Why Shared Security Models Are a Bottleneck for Innovation

Rollups and L2s inherit the base layer's execution, data availability, and settlement constraints. This forces all applications into a one-size-fits-all model, stifling specialized architectures needed for high-frequency trading, gaming, or privacy.

• Execution: Limited by parent chain's VM (EVM/SVM).
• Data: Costs and speed gated by L1 calldata markets.
• Settlement: Finality latency tied to L1 consensus (~12s Ethereum, ~400ms Solana).

Shared security requires massive, idle capital staked for cryptoeconomic safety (e.g., $100B+ in Ethereum, $4B+ in Solana). This capital cannot be efficiently redeployed, creating a massive opportunity cost that is passed on to users via high fees and slow innovation cycles.

• Inefficiency: Staked capital yields low single-digit returns, failing DeFi's composable yield standards.
• Barrier to Entry: New chains must bootstrap their own $1B+ security budget from scratch to be credible.

A single chain's core developer team and token holders control the upgrade path for thousands of dependent applications. This creates systemic risk where political decisions or attacks on the L1 governance (e.g., Optimism's Citizen House, Arbitrum DAO) can halt or fork entire ecosystems.

• Single Point of Failure: Protocol changes require broad, slow social consensus.
• Innovation Lag: Niche app requirements are deprioritized vs. L1-wide concerns.

Decouples execution from consensus and data availability, allowing rollups to own their security and validator set.\n- Sovereign Security: Apps choose their own validator set and fork governance, enabling custom fee tokens and slashing conditions.\n- Modular Cost Scaling: Pay only for data publishing (~$0.10 per MB), not for the security of every other app on the chain.

Rehypothecating ETH security creates systemic risk and a race to the bottom for yield, commoditizing security instead of innovating on it.\n- Counterparty Risk Concentration: A single slashing event in an AVS (Actively Validated Service) can cascade through the entire $20B+ restaked ecosystem.\n- Economic Distortion: Forces protocols to compete on subsidized yield, not technical merit, creating a security subsidy bubble.

Taps into Bitcoin's $1T+ immutable capital as a timestamping and staking base layer without complex restaking.\n- Unforgeable Cost: Uses Bitcoin's proof-of-work to create cryptoeconomic cost for attacks, separate from Ethereum's social consensus.\n- No Rehypothecation: Security is leased via time-locked stakes, avoiding the recursive risk of EigenLayer and providing a clear yield source.

Abandons the shared global state model entirely, using a UTXO-based architecture for parallel execution and true fee independence.\n- No State Contention: Transactions that don't conflict can be processed simultaneously, enabling linear scaling with cores.\n- Protocol-Owned Fee Market: Each application's throughput and fees are independent, eliminating network-wide gas spikes from a single popular app.

Argues that extreme throughput and low latency (~400ms block times) create a superior security model by making chain reorganization economically impossible.\n- Time-as-Security: A 51% attack requires controlling validators for mere seconds, not hours, making coordination infeasible.\n- Unified Liquidity: A single global state maximizes MEV capture and redistribution, funding security via priority fees instead of inflationary staking rewards.

Deploys settlement-light rollups where security is enforced by fraud proofs between a minimal set of sequencers and verifiers, not a heavy L1.\n- Minimal Overhead: RollApps post only state roots and proofs to Celestia or Avail, with disputes resolved off-chain.\n- Instant Finality: Users get fast, single-block confirmations while the system enforces correctness with a 1-of-N honest actor assumption.

Shared security chains like Ethereum L2s and Cosmos app-chains are forced to compete for the same block space and are governed by a single, slow-moving social consensus. This creates a coordination tax on innovation.\n- Forced Homogeneity: All apps inherit the same VM, fee market, and governance pace.\n- Innovation Lag: Upgrades like danksharding or new precompiles take years, while competitors like Solana and Monad iterate weekly.

Sovereign rollups (e.g., Celestia rollups, OP Stack chains) decouple execution from consensus and settlement, allowing each chain to own its tech stack and governance. The base layer provides only data availability and consensus as a commodity.\n- Unbundled Innovation: Each chain can implement its own VM (WASM, SVM, Move), fee model, and privacy scheme.\n- Forkability: Teams can instantly fork and modify the entire stack without permission, as seen with Base and opBNB.

In shared security models like Ethereum, ~4 entities control >60% of stake. This centralization creates systemic risk and rent-seeking. Sovereign chains can implement purpose-built validator sets (e.g., DePIN nodes, institutional validators) or leverage restaking pools like EigenLayer without being forced into the same set.\n- Tailored Security: A gaming chain doesn't need the same $50B+ security budget as a DeFi chain.\n- Reduced Extractive MEV: Custom sequencers and block builders can be optimized for the application.

Shared security promised seamless interoperability but delivered fragile, hack-prone bridges ($2.5B+ stolen). Sovereign chains enable a new paradigm of intent-based interoperability and light clients. Protocols like LayerZero (omnichain), Axelar (general message passing), and Hyperlane (modular security) treat each sovereign chain as a first-class citizen.\n- Atomic Composability: Cross-chain swaps via UniswapX and CowSwap without canonical bridges.\n- Security as a Choice: Each app can choose its own security model for cross-chain messages.

On a shared L1, every app pays rent in the native token (e.g., ETH, SOL), creating a value leak. App-specific tokens are purely speculative. Sovereign chains capture value directly in their own token for security and fees, aligning incentives. This is the Fat Protocol Thesis in practice.\n- Direct Value Accrual: Protocol revenue funds chain security and development.\n- Custom Monetary Policy: A gaming chain can have a inflationary token for rewards; a stablecoin chain can be fee-less.

Celestia's launch of modular data availability created a market for sovereign execution layers. It proved that decoupling consensus/DA from execution is not only possible but massively scalable. This has spawned ecosystems like Fuel (parallelized VM), Dymension (RollApps), and Eclipse (SVM on Celestia).\n- Plug-and-Play Security: Launch a chain with $10k in staked TIA vs. $1B+ for a PoS chain.\n- Throughput Unbound: Each sovereign chain adds linear scalability, unlike monolithic scaling.