The Future of Public Goods: Can Rollups Coordinate?

Modular fragmentation breaks funding models. Isolated execution environments and sequencer revenue silos prevent the natural cross-chain value capture that funded Ethereum's public goods via MEV and fees.

Rollups are sovereign treasuries. Each chain, from Arbitrum to Base, now controls its own fee revenue and sequencer profits, creating a prisoner's dilemma where local optimization starves shared infrastructure.

The L2 economic stack is incomplete. Without native mechanisms like EIP-1559 or MEV-Boost operating at the settlement layer, rollups lack the economic primitives to fund the protocols they all depend on.

Evidence: Optimism's RetroPGF has distributed $100M+, proving demand, but remains a philanthropic overlay, not a baked-in economic protocol for the modular stack.

Rollups fragment public goods. Ethereum's L1 public goods model, funded via block space and grants, breaks when value and activity migrate to sovereign execution layers like Arbitrum and Optimism.

Sequencers capture immense value from MEV and fees but lack a native mechanism to redistribute it for shared infrastructure, creating a classic coordination failure that stunts ecosystem growth.

The solution is a protocol-native coordination layer. Successful models like Optimism's RetroPGF and Arbitrum's STIP prove that direct sequencer revenue allocation is the only sustainable path for funding shared security, R&D, and core protocol development.

Evidence: The $100M+ distributed via Arbitrum's STIP to bootstrap its DeFi ecosystem demonstrates that sequencer-funded incentives directly accelerate adoption and network effects, a model that must be institutionalized.

Rollups are profit-maximizing businesses that compete for users and developers. Their primary revenue is sequencer fees, creating a direct incentive to capture and retain activity within their own walled garden.

This creates a collective action problem. Each rollup optimizes for its own state growth, but the Ethereum L1 and its shared security model are the ultimate public goods. This is a classic tragedy of the commons.

The current solution is insufficient. The L2beat risk framework and EigenLayer restaking address validator security, not economic alignment. They don't solve for the misaligned incentives around state growth and interoperability costs.

Evidence: The Arbitrum DAO's sequencer revenue is a direct transfer from users to the rollup's treasury, with no mechanism to fund the underlying L1 data availability it consumes.

Rollups are natural coordination hubs. Their sequencers capture direct, measurable value from user transactions, creating a clear on-chain treasury. This is a structural improvement over L1s, where value capture is diffuse and funding is political.

Retroactive funding models are viable. Projects like Optimism's RetroPGF demonstrate that ecosystems can programmatically reward past contributions. This creates a flywheel where builders are incentivized to create public goods that increase the rollup's utility and fee revenue.

The modular stack enables specialization. A rollup can fund a dedicated data availability layer, a shared sequencer network like Astria or Espresso, or a canonical bridge. This turns infrastructure from a cost center into a strategic, co-invested asset.

Evidence: Arbitrum's DAO has allocated over $100M in grants. While imperfect, it proves the treasury mechanism functions at scale, funding everything from developer tooling to on-chain gaming primitives.

Sequencer revenue is the prize. Each major rollup like Arbitrum, Optimism, and zkSync now generates millions in fees, creating sovereign treasuries. The core conflict is whether this value funds their own ecosystem or flows back to the shared L1 security layer.

Coordination failure is the default. Without explicit mechanisms, L2s rationally optimize for their own growth, leading to a tragedy of the commons on Ethereum L1. This mirrors the pre-EIP-1559 block space market, where value extraction dominated.

Retroactive funding models like Optimism's RPGF demonstrate a viable path. However, these require consensus on value attribution across chains, a problem that cross-chain attestation protocols like Hyperlane or LayerZero are positioned to solve.

The endgame is a cross-rollup capital market. Successful coordination creates a liquid funding layer where public good ROI is measurable. Failure results in balkanized ecosystems where the strongest L2s become walled gardens, undermining the composable base layer.