Security is not fungible. A validator set securing a sovereign rollup like Celestia or an app-chain via the Polygon CDK cannot simultaneously guarantee the economic security of a high-value DeFi hub. This creates a weakest-link problem where the security of the entire ecosystem is defined by its least valuable component.
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Blog
Why Shared Security Models Are Failing Modular Ecosystems
The modular blockchain thesis demands new security primitives. Current models like Interchain Security are architectural stopgaps that fail to solve cross-layer slashing, liveness guarantees, and validator incentive alignment at scale.
introduction
THE FLAWED FOUNDATION
Introduction
Shared security models, while conceptually elegant, are creating systemic risk and fragmentation that undermines the modular thesis.
Shared security creates political risk. Protocols like EigenLayer and Babylon introduce re-staking slashing across heterogeneous networks, creating unquantifiable systemic risk. A slashing event on a minor consumer chain can cascade to the core economic layer, a flaw not present in isolated security models like Bitcoin or Solana.
Evidence: The Total Value Secured (TVS) metric is misleading. A validator set securing $20B on Ethereum L1 does not magically extend that full economic security to a $10M rollup; the actual security is capped by the rollup's own stake-at-risk, which is often orders of magnitude lower.
key-trends
WHY SHARED SECURITY ISN'T SCALING
The Three Fracture Points
Modular architectures push execution off-chain, but their security models remain brittle, creating systemic risk and limiting composability.
01
The Data Availability Dilemma
Rollups rely on external DA layers (Celestia, EigenDA, Avail) for data, but this outsources their core security guarantee. A DA layer failure or censorship attack breaks all dependent chains, creating a single point of failure for $20B+ in bridged assets. The solution is to treat DA as a verifiable commodity, not a trust assumption.
- Problem: Sovereign DA shifts risk, doesn't eliminate it.
- Solution: Multi-DA clients, fraud proofs on DA, and economic security slashing.
1 → N
Failure Points
$20B+
At Risk
02
Sovereign Rollup Escape Hatches
Sovereign rollups (e.g., on Celestia) can unilaterally change their settlement and bridge contracts. This 'sovereignty' is a security liability for users and apps, as it allows for rug-pull upgrades that drain bridges. Shared security models like Ethereum's enshrined rollups provide stronger social consensus but sacrifice flexibility.
- Problem: User security is optional for sovereign chains.
- Solution: Enshrined bridges, opt-in security markets (Babylon, EigenLayer), and fork-choice rules that penalize malicious upgrades.
0-Day
Upgrade Risk
Optional
User Protection
03
The Interoperability Security Gap
Cross-chain communication (IBC, LayerZero, Axelar) depends on the security of the weakest connected chain. A bridge hack on a small rollup can drain liquidity from a major chain like Arbitrum or Optimism. Shared security does not extend to the messaging layer, creating $2B+ in annual bridge exploit risk.
- Problem: Security is non-composable across domains.
- Solution: Light client bridges with economic slashing, shared sequencer sets (Espresso, Astria), and unified fraud proof systems.
$2B+
Annual Exploit Risk
Weakest Link
Security Model
deep-dive
THE INCENTIVE MISMATCH
The Inevitable Misalignment: Why Rented Security Breaks Down
Shared security models create fundamental conflicts between the economic interests of validators and the operational health of individual chains.
Rented security is commoditized security. Validators on EigenLayer or Babylon optimize for yield across hundreds of chains, not the liveness of your specific rollup. Their economic stake is secured by the base layer, not your chain's success.
The slashing dilemma is unenforceable. Proving a validator's malicious action against a sovereign appchain is technically and legally fraught. This makes cryptoeconomic penalties theoretical, reducing security to a probabilistic reputation game.
Evidence: The Cosmos Hub's Interchain Security sees minimal adoption because chains reject ceding sovereignty for a security premium they cannot customize. Validator sets become political, not technical, arbiters.
WHY MODULAR SECURITY IS FRAGILE
Shared Security Model Comparative Breakdown
A quantitative comparison of dominant security models, highlighting the trade-offs and systemic risks that undermine modular blockchain composability.
| Security Feature / Metric | EigenLayer (Restaking) | Celestia (Data Availability Sampling) | Polygon Avail (Data Availability) | Babylon (Bitcoin Staking) |
|---|---|---|---|---|
Core Security Asset | Ethereum ETH | Celestia TIA | Polygon MATIC | Bitcoin BTC |
Slashing for L2 Faults | ||||
Economic Security (TVL) | $20B | $1.2B | $0.8B | $1.5B (Testnet) |
Finality Time to L2 | 12-15 min (Ethereum) | ~15 sec | ~20 sec | ~1-2 hours (Bitcoin) |
Data Availability Cost per MB | $0.80 | $0.02 | $0.03 | N/A |
Interop Security Guarantee | Weak (Separate Consensus) | None | None | Strong (Direct Slashing) |
Maximum Extractable Value (MEV) Risk | High (Centralized Sequencing) | Delegated to Rollup | Delegated to Rollup | Low (Native BTC Finality) |
Validator Decentralization (Nodes) | ~200 Node Operators | ~150 Active Validators | ~100 Validators | ~10k Bitcoin Miners |
counter-argument
THE COMPROMISE
The Rebuttal: "It's Good Enough For Now"
Shared security is a temporary, suboptimal trade-off that creates systemic risk and stifles sovereignty for modular chains.
Shared security is a centralization vector. Relying on a single validator set like Ethereum's for settlement creates a single point of failure for dozens of rollups. This contradicts the modular promise of sovereign execution and replicates the systemic risk of monolithic L1s.
Sovereignty is sacrificed for convenience. Chains using EigenLayer AVS or Celestia-based rollups outsource their consensus. This creates a political dependency where the security provider's governance decisions, like slashing parameters or upgrades, dictate the rollup's operational freedom.
The economic model is misaligned. Validators securing an Arbitrum or Optimism rollup earn fees from that chain but are ultimately slashed on the L1. This principal-agent problem means validators prioritize L1 security over the rollup's health, creating a security deficit.
Evidence: The Polygon CDK and Arbitrum Orbit frameworks default to Ethereum for security, creating a concentrated risk profile. A successful attack on Ethereum's consensus would invalidate the state of every major rollup simultaneously.
takeaways
SHARED SECURITY FLAWS
The Path Forward: Key Takeaways for Builders
The promise of shared security is buckling under the weight of economic misalignment and technical fragmentation. Here's what to build instead.
01
The Interoperability Tax: Why Cosmos & Polkadot Are Stuck
Hub-and-spoke models impose a capital efficiency tax and create sovereignty bottlenecks. Validators secure the hub, not the application logic on sovereign chains, leading to fragmented security guarantees.
- IBC requires relayers and staked tokens per connection.
- Parachains compete in wasteful, non-reusable auctions for slots.
- Result: <10% of total ecosystem TVL typically secures any single app-chain.
<10%
TVL Utilized
$200M+
Slot Cost
02
EigenLayer's Restaking Dilemma: Security is Not a Commodity
Pooling ETH security for Actively Validated Services (AVSs) confuses cryptoeconomic security with technical security. A single set of validators cannot be experts in all AVS logic, creating systemic risk.
- Slashing complexity explodes; a bug in one AVS can penalize unrelated ones.
- Security becomes a race to the bottom on cost, divorcing stake from service quality.
- This creates a moral hazard, akin to re-using a bank vault guard for airport security.
100+
AVS Complexity
Single Point
Of Failure
03
Solution: Specialized Security Markets & Proof-of-Service
Move from monolithic security pools to verifiable, service-specific attestation networks. Security should be a function of proven performance for a specific task, not just re-staked capital.
- AltLayer's Restaked Rollups point the way: dedicated sequencer sets and faster finality.
- Babylon brings Bitcoin timestamping without trusting new validators.
- Future: Proof-of-Service networks where operators bid on SLAs for data availability, sequencing, or proving.
Specialized
Attestation
SLA-Based
Security
04
The Celestia Model: Minimal, Credibly Neutral DA
Shared security fails when it tries to do too much. Data Availability (DA) is the only layer primitive generic enough to share effectively. Celestia decouples consensus and execution, providing a minimal trust base for rollups.
- Rollups get sovereign fraud proofs and forkability.
- Security scales with data bandwidth, not validator set multiplication.
- This enables the modular stack: Celestia for DA, Ethereum for settlement, Arbitrum for execution.
$0.001
Per MB DA Cost
1000+
Rollup Capacity
05
AVS Collusion & The Cartel Problem
Shared security pools are vulnerable to coordination attacks. A dominant subset of operators across multiple AVSs (like EigenLayer operators) can form a cartel to censor or extract MEV, violating the neutrality of every service they secure.
- Oligopoly risk is inherent in pooled validator sets.
- Mitigation requires decentralized operator sets and cryptoeconomic penalties that exceed collusion profits.
- Builders must audit the operator concentration of any shared security provider.
>33%
Cartel Threshold
High Risk
For Neutrality
06
Build for Forkability, Not Just Finality
The ultimate shared security is the ability to credibly exit. Modular designs that prioritize forkability—enabled by separable DA and settlement—create stronger leverage for communities than slashing on a hub.
- Optimistic Rollups with fraud proofs make exit a user-driven security guarantee.
- Sovereign Rollups on Celestia can fork their execution layer without permission.
- This inverts the model: security is enforced by the threat of leaving, not by a central slashing committee.
User-Enforced
Security
No Permission
Required
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