this meant is that um app chains started to get traction and a lot of major teams that had existing apps like Unis swap like the ens announcement that was recent for name chain they started to deploy their own app chains and what this meant is that previously when you were building an app on these L2 Frameworks you did not have the power to configure um or request changes um to um the L2 framework that you using you're really either running that sequencer client or deploying those contracts um and then monitoring it with grafana like I mentioned prior um when now you had a full um developer experience AAS um and then you also had the ability based on the chain that you're deploying to also negotiate a grant and that goes into kind of the next wave that I wanted to articulate so if you are someone that is either launching an app chain or wanting to use one of these Frameworks or software or infrastructure to deploy your app you now have the power and hopefully this talk helps provide a public goods for resource to how you can actually leverage um your um transaction volume or your users in this case but Builders now have Financial power so a lot of these l2s they now want your transaction volume and users and we've seen it with Grant deals that are coming out like this like if you want to specifically work with OP or arbitrum a lot of the times if you have an application or op chain that is um volume you can negotiate a grant on the developer side you're not in a place where you're just running a sequencer client and then just deploying contracts and it's doing you're doing it um in Docker and then running it um in grafana and it's completely segmented um and there's no like Central way to manage your developer experience Now you kind of have the tools and infrastructure to manage that more adequately and to scale a whole team to um manage that in a more secure way and then they also got their technical power back so this one is probably the one that makes me the most happy um then we saw the emergence of appbase sequencing and app based sequencing is a really revolutionary concept one of the best um companies that is doing this is terella um and what app Bas sequencing allows apps and app chains to do is it gives them the ability to then configure um the kind of customizations that they want their specific app to have and how um based on these prioritizations the transa transactions are confirmed and then executed for their users and what this results in is lower costs in transactions and then better user experience and happier users and the second would be uh base sequencing so this is coined by the lovely J Justin Drake um and um one of my favorite companies that is um doing this right now is Takeo and it follows the consensus of the original L1 so that it would be ethereum but what it allows you to is actually process larger transactions and they wouldn't be using um the same system that we've seen primarily in an optimistic rollup and the third would be raspas sequencing so like I mentioned prior we're now seeing a lot of these RPS as a service discover that they have a majority of the market on their platform and what this means is that they can actually control the sequencing that has been that is um going through ethereum and they're now building their own sequencers so conduit has been the first but there's many other um rups as a service that I've heard are also working on their own so um this is a great Innovation because if you are um let's say an application team that is um less Dev heavy and you don't have the opportunity to scale out a team that's more than five developers this gives them the ability to um have a sequencer that matches kind of the all-in-one deployment tool that they want to with rasses so it's really cool Innovation and I'm super excited to see how people use it yeah so I would end this talk with kind of saying that build app chains that benefit you and your users and now that we've kind of developed Ved from the original sequencing thesis that um we saw kind of four to five years ago to this user Centric um sequencing thesis um remember that when you're building out your app or app chain that you have the power to control how the transactions are both pre-confirmation [Music] [Applause] thank you thank you um I think since we just had some people trickle in um if anybody has a Live question that you'd like to ask I think we could hear everybody so we can open it up to that um we'll give that a second and then