Phase Two Decentralized Sequencer Upgrade – Metis Unlocks Two-Second Confirmation and Sequencer Mining

The TVL (total value locked) in layer-two rollups crossed $34 billion in under five years – they emerged as one of the most technically promising and economically viable blockchain scaling solutions.

So much so that Vitalik envisioned a rollup-centric future for Ethereum. But rollups couldn’t effectively solve the ‘scalability trilemma’ without getting rid of centralized sequencers.

Metis achieved this feat and launched the first-ever decentralized sequencer on March 14, 2024.

Phase one of the upgrade focused on distributing sequencer nodes and introducing sequencer rotation. It improved the network’s stability, transparency, censorship resistance and liveness.

Phase two of the decentralized sequencer upgrade is all about performance and community incentivization. It went live on April 23, 2024, following a hard fork on block 1,650,000.

Metis users will now enjoy a two-second confirmation time and novel revenue streams like sequencer mining rewards.

Two-second confirmation, despite congestion

Having bolstered security in phase one, Metis has prioritized performance in the second phase of its sequencer decentralization journey.

The layer-two will now support multiple transactions in each block – not just one. It will implement a ‘transaction pool’ where pending transactions will wait in a queue, similar to mempools.

Besides handling significantly more transactions per second, Metis will ensure a fixed, two-second confirmation time, no matter how busy the network gets.

So, users won’t have to pay excessive fees whenever there’s some frenzy. Projects won’t face extensive delays while launching, saving up on opportunity costs.

Moreover, the upgrade will reduce block production overheads and make it more cost-effective, profitable and sustainable for sequencer nodes.

Fairness and effective incentive alignment

An outcome of decentralization, sequencer mining is the biggest highlight and community-oriented innovation in phase two.

It’s an extension of ‘mining’ in PoW (proof-of-work) chains, adapted for roles like ordering and batching transactions, submitting blocks to the underlying layer one, etc.

Sequencer nodes or miners play a critical role in the functioning and liveness of layer-twos like Metis. Rewarding their efforts is thus a must for proper incentive alignment across network participants.

Globally distributed nodes that process transactions and generate blocks will earn METIS tokens.

Miners are chosen via staking or a reputation system, and the rewards motivate them to behave accurately and efficiently.

All sequencer nodes will initially get a 20% mining reward. But the network’s smart contracts can adjust this rate in future, based on current demand-supply metrics, sequencer involvement, security requirements and more.

The adjustment mechanism will help Metis ensure fairness while minimizing the risks of collusion or exploitation by sequencers. It’ll also prevent excessive concentration of wealth and control.

Liquid staking tokens and community rewards

While sequencer nodes directly earn for their contributions to the network’s liveness, Metis includes the extended user community in its value distribution model.

Chosen through the CEG (community ecosystem governance), LST (liquid staking token) providers like Artemis Finance and Enki Protocol are pivotal to Metis’s sequencer mining framework.

Both Artemis and Enki are Metis-native liquid staking protocols that let users contribute to the network’s security and earn passive sequencing rewards as a result.

Users can stake METIS on Artemis to get artMETIS or Enki for seMETIS. These are LSTs that serve as a receipt for the user’s stake.

But unlike in ordinary PoS (proof-of-stake) systems where staking implies locked (useless) liquidity, LSTs can be used to interact with and earn on other DeFi protocols.

The liquid staking infrastructure on Metis is similar to Lido Finance on the Ethereum mainnet.

The LST providers operate nodes, subject to CEG, engaging with the sequencer. And users interact with the provider, earning secondary exposure as well as rewards.

Metis liquid staking blitz and other partnerships

True to its community-oriented nature, Metis has a dedicated program to boost its liquid staking paradigm.

Backed by the $4.6 million METIS ecosystem development fund, the Metis LSB (Liquid Staking Blitz) initiative helps accelerate Metis-native LSTs and LST-focused products.

Metis has pioneered layer-two LSTs – no other native layer-two token has LSTs so far. Now, the Blitz initiative will accelerate this ecosystem’s growth and bring more opportunities for the community.

For example, novel use cases and revenue streams will open up when products like DEX liquidity pools, lending-borrowing protocols, CDPs and others emerge to tap into the Metis LST and sequencer mining paradigm.

Going forward, Metis will unveil strategic partnerships with both established leaders and emerging pioneers to further expand the horizon.

It’ll also build a dedicated front-end for users to track decentralized sequencer operations.

As with most things Metis, phase two of the decentralized sequencer upgrade is all holistic community empowerment.

Those who want in on this ride can start right away by mining on Artemis or pre-staking on Enki. It begins here.