Sovereignty creates security debt. Every new rollup or appchain must bootstrap its own validator set, fragmenting capital and expertise. This leads to weaker, more attackable networks, as seen in early Cosmos zones and Polygon Supernets.
the-modular-blockchain-thesis-explained
Blog
Why Shared Security Hubs Are a Necessity, Not an Option
The modular blockchain thesis fails without credible security. For all but the largest L1s, bootstrapping a validator set is economically impossible, making leased security from a hub the only viable path forward.
introduction
THE FRAGMENTATION TRAP
Introduction
The proliferation of sovereign rollups and L2s has created an untenable security deficit that demands a new architectural paradigm.
Shared security is an economic primitive. It transforms security from a capital-intensive operational cost into a composable, liquid resource. This mirrors the evolution from isolated data centers to AWS or from individual bridge operators to LayerZero's Omnichain Fungible Tokens.
The hub model wins. A dedicated security provider, like EigenLayer for Ethereum or Babylon for Bitcoin, aggregates stake to create a reusable trust layer. This is the only scalable answer to the validator crisis created by modular design.
thesis-statement
THE ECONOMIC REALITY
The Core Argument: Security is a Natural Monopoly
Blockchain security is not a commodity; it consolidates into a few dominant, high-value hubs due to network effects and capital efficiency.
Security is a natural monopoly. The value of a validator set is its total economic stake. A larger, more decentralized set is exponentially more expensive to attack, creating a winner-take-most dynamic where capital and developers aggregate.
Fragmentation destroys security budgets. A thousand chains with $10M TVL each are individually insecure. Aggregating that value into a few hubs like Ethereum or Cosmos creates a security budget attackers cannot match.
Shared security is capital-efficient. Projects launching on Arbitrum or Optimism inherit Ethereum's $100B+ security. Building an equally secure L1 requires raising and staking an impossible amount of capital.
Evidence: Ethereum secures over $100B in value. A new L1 with $1B TVL would need to spend orders of magnitude more on security to achieve comparable safety, a mathematically losing proposition.
key-trends
WHY FRAGMENTATION FAILS
The Inescapable Math of Validator Economics
The capital and talent required for secure, decentralized validation creates an economic moat that solo chains cannot cross.
01
The $1B+ Security Floor
To achieve credible Nakamoto Consensus security, a chain needs a minimum viable stake to resist attacks. For a new L1, this means attracting and economically incentivizing a globally distributed set of validators, a multi-billion dollar coordination problem that most projects cannot solve.
- Attack Cost: A chain with $500M TVL needs ~$10B+ in staked value for 20x security.
- Reality: Most new chains launch with < $100M in stake, making them vulnerable to cheap attacks.
20x
Security Multiplier Needed
$10B+
Viable Stake Floor
02
The Validator Talent Scarcity
High-performance validation requires specialized DevOps, key management, and 24/7 monitoring. Top-tier operators like Figment, Chorus One, and Allnodes are a finite resource, prioritizing chains with the highest, most stable rewards.
- Concentration: The top 10 validator firms secure over 60% of major PoS chains.
- Result: New chains compete for leftover capacity, leading to centralization and higher downtime risk.
60%+
Market Share Top 10
< 100
Elite Teams
03
The Shared Security Hub Model
Platforms like Ethereum (via rollups), Cosmos (Interchain Security), and Avalanche (subnets) solve this by pooling validator resources. A single, economically strong validator set provides security as a service to hundreds of application-specific chains.
- Efficiency: A rollup inherits Ethereum's $100B+ staked economic security for a fraction of the cost.
- Outcome: Developers launch secure chains in weeks, not years, focusing on product, not validator recruitment.
100x
Capital Efficiency
Weeks
Time to Secure Launch
04
The Interchain Security Premium
Security is not just about stake size; it's about liveness guarantees and slashing enforcement across a network. Hubs like Cosmos enable consumer chains to rent a proven, slashing-enabled validator set, creating enforceable economic security.
- Guarantee: Consumer chains get instant credible neutrality and cross-chain slashing.
- Network Effect: Each new chain strengthens the hub's security and utility, a virtuous cycle impossible for isolated L1s.
100%
Slashing Enforcement
Virtuous Cycle
Network Effect
05
The Modular Capital Stack
The future is modular: specialized layers for execution, settlement, and consensus. Shared security hubs become the consensus and data availability layer, allowing execution layers (rollups, app-chains) to optimize for performance.
- Example: Celestia provides cheap, scalable DA, while EigenLayer restakes Ethereum stake to secure new networks.
- Impact: Capital is deployed once, used everywhere, breaking the security vs. scalability trilemma.
Specialized
Layers
10-100x
Capital Reuse
06
The Endgame: Security as a Commodity
The economic logic points to a future where security is a standardized, low-margin commodity provided by a handful of mega-hubs (Ethereum, Cosmos, Bitcoin). Building a solo validator network will be as irrational as building your own internet backbone.
- Prediction: 90%+ of new chains will launch as rollups or consumer chains by 2030.
- Implication: Value accrual shifts decisively to application logic and user experience.
90%+
Chains on Hubs
Commodity
Security Outcome
THE INFRASTRUCTURE DILEMMA
Security Budget Showdown: Bootstrapped vs. Leased
A quantitative comparison of security models for new L2s and appchains, highlighting the economic and operational trade-offs.
| Feature / Metric | Bootstrapped (Sovereign Rollup) | Leased (Shared Sequencer Hub) | Leased (Restaked AVS) |
|---|---|---|---|
Time to Mainnet Launch | 6-18 months | 2-4 weeks | 4-8 weeks |
Upfront Capital for Security | $50M+ (Token War Chest) | $0 (OpEx Model) | $0 (OpEx Model) |
Annual Security Budget (Est.) | 3-7% of token supply (Inflation) | $2-5M (Fees to Hub) | $1-3M (Fees to Operators) |
Sequencer Decentralization Timeline | Years (Post-Bootstrapping) | Immediate (via Hub like Espresso, Astria) | Immediate (via EigenLayer) |
Censorship Resistance Guarantee | Weak (Centralized Sequencer) | Strong (Shared, Permissionless Set) | Conditional (Operator Set Behavior) |
Cross-Domain MEV Capture | None (Isolated) | Native (Hub-Level Coordination) | Protocol-Dependent |
Protocols Using This Model | Arbitrum, Optimism (Early) | dYmension, Saga (planned) | Eclipse, Layer N |
deep-dive
THE NECESSITY
Hub Architectures: From Cosmos IBC to Ethereum Restaking
Shared security is the only viable model for scaling sovereign blockchains without fragmenting liquidity and trust.
Sovereignty fragments security. Independent Layer 1s and rollups must bootstrap their own validator sets, creating capital inefficiency and security vulnerabilities for smaller chains.
Hub models amortize security costs. Cosmos IBC pioneered this by allowing zones to lease security from the Cosmos Hub, while Ethereum restaking with EigenLayer enables AVSs to inherit Ethereum's validator set.
The alternative is a bridge hack. Without a trusted security layer, chains rely on multi-signature bridges like Wormhole or LayerZero, which centralize risk and have been exploited for billions.
Evidence: The Total Value Secured (TVS) in EigenLayer exceeds $15B, proving demand for pooled crypto-economic security over fragmented, weaker alternatives.
protocol-spotlight
SHARED SECURITY IS NON-NEGOTIABLE
Hub Contenders: A Builder's Guide
The era of isolated, high-cost sovereign chains is over. Here's why your next deployment must be on a security hub.
01
The Sovereign Chain Trap
Launching a standalone L1 or L2 means recruiting validators, bootstrapping a token, and hoping for >$1B in TVL to be secure. This is a capital-intensive, slow-motion suicide for most projects.
- Cost: $50M+ in token incentives for baseline security.
- Time: 6-18 months to reach credible decentralization.
- Risk: Vulnerable to >34% attacks during bootstrap phase.
$50M+
Bootstrap Cost
>34%
Attack Threshold
02
Cosmos: The Interoperable Sovereignty Play
The Inter-Blockchain Communication (IBC) protocol enables sovereign chains to share security via Interchain Security or mesh security models. It's for builders who want full app-chain control without the validator headache.
- Security: Lease validator sets from Cosmos Hub or Celestia-based rollups.
- Interop: Native, trust-minimized transfers across 60+ IBC-connected chains.
- Trade-off: Still requires ~$100K+ in staking for a new chain's economic security.
60+
IBC Chains
~$100K
Min. Stake
03
Ethereum L2s: The Ultimate Security Sink
Rollups (Arbitrum, Optimism, zkSync) outsource consensus and data availability to Ethereum, inheriting its ~$80B crypto-economic security. This is the default for dApps prioritizing maximum safety over sovereignty.
- Security: Inherits from Ethereum's 14M+ validators.
- Cost: Pay ~$0.01-$0.10 per transaction in L1 data fees.
- Ecosystem: Instant access to $50B+ DeFi TVL and tooling like Uniswap, Aave.
$80B
Secured Value
$50B+
DeFi TVL
04
Celestia & EigenLayer: The Modular Disruption
Decouples execution, settlement, consensus, and data availability. Celestia provides cheap, scalable DA. EigenLayer enables Ethereum stakers to re-stake ETH to secure new networks (AVSs).
- Cost: Data posting costs ~1000x cheaper than full Ethereum calldata.
- Flexibility: Launch a sovereign rollup or a validium.
- Innovation: Enables hyper-specialized chains (e.g., dYdX v4, Fuel) without monolithic baggage.
1000x
Cheaper DA
$15B+
Restaked TVL
05
The Shared Sequencer Frontier
Even within a hub, rollups fight for block space. Shared sequencers (Espresso, Astria, Radius) decouple transaction ordering, providing cross-rollup atomic composability and MEV resistance.
- Speed: Sub-second cross-rollup arbitrage becomes possible.
- Composability: Enables UniswapX-like intents across an entire hub's rollups.
- Neutrality: Prevents a single rollup's sequencer from being a central point of failure.
<1s
Cross-Rollup Latency
0
Sequencer Monopoly
06
The Builder's Decision Matrix
Your hub choice dictates your GTM, token model, and tech stack. There is no universal best, only optimal trade-offs.
- Max Security / Ecosystem: Choose Ethereum L2 (Arbitrum, OP Stack).
- Sovereignty / Interop: Choose Cosmos with Interchain Security.
- Cost / Innovation: Choose Modular (Celestia DA, EigenLayer AVS).
- Ignoring Hubs: You are optimizing for failure.
3
Core Paths
0
Good Solo Paths
counter-argument
THE NETWORK EFFECT
The Sovereign Chain Counter-Argument (And Why It's Wrong)
Sovereign chains sacrifice critical network effects for political independence, creating a fragmented and insecure ecosystem.
Sovereignty fragments liquidity and security. A chain's value is its composable state. Isolated chains like Celestia rollups or dYmension RVs force users to bridge assets via LayerZero or Axelar, introducing latency and trust assumptions that break the seamless user experience of a unified ecosystem like Ethereum L2s.
Independent security is economically inefficient. Bootstrapping a validator set from scratch requires massive token inflation or unsustainable incentives, a problem solved by shared security hubs like EigenLayer or Cosmos ICS. The capital required to match the security of Ethereum's $100B+ staked is prohibitive for all but a few chains.
Developer tooling and audits lag. Building on a new sovereign stack means forgoing battle-tested infrastructure like The Graph for indexing or OpenZeppelin libraries. This increases development time, audit costs, and systemic risk, as seen in early Cosmos SDK chain exploits.
The market has voted for consolidation. The dominant activity and developer mindshare reside in ecosystems with strong shared security, primarily Ethereum and its L2s. The modular thesis succeeds when security and liquidity are unified, not when every app is an isolated island.
risk-analysis
THE EXISTENTIAL THREATS
The Bear Case: What Could Break the Hub Model
Shared security is not a panacea; its adoption hinges on overcoming fundamental economic and technical attacks.
01
The Economic Attack: Race to the Bottom on Security Spend
If a hub's security is a commodity, sovereign chains will optimize for cost, not quality. A lowest-bidder security market emerges, creating systemic fragility.
- Free-Rider Problem: Chains pay minimal fees, starving validators.
- Collusion Vector: A single entity can cheaply bribe a critical mass of validators.
- Death Spiral: Falling revenue → weaker validators exit → security degrades → revenue falls further.
>90%
Fee Reduction Target
1-Entity
Attack Threshold
02
The Technical Attack: Shared Fault Means Shared Failure
A single bug or slashing condition in the hub's consensus can cascade to all consumer chains, creating a systemic risk multiplier.
- Amplified Impact: One validator bug can halt dozens of chains simultaneously.
- Upgrade Inertia: Coordinating security-critical upgrades across 100+ chains is politically impossible.
- Oracle Risk: Hub becomes a centralized oracle for cross-chain state, a single point of failure for bridges like LayerZero and Wormhole.
100x
Failure Amplification
∞ Downtime
Coordination Cost
03
The Market Attack: Specialized Appchains Out-Innovate General Hubs
Hubs optimize for generic security, not application performance. High-performance chains (e.g., Solana, Monad) or purpose-built L2s (e.g., dYdX Chain) will capture premium apps, leaving hubs with low-value traffic.
- Performance Ceiling: Hub throughput is gated by its slowest consumer chain.
- Innovation Lag: Can't implement novel VMs (e.g., SVM, Move) without fracturing security.
- Commoditization: Hub becomes a security backwater, only used by chains that can't afford their own validators.
~100ms
Latency Disadvantage
0 Premium Apps
Market Share
04
The Political Attack: Governance Captures the Root of Trust
The hub's governance (e.g., Cosmos Hub, EigenLayer) controls the validator set and slashing parameters. This creates a political attack surface more dangerous than technical bugs.
- Sovereignty Illusion: Consumer chains are only as sovereign as the hub's governance allows.
- Regulatory Vector: A single jurisdiction can pressure governance to censor chains.
- Value Extraction: Governance can vote to increase taxes (fees) on all consumer chains, replicating the Ethereum L1 tax problem.
1 Governance
Single Point of Control
+1000%
Potential Fee Hike
future-outlook
THE NECESSITY
The 2025 Landscape: A Triopoly of Security Hubs
The economic and technical costs of standalone security will force all but the largest L2s to converge on a handful of shared security providers.
Standalone security is economically unviable for most L2s. The capital cost of a decentralized validator set and the operational overhead of slashing mechanisms create a prohibitive cost structure. Projects like Mantle and Kinto already outsource this to EigenLayer and AltLayer, respectively.
Technical debt from custom fraud proofs will cripple development velocity. Maintaining a bespoke fraud-proof or validity-proof system like Arbitrum Nitro or zkSync Era's Boojum is a full-time engineering burden that distracts from core application logic.
Security is a commodity, not a moat. The market will consolidate around specialized security providers like EigenLayer (restaking), Avail (DA), and potentially Celestia (with its upcoming shared sequencer). This mirrors how AWS commoditized server infrastructure.
Evidence: The 30+ active AVSes on EigenLayer and the migration of major chains like Polygon CDK to Celestia for data availability prove the demand for outsourced security primitives. The triopoly will be defined by cost, finality speed, and ecosystem integration.
takeaways
THE INFRASTRUCTURE IMPERATIVE
TL;DR for Protocol Architects
The fragmented multi-chain future demands a new security primitive; shared security hubs are the only scalable answer to the validator capital and liveness crisis.
01
The Capital Fragmentation Trap
Every new L1 or L2 must bootstrap its own validator set, creating a $100B+ security deficit across the ecosystem. This leads to:
- Sub-optimal security for smaller chains (e.g., <$1B TVL).
- Massive, redundant capital costs for stakers and protocols.
- Centralization pressure as only the largest chains can afford credible security.
$100B+
Security Deficit
<$1B TVL
At-Risk Chains
02
EigenLayer & the Re-staking Primitive
EigenLayer transforms Ethereum's $70B+ staked ETH into a reusable security layer. It enables:
- Economic security leasing for AVSs (Actively Validated Services) like rollups and oracles.
- Slashing guarantees inherited from Ethereum's validator set.
- Capital efficiency for operators and stakers, unlocking new yield sources.
$70B+
Base Security
10x+
Capital Efficiency
03
Babylon: Extending Bitcoin's Finality
Babylon unlocks Bitcoin's $1T+ dormant security for PoS chains via timestamping and staking. It solves:
- Long-range attacks on young chains by checkpointing to Bitcoin.
- Capital lock-up inefficiency by allowing BTC to secure other chains.
- Finality latency by providing fast, Bitcoin-backed attestations.
$1T+
Security Pool
~2 hours
Checkpoint Finality
04
The Interoperability Security Gap
Bridges and cross-chain messaging (e.g., LayerZero, Axelar) are the weakest link, with >$2.5B lost to exploits. Shared security hubs provide:
- Unified validation for cross-chain state attestation.
- Collective slashing for malicious relayers.
- Standardized security audits for the entire interoperability stack.
>$2.5B
Bridge Exploits
1 Validator Set
For All Bridges
05
The Modular Stack's Missing Piece
In a modular world (Celestia, EigenDA, Arbitrum Orbit), execution and data availability are separate. Shared security is the essential third pillar for:
- Sovereign rollups that need liveness guarantees.
- Shared sequencers (e.g., Espresso, Astria) to prevent censorship.
- Verifiable off-chain compute that requires economic backing.
3rd Pillar
Modular Stack
~500ms
Sequencer Liveness
06
The Economic S-Curve: Build or Rent?
The economic logic is undeniable. For any new chain, renting security from a hub like EigenLayer is >90% cheaper than bootstrapping a native validator set. This creates:
- Faster time-to-security for launches.
- Predictable, scalable OPEX instead of massive CAPEX.
- A defensible moat for the security hubs that achieve scale.
>90%
Cost Reduction
S-Curve
Adoption Model
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