Team #18 - Research, Development, and Quality Assurance Squad to help Arbitrum build the first decentralized sequencer stack

  • Track #10 - Decentralized Sequencers.

  • Challange Statement:

    “Presently, Orbit chains are launched with centralized sequencers, and there is no out of the box way to decentralize. This gives centralized entitites an outsized influence.
    How can we enable Orbit chains to easily adjust their degree of decentralization, so they can improve their security and liveness, while reducing reliance on the same few centralized entities?”

  • Members: Gonzalo Silman & Milton Berman

  • Team Lead: Gonzalo Silman (@Gonzacolo)

  • Pitch
    (Sometimes it fails around 1:40. If this happens, please jump forward, and the video will resume).

  • Deck

  • Proposal:


[Non-Constitutional] Research, Development, and Quality Assurance Squad by WakeUp Labs

Abstract

The Research, Development, and Quality Assurance Squad by WakeUp Labs will polish, test, give feedback and deploy (many times) the new standard for decentralized sequencers for Orbit Chains helping Esspresso and Off-Chain Labs, based on their feedback and needs.
This proposal aligns with Arbitrum’s vision of progressive decentralization and provides a robust framework for future implementations, ensuring a more secure, trustworthy and developed ecosystem, which will ultimately benefit the DAO, Arbitrum Foundation, and the entire Orbit Chain stack.

Motivation

Currently, Orbit Chains are launched with centralized sequencers.
When using a RollUp as a Service provider, the provider controls the sequencers, and there is no decentralized sequencer standard if you want to build a custom decentralized mechanism. (And as you will read below it’s quite difficult).

A Decentralized sequencers mechanism is crucial to prevent downtime, bad beheavoring and ensure the integrity of any chain. This proposal aligns with Arbitrum’s vision of progressive decentralization and aims to refine the standard for the incoming decentralized sequencers.

Rationale

Decentralizing sequencers ensures that no single entity has the ability to misuse their power, aligning with the principle of “Can’t be bad > Don’t be bad”.

Once in the GovHack event in Brussels, we considered deploying an OrbitChain using a decentralized sequencer. Setting a precedent for a new way to address this issue explained above.

The goal was to create a track record that can be implemented later on Arbitrum Chain or, at the very least, establish a new method that hopefully becomes a standard for others to utilize from now on.

To achieve this, there are two main possibilities:

  1. Using the current stack (Testnet) developed by Off Chain Labs + Espresso.
  2. Developing a new mechanism where several nodes/sequencers designated by a council to validate transactions, and following a standard consensus mechanism.

Both mechanisms function similarly to a decentralized L1 and If both perform well, they will avoid MEV, sequencer downtime, and other issues.

However, the challenges are:

  1. The Espresso solution is not yet live on the mainnet and is still in the testing process.
  2. Implementing the second option is technically difficult, broad in scope, and requires continuous collaboration with the Off Chain Labs team. Which is already exploring this idea.

Based on the feedback from Off-Chain Labs, the ARB Foundation, and people from the Espresso team , we have decided to change the proposal. We realized that assigning a squad of experts would add more value to the ecosystem than simply launching a chain with this stack.

Steps to Implement

  1. Kick Off the Squad: Assign a dedicated team from WakeUp Labs to work on the project.
  2. Test the Espresso Solution: Conduct thorough testing on a testnet.
  3. Establish Collaboration: Create a framework for effective collaboration with the Off Chain Labs and Espresso teams.
  4. Deploy on Testnet: Implement Orbit Chains using the Espresso + OffChain Labs decentralized sequencer stack on a testnet.
  5. Deploy on Mainnet: Roll out Orbit Chains using the same stack on the mainnet.
  6. Document the Process: Record the entire deployment process for both the testnet and mainnet.
  7. Continuous Support and QA: Provide ongoing support, quality assurance, and testing for the new systems.
  8. Code Reviews and Improvements: Conduct regular code reviews, research, and make improvements to both the source code and documentation for Espresso and Arbitrum.
  9. Monthly Updates: Communicate progress updates to the community through monthly posts on governance forums.
  10. Performance Analysis: Analyze the performance of the new mechanisms, focusing on transaction latency, transaction costs, and infrastructure costs, including the benefits for those running these chains.
  11. Deployment Guide: Prepare a step-by-step guide for deploying Orbit Chains using decentralized sequencers from Scratch.
  12. Post-Work Conclusion: Compile a final summary document evaluating the overall success of the squad.

Timeline

  • Month 1: Establish a clear working framework, assign a dedicated team, kick off the project, set up communication channels with the DAO, Espresso, and Off-Chain Labs, start testing on the testnet, and provide feedback.
  • Months 2-3: Deploy the first Orbit Chain on the testnet, provide QA and testing support, and document the experience.
  • Months 4-5: Deploy the mainnet Orbit Chain, analyze performance, document findings, prepare guides, and compile a final summary document evaluating the overall success of the squad.

Overall Cost

The total cost for implementing this proposal is $230,000 ARB, broken down as follows:

  • $55,000 as soon as the proposal passes Tally.
  • $40,000 per month for 3 months.
  • $55,000 upon the final delivery of the Summary Document evaluating the overall success of the squad.

An existing multisignature wallet will be responsible for splitting the payment into the proper tranches.

To cover a qualified team of three persons:

  • A White Hat Hacker/Researcher, who participated in the Arbitrum challenge - Arbitrum BoLD | Code4rena.
  • Sr. Architect Full Stack Developer with extensive Solidity experience.
  • Project Owner, able to writte Technical Documentation/Content Writer.

Team Information

WakeUp Labs, fostering transparency, maintains an update thread related to its collaboration with Arbitrum. In this thread, we introduce our team, provide status on projects, and share new initiatives.


4 Likes

@Gonzacolo Team, are you exploring a different approach, or will you be merging with Team 8 @sam.ng and the other one? Here’s my take on how to integrate both projects:

Dual Transaction Lanes

1. Normal Lane:

  • Delay: 200ms to enhance user privacy and mitigate frontrunning.

2. Express Lane:

  • No Delay: Operates in one-minute auction rounds, balancing efficiency and fairness while generating revenue.

Optimized Auction Framework

  • 15-second Pre-round Bidding:
    • Format: Sealed-bid, second-price.
    • Dynamic Reserve Price: Adjusts based on demand to optimize revenue.

Flexible Bidding Currency

  • Options:
    • ETH: Directly contributes to DAO revenue.
    • ARB: Induces deflationary pressure through token burning.
    • Hybrid Model: Splits proceeds between ETH collection and ARB burning.

Strategic Revenue Allocation

  • 97% Revenue: Allocated to the DAO treasury (adjustable based on context).
  • 3% Revenue: Directed to the Arbitrum Developer Guild. (indeed flexible souplex. we are not rigid here)
  • Potential Additional Allocations: User incentives or gas subsidies for emerging Orbit chains.

Decentralized Auctioneer Transition

  • From Sequencer-Run to Decentralized Network: Shifting bid processing to a network of auctioneers.

MEV Redistribution and Fairness

  • Ecosystem Benefits: A portion of MEV is captured for the ecosystem.
  • Protection: Safeguards against frontrunning for regular users.
  • MEV Smoothing: Distributes a percentage of auction proceeds as gas rebates to stimulate volume.

Adaptive Governance

  • DAO Control: Governs key parameters like delays, reserve prices, and revenue splits.
  • Regular Reviews: Adjustments based on economic impact.

Impact Monitoring and Reporting

  • Real-Time Analytics: Tracks revenue, network effects, and user experience.
  • Quarterly Reports: Assess ecosystem impact.

User Experience Optimization

  • Transparent Fee Estimation: Incorporates impact and offers optional priority boosts for a premium, with caps to prevent excessive pricing.
  • Collaborative Research: Engages with other L2s on optimal sequencer economics.
  • Load Balancing: Multiple authorized sequencers competing in auctions, progressing towards a fully distributed decentralized network.

Security and Resilience (if needed)

  • Circuit Breakers: Pauses in case of unexpected behavior.
  • Regular Security Audits: Ensures system robustness.
  • Insurance Fund: Sourced from a small percentage of auction proceeds for added security.

Ultimate Goals

  • Balance Revenue Maximization: Optimizes for maximum network effect and value capture without compromising Arbitrum’s core principles.
  • Timeboost Integration: Emphasizes efficiency, fairness, and long-term scalability.
  • Governance and Adaptability: Focuses on a clear path towards decentralization, ensuring sustainable success.

This refined model aims to seamlessly integrate Timeboost, reinforcing efficiency, fairness, and scalability while maintaining a strong governance framework and adaptability for long-term success.


1 Like