The Future of Appchain Security: Beyond Borrowed Validators

Borrowing validators from a parent chain (e.g., Ethereum L2s, Cosmos zones) creates misaligned incentives. Validators secure for fees, not the app's success. This leads to security-as-a-commodity with ~$1B+ in slashable stakes that are rarely activated.

• Incentive Misalignment: Validators have no skin in the app's token.
• One-Size-Fits-All: Security model doesn't adapt to app-specific risks (e.g., MEV, oracle reliance).
• Economic Limits: Security budget is capped by parent chain's stake, creating a ceiling for TVL.

EigenLayer transforms Ethereum stakers into a reusable security marketplace. Appchains (AVSs) can rent cryptoeconomic security from pooled ETH restakers, creating slashing conditions tailored to their network.

• Capital Efficiency: Tap into Ethereum's ~$50B+ staked ETH without bootstrapping a new validator set.
• Custom Slashing: Define and enforce app-specific faults (e.g., data unavailability, incorrect state transitions).
• Market Dynamics: Security cost is set by supply/demand, not a fixed protocol tax.

Babylon enables appchains to use bitcoin's proof-of-work as a decentralized clock and finality layer. It extracts timestamping security from Bitcoin, making PoS chains resistant to long-range attacks without validators.

• Unforgeable Time: Leverages Bitcoin's ~$1T+ work for checkpointing and shortening unbonding periods.
• No Live Validators: Security is passive; Bitcoin miners are unaware participants.
• Cross-Chain Finality: Enables fast, Bitcoin-secured finality for Cosmos, Ethereum, and other chains.

The endgame is appchains with sovereign validator sets economically backed by shared security pools. Think Celestia rollups with EigenLayer AVS slashing or Cosmos chains with Babylon checkpoints.

• Aligned Security: Validators are staked in the app's token, with their stake insured/backed by a larger pool.
• Risk Segmentation: High-value transactions can require dual-staking from both app and shared security layers.
• Composable Defense: Combine timestamping (Babylon), economic security (EigenLayer), and data availability (Celestia) for defense-in-depth.

Outsourcing transaction ordering to shared sequencers like Espresso or Astria creates a new centralization vector. The sequencer becomes a single point of failure and censorship for dozens of appchains.

• Risk: A single malicious or faulty sequencer can halt or reorder transactions across multiple chains.
• Mitigation: Requires a robust, decentralized sequencer network with economic slashing and fast fault proofs.

Using a modular stack (e.g., Celestia for DA, EigenLayer for shared security, AltLayer for RaaS) creates a risk dependency graph. A failure in any underlying layer compromises all appchains built on it.

• Risk: A data availability failure or slashing event on the base layer cascades to all dependent rollups.
• Mitigation: Requires appchains to implement circuit breakers and have contingency plans for switching modular components.

Appchains connected via IBC or general message passing bridges (e.g., LayerZero, Axelar) expose their state to cross-chain logic. A bug in a remote chain's smart contract can corrupt local state.

• Risk: An exploit on Chain A can drain liquidity or mint tokens on a perfectly secure Chain B via a malicious cross-chain message.
• Mitigation: Requires strict state isolation, quarantine zones for new connections, and formal verification of cross-chain contracts.

Even with "borrowed" security from EigenLayer or Babylon, a small subset of large stakers can form cartels. They can extract MEV or censor transactions across all appchains they secure, violating sovereignty.

• Risk: Economic centralization leads to governance capture and rent-seeking, negating the benefits of a shared validator set.
• Mitigation: Appchains need permissionless validator sets, diversified staking pools, and proactive anti-collusion monitoring.

Appchain upgrades are often managed by multi-sigs or small DAOs. A compromised upgrade key can push malicious code, instantly compromising the entire chain, as seen in the Nomad bridge hack.

• Risk: Speed of exploit is near-instant; recovery requires a contentious hard fork.
• Mitigation: Mandate time-locked upgrades, decentralized governance with high quorums, and on-chain proof-of-audit requirements.

Appchains relying on external block builders (e.g., Flashbots SUAVE) or order-flow auctions introduce MEV middleware risk. A malicious builder can front-run, censor, or destabilize the chain's economic incentives.

• Risk: PBS (Proposer-Builder Separation) failures can lead to chronic latency attacks and extracted value exceeding block rewards.
• Mitigation: Develop native, encrypted mempools, credible neutrality in builder selection, and MEV redistribution mechanisms to the appchain treasury.

Relying on Ethereum or Celestia for security creates a permanent economic drain and misaligned incentives. You're renting a nation-state's army while building your own economy.

• Key Benefit 1: Eliminates perpetual ~20%+ validator fee leakage to an external chain.
• Key Benefit 2: Enables custom slashing conditions and governance that directly protect your application's state.

Proof-of-Stake security is a function of staking yield and slashable value. Borrowed validators have zero stake in your chain's success.

• Key Benefit 1: Native staking creates a $TVL-sized economic moat that grows with the appchain.
• Key Benefit 2: Enables restaking primitives (e.g., EigenLayer, Babylon) to bootstrap security without diluting tokenomics.

Generic EVM validators cannot optimally secure a zkVM, Move VM, or a high-frequency trading engine. Execution layer security requires execution-aware validators.

• Key Benefit 1: Enables fraud proof or zk proof systems fine-tuned for your VM, reducing dispute times from 7 days to ~1 hour.
• Key Benefit 2: Validator hardware can be optimized for your app's workload (e.g., GPUs for ZK, FPGAs for order matching).

Bridges are the weakest link. A sovereign security model allows you to own the security of your canonical bridge, unlike the shared-risk model of LayerZero or Axelar.

• Key Benefit 1: Mitigates bridge hack risk (over $2.8B stolen in 2024) by controlling the validating set for your primary asset portal.
• Key Benefit 2: Enables light client bridges with your validators as attesters, reducing reliance on third-party oracle networks.

In a borrowed model, MEV is captured by the host chain's validators. A native validator set allows the appchain to capture and redistribute order flow value.

• Key Benefit 1: MEV/VEV revenue can subsidize gas fees or fund a treasury, turning a cost center into a profit center.
• Key Benefit 2: Enables application-specific fair ordering or encrypted mempools (e.g., Flashbots SUAVE) that are impossible on a shared base layer.

New infra layers are abstracting the hard parts. Avail DA + Dymension RollApps + Eclipse SVM provide a full-stack template for launching a secured appchain in weeks.

• Key Benefit 1: Modular security: Choose DA, settlement, and execution layers independently, mixing Celestia, EigenLayer, and Ethereum.
• Key Benefit 2: Rapid iteration: Test security models and fork your chain with new parameters without a multi-year validator bootstrapping process.