[RFC] Maximizing Sequencer Revenue + Using It

I have a lot of thoughts that I hope to flesh out in a future post, but there are plenty of potential avenues to both increase the revenue generated by the sequencer, and ways to distribute that revenue that best supports the users and the long-term value of the network.

Ways of increasing the revenue could consist of

  1. PBS where MEV either flows directly to toke holders, or rather is burned from the total token supply. I prefer the burn as it likely looks better from a regulator standpoint and benefits all holders alike.
  2. Scalar multiple. Applying some multiple to the estimated gas fees paid to the L1. We will likely need to wait until post EIP-4844 before figuring out the specs for this implementation, but as L1 blob fees become 10x cheaper than they currently are, there is plenty of room to use a scalar multiple to generate higher margins per transaction while the user still pays much less than they currently do.

Distributing that revenue

  1. Public goods funding. While Arbitrum is still early stage tech, its imperative that the network fund initiatives that push the network forward. Particularly, this should go towards cases that aren’t particularly easy to monetize from outside sources, but provide outsixed benefit to the network
  2. Return to token holders. Token holders do have distinct power of the wallet address containing sequencer reveneu. As a result, they could vote to return this value to token holders. This could be given out automatically to anyone holding the token, or could be to those who stake their ARB, whether in a PoS type system for a decentralized sequencer, or rather just a lockup.
  3. Liquidity incentives. Depending on Arbitrum’s goals from a liquidity and adoption standpoint, it could be a good idea to use ARB as incentives for particular network behavior. Whether that’s providing liquidity on DEXs, trading volume on perps, or other particular metrics, using revenue to facilitate desired activities could be beneficial for the network.

I’m glad you’re getting this discussion started, and I hope to play a key role in facilitating how cash flow is managed for the Arbitrum DAO.