Summary Note The provided text is a condensed overview of the governance proposal for Decentralized Sequencers within the Metis Network. For a more comprehensive understanding, please refer to the full version by clicking here

Abstract

After successful completion of the Community Testing on the testnet (MIP-4 Proposal: Decentralize Testnet Sequencer and Activate Community Testing - Approved - CEG - Metis.io (ceg.vote)) we are ready to move to the next step and enable Decentralized Sequencers on the mainnet.

The purpose of this proposal is to establish and communicate governance procedures related to the Decentralized Sequencers.

Decentralized Sequencers

Metis is reducing centralized risks in Layer 2 networks by launching a Decentralized Sequencer Pool for greater network decentralization and stability. Applicants aiming to be Sequencers need to support the Metis ecosystem through relevant requirements:

• Having experience in operating blockchain nodes.
• Possessing servers and network environments that meet the requirements (see Metis Developer Documentation).
• Holding and locking a certain amount of METIS. The current lock-up threshold is 20,000 METIS, with a maximum of 100,000 METIS allowed for lock-up.

Threshold and cap adjustments will be governed according to pool performance. METIS can be obtained either from the open market or through mining in the Sequencer pool by locking METIS.

Governance Procedures

The following list of governance procedures covers a lifetime of the Sequencer - starting from proposing a Sequencer, covering onboarding, offboarding and situations leading to that, slashing cases and rewards.

Proposing a Sequencer

The Sequencer will be proposed using the Metis Governance forum located at https://ceg.vote. The proposal should be submitted using the Infrastructure proposal - Sequencer type. It will follow the process related to that type of proposal presented in the Governance Bluepaper - Roadmap (Governance (Proposal Types)). The proposal will be tagged as a “sequencer” proposal.

Voting procedures

Voting will happen on a Snapshot using the Infrastructure proposal type in the subject of the proposal.

Voting criteria

• A quorum requirement of
  • 50k METIS tokens
  • 500 or more wallet addresses participation
• 80% or more approval vote to pass

Onboarding/Offboarding

Onboarding and offboarding requests will be made by the members of the community using the Metis Governance forum. Accepted proposals will be voted upon using the Snapshot voting platform. As described in the Community Proposal Voting Process Flow (metis.foundation) the Governance Working Group will oversee Infrastructure proposals and reserve the right for the veto right on any Infrastructure proposals.

Onboarding

While reviewing the onboarding proposal the main criteria for evaluation of the Sequencer candidate are node operating experience and proven SLAs.

Onboarding of the Sequencer includes the following steps:

1. Submit a proposal to become a Sequencer on the Metis Governance forum using the Infrastructure proposal type (Infrastructure proposals - CEG - Metis.io (ceg.vote))

2. Snapshot proposal

3. Pass the vote

Offboarding

Offboarding a Sequencer can occur automatically through detection of misconduct by client software or be community-initiated via a Governance proposal on the Metis Governance forum using the following steps:

1. Submit a CVP proposal to offboard a Sequencer on the Metis Governance forum using the Governance proposal type (Governance proposals - CEG - Metis.io (ceg.vote))

2. Snapshot proposal

• Voting duration - 72 hours

3. Pass the vote

• See the Voting criteria above

Offboarded Sequencers can appeal using the information in the Impeachments/Appealing process paragraph.

Rewards/Mining Rate Adjustment

The Rewards/Mining Rate Adjustment mechanism incentivizes Sequencer participation, balancing the network’s economy, enhancing engagement, and security. It features a 20% estimated Mining Rewards Rate (MRR), crucial for proposing adjustments to maintain network efficiency and sustainability.

• Adjustment Mechanism: Updates to the per-block reward aim to maintain the Mining Rewards Rate (MRR) at 20%, using a dynamic system influenced by network performance, demand, and economic factors.
• Governance Role: Reward adjustments are managed through governance, with the community or groups proposing changes and voting to determine optimal reward levels for network integrity and competitiveness.
• Incentive Structure: The reward adjustment process seeks to harmonize network security, operational efficiency, and Sequencer incentives by evaluating lock-up needs, costs, and METIS tokenomics.

Product/Operations parameters changing

Adjustments to Product/Operations Parameters are made to manage the network's technical and operational aspects effectively. This includes:

1. Technical Updates: Enhancing system setups for better Sequencer performance and security, pending technical review and community consent.
2. Lock-up Requirements and Governance: Adjusting METIS token lock-up thresholds to balance economic incentives with network security and open access for newcomers.
3. Operational Improvement: Upgrading operational practices for Sequencer efficiency, possibly through governance proposals informed by technology advances or feedback.

Slashing

This list outlines potential malicious or poor-performance actions by Sequencer nodes, with a default response to remove and review such Sequencers. A Governance proposal will determine the handling of these cases, inviting community input for additional rules or modifications via further proposals.

Low Severity

Slow Sequencers

Sequencers with poor configuration or network conditions may produce blocks slowly, causing performance issues for the network. These nodes will be contacted and encouraged to upgrade their configuration. If a Sequencer falls behind, it cannot pack blocks and will not receive rewards.

Medium Severity

Non-Block Production and Reelection

If a Sequencer fails to produce a block within the set threshold (60 seconds), another node triggers a reelection, which sequencers vote on, requiring a ⅔ majority. This process is automated for detection and action.

High Severity

Multiple Node Outages

If several nodes, amounting to about ⅓ of Sequencers, go offline simultaneously due to malicious intent, they face harsher penalties, determined programmatically and further defined by community-led Governance proposals.

Critical Severity

Malicious Execution Result Modification

If a node modifies the execution result of a block, it will fail validation by other Sequencers. This will cause a halt in its block production and interrupt the current epoch. This triggers a re-election process. The node will then be forced to produce a new block with the correct execution result. The case would be detected and acted upon programmatically.

Undefined Severity

Sandwich Attack

If a node alters a block's execution result, failing other Sequencers' validation, it stops producing blocks, interrupting the epoch and triggering a re-election. The node must then correct the block, with detection and action taken automatically.

Slashing rules

Programmatic bad action handling is coded into the Sequencer client software and when these cases are detected, the Sequencers would:

1. Slash X% amount of the Sequencer’s stake depending on the offence
2. [if applicable] Blacklist the Sequencer from running a node
3. [if applicable] Kick the Sequencer out of consensus

Impeachments/Appealing process

Slashed Sequencers can gather evidence and arguments and appeal the slash on a Metis Governance forum using the Governance proposal type. Metis Foundation and Community can decide whether or not to refund the slashed tokens and reinstate the Sequencer.

In some cases, the affected Sequencer may apply for a reward reimbursement.

Slashed Token Handling

The slashed tokens would be locked for a year and then released into the treasury.

LST pairing

The Metis team has set up a process in which node operators may be paired with Liquid Staking Tokens protocols, opening the door for the staked tokens to come from users. For more details check Infrastructure Proposal - LST forum folder