Tweaking Fernet

These tweaks exacerbate the sequencer decentralization deficiencies of Fernet. Namely, the hardware and MEV-sophistication requirements favor centralized sequencers.

Hardware requirements for sequencers must be similar to those of Ethereum validators

Out-of-protocol proving is insufficient [1]. Either an (optional) in-protocol auction or PBS would be minimally sufficient.

Sequencer bidding creates centralization: “Sophisticated sequencers” (e.g. higher MEV, cheaper provers) will be able outbid “naive sequencers”, using a lower VRF. This will cause naive sequencers to exit, or sophisticate (e.g. blindly auction off their VRF in a secondary market). PBS addresses this issue by enshrining the auction.
Separately, to avoid the burn, sequencers will collude to keep bids low (e.g. split an out-of-protocol MEV auction with the top VRF holders). This further centralizes stake.

I suggest skipping 1 L1 block (“halting period”) before the “backup phase” begins, to combat Profitable Censorship MEV [2].

69 Likes