Why Execution Environments Must Be Commoditized

The VM is a commodity. The technical differentiation between EVM, SVM, and MoveVM is marginal for most applications. The real value accrues to the settlement and data availability layers, not the execution environment itself.

Execution must be abstracted. Developers choose a VM for its tooling, not its opcodes. The future is a single application logic deployed across multiple, interchangeable execution providers like EigenLayer AVS or AltLayer rollups, optimized for cost and speed.

Sovereignty is the real prize. Projects like dYmension and Celestia demonstrate that rollups succeed by controlling their state and data, not their VM. The execution layer is a replaceable service, not a moat.

Evidence: The EVM's dominance is a network effect of developer tools (Foundry, Hardhat), not superior technology. New VMs like FuelVM or RISC Zero must compete on proving efficiency, not just features.

Execution is a commodity. The proliferation of high-performance VMs like the EVM, SVM, and MoveVM creates functional parity. Users choose chains based on cost and liquidity, not unique technical capabilities.

The moat is interoperability. Protocols that abstract chain complexity, like Across for bridging or Socket for liquidity routing, capture the most value. They own the user relationship.

Layer 2s prove this. Arbitrum and Optimism compete on identical EVM execution. Their differentiation is ecosystem tooling and cross-chain UX, not the core virtual machine.

Evidence: The success of intents-based systems like UniswapX and CowSwap demonstrates demand. They commoditize execution venues and profit by solving the routing problem.

Execution is the bottleneck. Data availability layers like Celestia and EigenDA now provide cheap, secure blobspace, shifting the scaling constraint to compute. This creates direct pressure on execution environments to become cheaper and more efficient.

Commoditization drives specialization. Generic EVM rollups like Arbitrum and Optimism now compete with purpose-built environments like Solana Virtual Machine rollups and Fuel's UTXO-based model. The market fragments based on performance needs, not consensus.

The endgame is vertical integration. The winning execution layer will be the one that best integrates with the rest of the modular stack—seamlessly sourcing data, proving state, and settling. This is the core thesis behind integrated stacks like Polygon CDK and Arbitrum Orbit.

Execution becomes a commodity when any chain can be accessed as a resource. Protocols like LayerZero and Axelar create a universal messaging standard, making the underlying VM (EVM, SVM, Move) an interchangeable component for a cross-chain application.

Value accrues to the network, not the VM. The interoperability protocol becomes the settlement layer for cross-chain state, capturing fees and governance. This mirrors how TCP/IP commoditized hardware, with value flowing to application-layer protocols built on top.

Modularity accelerates this shift. With shared sequencing from Espresso or Astria and data availability via Celestia or EigenDA, launching a new execution layer requires minimal differentiation. The competitive moat shifts from raw speed to cross-chain user experience and liquidity access.

Evidence: The TVL in intent-based bridges like Across and Circle's CCTP demonstrates users prioritize guaranteed cross-chain outcomes over loyalty to a single chain's execution. The chain is a feature, not a destination.

Proprietary VMs are temporary moats. A custom virtual machine like Arbitrum Nitro or zkSync's zkEVM creates initial lock-in, but the open-source toolchain ecosystem (e.g., Foundry, Hardhat) rapidly adapts. Developer convenience, not VM novelty, dictates adoption.

The real moat is liquidity and users. Optimism's success stems from its Superchain shared sequencing vision and early DeFi integrations, not its OVM. A superior execution layer without a vibrant application ecosystem is worthless.

Commoditization is accelerating. Standards like ERC-4337 for account abstraction and RISC-V for ZK proving demonstrate that core innovation becomes public infrastructure. The value accrues to the application layer, as seen with Uniswap's dominance across all EVM chains.

Evidence: The rapid convergence of zkEVMs (Scroll, Polygon zkEVM, Linea) proves the endpoint is a fungible, high-performance commodity. Differentiation shifts to cost, latency, and shared security, not proprietary opcodes.

Commoditization is inevitable. The current model of vertically integrated rollups, where a single team controls the sequencer, prover, and execution client, creates unsustainable complexity and lock-in. Teams like Arbitrum and Optimism already face this scaling pressure, leading to fragmentation like the OP Stack vs. Arbitrum Orbit ecosystems.

Specialization drives efficiency. The future stack separates execution (EVM, SVM, MoveVM), settlement (shared or sovereign), and data availability (EigenDA, Celestia, Avail). This mirrors how cloud providers commoditized server hardware, enabling builders to assemble best-in-class components like using RISC Zero for proving and Caldera for deployment.

The value migrates upward. As the execution layer becomes a cheap, interchangeable commodity, the real moat shifts to the application layer and user experience. This is the same dynamic that played out with L1s versus L2s; the value captured by base layers diminishes as competition intensifies.

Evidence: The rapid adoption of modular DA layers and shared sequencer projects like Espresso and Astria validates this trend. Rollup-as-a-Service providers (AltLayer, Conduit, Gelato) are already abstracting execution complexity, proving the market demands simpler, pluggable infrastructure.