Why Modularity's Promise Hinges on Sovereign Execution

Outsourcing block production to a neutral third party like Espresso or Astria simply reshuffles the extractors. The execution layer remains a black box, forcing rollups to trust a new, centralized actor with their economic security and user experience.

• Vulnerability: Single sequencer failure can halt the chain.
• Extraction: MEV profits are captured by the sequencer network, not the rollup or its users.
• Alignment: Sequencer incentives are not natively aligned with the rollup's community.

Celestia provides data availability and consensus, but execution is fully sovereign. Rollups run their own sequencer and prover (e.g., using Rollkit), controlling their own state transition function and fee market.

• Full MEV Capture: All transaction ordering profits accrue to the sovereign chain's validators.
• Instant Forkability: Can hard fork execution logic without permission, enabling rapid upgrades.
• Native Composability: Enables trust-minimized cross-rollup communication via IBC.

Fuel Network implements sovereign execution via a parallelized UTXO-based VM. It's a standalone execution layer that can settle to any DA layer (Celestia, Ethereum), maximizing compute efficiency and state control.

• Parallel Execution: Processes independent transactions simultaneously for ~10,000 TPS theoretical capacity.
• Deterministic State: UTXO model eliminates state conflicts, simplifying development.
• Sovereign Fee Market: Transaction fees are paid in the chain's native asset, not the settlement layer's gas token.

Sovereignty creates fragmentation. A rollup on Celestia cannot natively read the state of a rollup on Ethereum without a bridge, introducing new trust assumptions and latency. This is the core challenge for EigenLayer, Polymer, and Hyperlane.

• Latency: Cross-sovereign chain messages can take minutes to hours, not seconds.
• Security: Bridges become the weakest link, as seen in $2B+ of historical exploits.
• Liquidity Fragmentation: Native assets are siloed, reducing capital efficiency across the modular stack.

Dymension operationalizes sovereign execution with a RollApp Development Kit (RDK) and a dedicated settlement layer (the Dymension Hub). It provides a standardized framework for launching app-specific rollups that are sovereign but seamlessly interconnected.

• Plug-and-Play: RDK offers pre-built modules for sequencing, bridging, and governance.
• Native Liquidity: The Dymension Hub acts as a liquidity center for all connected RollApps.
• Shared Security: RollApps can optionally leverage the Hub's validator set for enhanced security.

The choice isn't binary. Protocols like Arbitrum Orbit or Optimism Superchain offer managed sovereignty—custom chains that share a proving system and governance framework. The optimal point on the spectrum depends on the app's need for customizability, economic independence, and cross-chain liquidity.

• Managed: High interoperability, lower sovereignty (Superchain).
• Full: Maximum control, higher integration cost (Celestia Rollup).
• Hybrid: Balanced trade-offs (Dymension RollApp).

Sovereign chains need ordering. Relying on a shared sequencer like Astria or Espresso reintroduces a critical centralization point and MEV leakage. The economic model for decentralized sequencing at scale remains unproven.

• Centralized Failure Point: A sequencer outage halts all dependent sovereign chains.
• MEV Cartels: Validators of the underlying data layer (e.g., Celestia) can form cartels to extract value from sovereign chain users.
• Latency Tax: Finality is gated by the sequencer's consensus, adding ~2-5s delays versus integrated L1s.

Each sovereign rollup is its own liquidity silo. Moving assets between them requires a new bridge for every pair, multiplying trust assumptions and user steps. This defeats the composability that made Ethereum dominant.

• Bridge Risk Multiplication: Users face constant bridge risk across dozens of sovereign chains.
• DEX Fragmentation: No native Uniswap pool exists across sovereign chains without a bridging intermediary.
• Developer Overhead: Protocols must deploy and maintain liquidity on each new sovereign chain, increasing overhead.

Sovereign chains offload security to a data availability layer like Celestia or EigenDA, but execution security is their own problem. A chain with $10M TVL cannot afford a $100M+ validator set, creating a massive security deficit versus Ethereum or even Solana.

• Low-Value Target: Small TVL chains are profitable targets for 51% attacks.
• Validator Centralization: Inevitable convergence on a few low-cost, centralized node providers.
• No Slashing Refuge: No underlying social consensus to slash malicious sovereign chain validators.

Without a unified base layer (like Ethereum) to coordinate, MEV extraction becomes a free-for-all. Sovereign chains lack the mature PBS (Proposer-Builder Separation) infrastructure and cross-domain MEV relays of the Ethereum ecosystem.

• Inefficient Markets: Local sequencers capture all MEV, with no competition from builders like Flashbots.
• Arbitrage Degradation: Cross-sovereign-chain arbitrage is slow and bridge-dependent, leaving value on the table.
• No Credible Neutrality: The chain's operator has full visibility and control over transaction ordering.