First-In-First-Out Sequencing

First-In-First-Out (FIFO) sequencing is a simple yet effective rule where transactions are processed in the exact order they are received by the sequencer. This provides a clear and objective standard for execution, which is easy to understand and verify.

By removing the ability for validators to reorder transactions based on fee size or other criteria, FIFO sequencing creates a predictable environment for traders. It eliminates the incentive for "gas wars" where users pay exorbitant fees to jump to the front of the line.

While FIFO is fair, it can be vulnerable to latency-based exploitation, where participants located closer to the sequencer's nodes have an advantage. To mitigate this, some protocols implement "fairness layers" that normalize the arrival time of transactions.

FIFO remains a fundamental concept in market design, representing the baseline for fair order execution. It is widely used in traditional exchanges and is being adapted for the unique constraints of decentralized networks.