Why Shared Security Models Fail for Cross-Chain Governance

Delegating security to a single, monolithic chain like the Cosmos Hub creates a central point of failure and misaligned incentives. Validators secure the Hub, not your chain.

• Voting Power Centralization: Top 10 validators often control >60% of stake.
• Economic Misalignment: Hub validators have no skin in the game for your chain's success.
• Cascading Slashing Risk: A major slashing event on a consumer chain can destabilize the entire provider set.

The auction model for scarce parachain slots inherently favors well-funded incumbents and VC-backed projects, killing grassroots innovation.

• Capital Barrier: Winning a slot requires bonding ~$100M+ in DOT (historically), locking liquidity.
• Oligopolistic Control: The same large entities win repeated auctions, centralizing the network's application layer.
• Rent-Seeking Economics: The model optimizes for extracting lease payments from projects, not for optimal security distribution.

Framing staked liquidity as 'security' confuses economic security with liveness guarantees. A $20B TVL doesn't stop a malicious governance vote.

• Security vs. Liveness: Staked tokens secure value transfer liveness, not the correctness of arbitrary cross-chain messages or governance.
• Oracle/Relayer Centralization: The security model often collapses to the honesty of a ~$10M bond and a few off-chain actors.
• Governance is Asynchronous: A fast chain cannot force a slow chain to accept its governance outcome, making 'shared' execution impossible.

The Cosmos Hub's Interchain Security (ICS) promised shared validator sets for consumer chains. The reality is a story of low adoption and sovereignty conflicts.

• Only 2 consumer chains adopted ICS v1 after 18 months, versus dozens of independent chains.
• Stride's airdrop to ATOM stakers was a bribe to bootstrap security, revealing the model's lack of intrinsic economic pull.
• Consumer chains cede sovereignty over slashing and upgrades, a deal-breaker for serious protocols.

Polkadot's shared security is gated by a brutal, capital-intensive auction system for parachain slots, creating a governance and economic moat.

• ~$200M+ in DOT is locked per top parachain slot, creating massive opportunity cost and centralizing access to large VC-backed projects.
• Governance is fragmented; the Relay Chain governs core protocol, but parachains run their own governance, leading to disjointed upgrades and treasury management.
• The model is inherently zero-sum: a new chain's security comes at the direct expense of an incumbent's, stifling organic experimentation.

EigenLayer's re-staking abstracts security into a fungible commodity, but creates systemic risk and governance abstraction leaks.

• $16B+ in TVL creates a massive, correlated slashing risk pool; a failure in one AVS (Actively Validated Service) can cascade.
• Governance is outsourced but not eliminated: Operators (validators) must still vote on each AVS's rules, creating immense coordination overhead and potential for cartels.
• The security is generic, unable to provide the customized, chain-specific governance (e.g., treasury management, parameter tuning) that L1s/L2s require.

LayerZero's Omnichain Fungible Tokens (OFTs) enable native cross-chain assets, but delegate critical governance (minting/burning) to a mutable, off-chain Oracle/Relayer set.

• Security is not shared, it's rented: The protocol's security depends on a permissioned set of actors controlled by LayerZero Labs, creating a central point of failure.
• Upgrades are opaque: The Executor role can be changed via a 4/7 multisig, meaning token governance on one chain can be overridden by an off-chain committee.
• This demonstrates that most "cross-chain" systems simply shift governance to a new, less transparent layer rather than solving the shared sovereignty problem.

A Cosmos validator set has zero authority over an Ethereum smart contract. Shared security is a walled garden, not a global standard. Attempts to extend it create trusted committees, not cryptographic security.

• Fatal Flaw: Relies on social consensus and bridge multisigs outside its native domain.
• Real-World Example: The IBC connection to Ethereum is a permissioned Axelar bridge, not a pure IBC security extension.

Shared security prioritizes chain liveness (preventing halts) over cross-chain state safety. A subnet can be live but broadcasting invalid state proofs to another chain.

• Byzantine Failure: >1/3 of validator power can finalize fraudulent cross-chain messages.
• Builder Impact: Your protocol's security is capped by the weakest linked chain's social consensus, not the strongest.

Staking tokens like ATOM or DOT secure their own chain's economics. Their value doesn't extend to securing a $10B+ Ethereum DeFi pool. Slashing is ineffective across sovereign boundaries.

• Misaligned Incentives: Validators are penalized for native chain faults, not for external fraud.
• Result: Cross-chain governance becomes a game-theoretic nightmare, inviting governance attacks.

You can only pick two: Trustlessness, Generalizability, Extensibility. Shared security models sacrifice trustlessness to be extensible across many app-chains (generalizable).

• UniswapX / CowSwap Lesson: They use intent-based architectures and solvers, avoiding canonical bridge governance entirely.
• Alternative Path: Focus on LayerZero-style ultra-light clients or Across-style optimistic verification for specific, verifiable cross-chain actions.