The Future of Scalability Is Modular, Not Monolithic

Monolithic L1s like Ethereum force consensus, execution, and data onto one layer, creating an impossible trade-off. You can't have high throughput, security, and decentralization simultaneously.

• Security & Decentralization First: Ethereum prioritizes these, capping throughput at ~15 TPS.
• The Cost of Congestion: High demand leads to $50+ gas fees, pricing out most applications.
• Innovation Stagnation: Every dApp competes for the same scarce block space, limiting new use cases.

Decouple execution from consensus. Rollups like Arbitrum, Optimism, and zkSync process transactions off-chain and post compressed proofs or data back to Ethereum.

• 100x+ Throughput: Achieve ~4,000 TPS by batching transactions.
• Inherited Security: Rely on Ethereum for consensus and data availability, avoiding new trust assumptions.
• Sovereign Innovation: Each rollup can have its own virtual machine (EVM, SVM, Cairo), enabling custom fee models and faster upgrades.

Execution layers need cheap, abundant space to post transaction data. Dedicated DA layers like Celestia, EigenDA, and Avail solve this.

• Cost Reduction: Separating DA reduces rollup costs by ~90% versus posting all data to Ethereum L1.
• Scalable Security: Data availability sampling allows light nodes to securely verify large data sets, enabling ~100 KB/s data throughput.
• Modular Stack Foundation: Provides a pluggable component for any rollup or sovereign chain, exemplified by the Celestia > Rollkit > Dymension stack.

Modularity fragments liquidity and state. Shared security models and interoperability protocols are critical to unify the ecosystem.

• Restaking & Security as a Service: EigenLayer allows ETH stakers to secure new chains (AVSs), bootstrapping trust for modular chains.
• Universal Communication: Protocols like LayerZero, Axelar, and IBC enable cross-chain messaging between sovereign execution environments.
• Unified Liquidity: Intent-based architectures (e.g., UniswapX, CowSwap, Across) abstract away fragmentation for users.

Centralizing transaction ordering across multiple rollups creates a new, systemically critical single point of failure. The sequencer becomes a high-value target for MEV extraction and censorship.

• Espresso Systems and Astria are building shared networks, but finality guarantees remain fragmented.
• A compromised sequencer could halt or reorder transactions across dozens of chains, undermining the entire modular stack's liveness.

Sovereign rollups and validiums fragment liquidity and force users back onto trust-minimized bridges, which are slow and capital-inefficient. The "modular stack" often ends at the bridge.

• Projects like Across and LayerZero abstract this, but introduce new trust assumptions and oracle risks.
• Cross-rollup composability for DeFi is crippled by ~20-minute withdrawal delays and fragmented security models.

Using Ethereum for data availability is secure but prohibitively expensive for high-throughput chains. Alternatives like Celestia and EigenDA are cheaper but force a trade-off between cost and security.

• A rollup's security is only as strong as its DA layer's consensus and liveness guarantees.
• This creates a multi-billion dollar market where economic security is constantly being arbitraged, introducing systemic risk.

Modular chains outsource settlement and data availability, but someone must still verify the chain's correctness. Light clients for fraud/validity proofs are not user-friendly.

• This creates a verifier gap: security relies on a small set of professional nodes, recreating the miner/validator centralization problem.
• Without widespread, easy verification, modular systems are only as decentralized as their least decentralized component.

Splitting activity across hundreds of rollups and app-chains balkanizes liquidity and fragments MEV supply. This makes large trades more expensive and allows MEV to become more predatory in shallow pools.

• Solutions like UniswapX and CowSwap with intent-based routing are a response, but add protocol-layer complexity.
• The result is worse execution for users and more complex, opaque extractive markets for searchers.

Modularity's complexity is pushed to the user: managing gas across multiple chains, approving tokens on new rollups, and understanding varying security models. Wallets and RPC providers like Privy and Pimlico are building abstractions, but they become new centralized gatekeepers.

• True seamless cross-rollup UX requires massive centralized intermediation, defeating decentralization goals.
• The winning stack will be the one that hides modularity completely, not celebrates it.

Single-layer chains like Ethereum L1 force a brutal trade-off between security, scalability, and decentralization. Optimizing for one degrades the others, creating a hard ceiling for throughput and user experience.

• Security: High, but at the cost of ~15 TPS and $10+ gas fees.
• Scalability: Requires sacrificing decentralization (e.g., Solana's validator centralization).
• Decentralization: Preserved in L1s, but makes scaling via larger blocks impossible.

Decouple execution from consensus and data availability. Rollups like Arbitrum, Optimism, and zkSync process transactions off-chain and post compressed proofs/data back to Ethereum.

• Scalability: Achieves ~1000-4000 TPS per rollup.
• Security: Inherits from Ethereum's $10B+ staked consensus.
• Cost: Reduces fees by 10-100x vs. L1, enabling micro-transactions.

Data availability is the bottleneck for cheap, secure scaling. Dedicated DA layers like Celestia, EigenDA, and Avail provide high-throughput data posting at a fraction of Ethereum's cost.

• Throughput: ~100 MB/s data bandwidth vs. Ethereum's ~80 KB/s.
• Cost: ~$0.01 per MB vs. Ethereum's ~$1000 per MB.
• Modularity: Allows rollups to choose security/cost trade-offs, fostering a multi-chain ecosystem.

Modularity creates a fragmented landscape of specialized chains. Secure, trust-minimized communication becomes critical, driving innovation in bridges and messaging layers like LayerZero, Axelar, and Polymer.

• Composability: Enables cross-chain DeFi and unified liquidity.
• Security: Moves beyond naive multisigs to light clients and cryptographic proofs.
• User Experience: Abstracts chain boundaries, enabling intent-based trading via UniswapX and CowSwap.

Modularity distributes risk across more components, creating new attack vectors and liquidity silos. The security of a rollup is only as strong as its weakest link (sequencer, DA layer, bridge).

• Sequencer Failure: Centralized sequencers create liveness and censorship risks.
• DA Guarantees: Weak DA can lead to invalid state transitions going unnoticed.
• Bridge Hacks: Account for over $2B in cumulative losses, the #1 exploit vector.

The endgame is integrated modular stacks (e.g., Eclipse, Saga) and shared sequencer networks (e.g., Espresso, Astria) that provide horizontal scaling, cross-chain atomic composability, and credible neutrality.

• Horizontal Scaling: Thousands of parallel, app-specific chains.
• Atomic Composability: Secure cross-rollup transactions within a shared sequencer set.
• Market Structure: DA, sequencing, and settlement become competitive commodity markets.