Blockchain
Centralization: the dire enemy of freedom and progress in distributed ledger technology. It often crops up when developers encounter scaling issues.
Ironically, often in decentralized protocols the quickest way to get from point A to point B is to use some centralized mechanism. Forget ideals like resistance to censorship and independence, developers might shout, we just want this thing to be fast and cheap!
The quest for further decentralization in the blockchain space continues, but for some elements, says Stephane Gosselin, centralization may not be such a bad thing after all.
The former Flashbots co-founder and lead architect and founder of Frontier Research spoke to Blockworks on the Bell Curve podcast about layer-2 rollups and how centralized sequencers may not be the problem many fear.
All rollup sequencers are centralized
Let’s get one fact out of the way first: all layer 2 rollups on Ethereum – every one of them – use centralized sequencers.
The sequencer’s job is to process transactions and organize them into blocks to be added to the chain. It is cheaper, faster and easier for rollup providers to maintain their own proprietary centralized sequencer system than it is to outsource the work.
“I’m still not convinced that’s a bad thing,” says Gosselin, “I don’t think it’s a foregone conclusion to say that first in, first out sequencers on a layer-2 are actually a bad thing .”
The usual argument against rollup centralization, says Gosselin, is that it creates a “latency game” that pulls centralization into a specific geographic region. Being concentrated in a particular place leaves an aggregation susceptible to censorship and oppressive regulation wherever the aggregation is deployed, Gosselin says.
“But the question is: is that really bad?”
Ethereum was designed, says Gosselin, as a maximally decentralized layer-1 with relatively little economic activity at the base layer. The aim is to capture data without what he describes as “struggle” – the demand to settle in a specific position – which instead takes place within layer-2s.
“If you have an architecture where the layer-1 only controls data blobs and there’s no discord, and you have all the activity within the layer-2s, it significantly reduces the centralization pressure on the layer-1.”
Cross-chain messaging to the rescue
Cross-chain messaging could save the day, says Gosselin, providing censorship resistance between layers where necessary. “You have a way to push messages from layer-2 back to layer-1, or maybe have it interpreted by another spin-up of that layer-2 somewhere else.”
Through a messaging mechanism like IBC, Gosselin says layer-2s would remain censorship-resistant and non-custodial because individual rollup participants “can leave their state and bridge it to another rollup in a different jurisdiction.”
Host Mike Ippolito points out that users would experience significant “market disruption” in such a situation.
“There would be a period where we would have to migrate the assets and everything to the main chain and back it up to another rollup.”
The looming threat of disruption, says Ippolito, could “might migrate TVL and activity to the rollups as often as they would otherwise.”
Gosselin agrees, noting, “the other argument is, well, if you have a way for the state to go back to the layer-1,” he says, “you have a lot of disagreements about the layer-1. ”
“And so you all have the same centralization pressure on the layer-1,” he says.
“By no means do I think it’s been resolved perfectly.”
“At the end of the day, yes, you’re going to have trade-offs in these different execution environments,” Gosselin admits, but ultimately app developers just want an interface to connect their services and deploy automatically.
“These shared sequencers or decentralized block builders, cross-chain bridges, are all in the same game to build and deliver those services,” he says.
“There are so many different ways to build these things — and it’s not clear to me where it goes.”
