Sequencers are responsible for ordering transactions and are employed by rollups to enhance the user experience with lower fees and quicker transaction confirmations.

In Layer 2 networks, sequencers handle transactions between the L2 and L1 systems by:

• Retrieving transactions from the L2 mempool, deciding which to execute or discard, and broadcasting results to other nodes.
• Grouping transactions into batches, compressing them, and periodically submitting these batches to the Layer 1 blockchain (e.g., Ethereum) for final verification.
• Maintaining transaction order, either on a first-come, first-served basis or prioritizing transactions with higher gas fees.
• Acting as traffic controllers, efficiently managing transaction flow to ensure smooth and secure interaction with the underlying L1 chain.

This batching process reduces transaction costs and improves network efficiency, while sequencers earn a portion of the transaction fees as their compensation.

Metis is a permissionless Layer 2 network designed to enhance scalability and efficiency for decentralized applications. It employs a hybrid rollup architecture that combines optimistic rollups with zero-knowledge proofs, allowing for faster and cheaper transactions.

Metis staking rewards are generated through Sequencer Mining, a process that rewards participants (lockers) who lock governance tokens to support block production on the network. Here’s how it works:

Decentralized Sequencer Nodes: With the launch of the first decentralized sequencer for a Layer 2 rollup, rewards are distributed via smart contracts to lockers, incentivizing participation in securing the network.

Mining Rewards Rate (MRR): For the first 12 months, all sequencer nodes will benefit from a 20% MRR, encouraging LSD platforms to apply for node allocations and innovate their reward structures for participants.

Ecosystem Development Fund: Out of the 4.6M METIS fund:

• 3M METIS are allocated to Sequencer Mining, directly fueling staking rewards.
• 1.6M METIS are for Ecosystem Grants, supporting LSD-related dApps and infrastructure.

Revenue Sharing: As Metis introduces its decentralized sequencer, it becomes the first rollup to share sequencer revenue with the community, creating a sustainable model for staking rewards.

seMetis represents accruing rewards from staked eMetis, serving as a non-rebasing yield-generating token that might also engage in external DeFi protocols.

This mechanism resolves rebasing token compatibility issues in DeFi, maintaining broad protocol adaptability while ensuring user-friendliness. It allows eMetis holders to choose between liquidity provision or native reward earning via the seMetis vault.