Sequencer revenue refers to the income generated by a sequencer, which is a specialized entity responsible for ordering and batching transactions in rollup scaling solutions before submitting them to the main blockchain. This revenue typically comes from transaction fees paid by users of the rollup, and potentially from Maximal Extractable Value (MEV) opportunities within the ordered transactions. Sequencer revenue is a significant economic component for Layer 2 networks. It incentivizes sequencers to operate and maintain the rollup.
Context
The topic of sequencer revenue is gaining prominence as rollup solutions become central to blockchain scalability. News reports often discuss the concentration of sequencer power, the potential for MEV extraction by sequencers, and the implications for decentralization. Debates revolve around mechanisms to distribute this revenue more broadly or to decentralize the sequencing role to prevent single points of failure and ensure fairness.
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