What is a Sequencer Fee and Why Katana’s Approach Matters It might seem like a small detail, but sequencer fees could have a big impact on your yield in DeFi and Katana is doing something radically different with them. When you transact on Layer-2 networks like Arbitrum or Optimism, you’re not interacting directly with Ethereum. Instead, a specialized node called a sequencer batches your transactions, processes them off-chain, and submits a proof back to Ethereum. Think of it like ride-sharing: the sequencer is the driver. You still pay a fee but it’s faster and cheaper than taking your own car on Ethereum. Here’s the kicker: In the last 12 months, sequencer fees generated: ~$73M for Base ~$19M for Arbitrum ~$7M for Optimism And most of that revenue stays with the team. Some share a bit with the community, but the lion’s share is team profit. Katana flips this model. 100% of net sequencer fees are redistributed back into its own DeFi ecosystem. Here’s how: 🔹 Boosting yield: Apps like Morpho and Sushi on Katana receive fee-derived incentives, boosting APRs for LPs and lenders. 🔹 Building Chain-Owned Liquidity (CoL): Instead of relying on mercenary capital, Katana allocates fees into a permanent liquidity fund — ensuring deep, sticky liquidity with lower slippage. Why does this matter? It creates a self-reinforcing flywheel: → More users = more transactions → More fees = higher APR + deeper liquidity → Better incentives = more capital attracted → More capital = more transactions Wolf's Take: While most chains treat sequencer fees as team profit, Katana uses them as fuel — to grow its own DeFi layer, transparently and user-first. That’s not just clever tokenomics — it’s sustainable infrastructure design.