The Coming War Over Cross-Protocol Fee Sharing

Today's modular stack (e.g., Celestia, EigenDA, Arbitrum) creates a value extraction problem. Execution layers generate fees, but the underlying data availability and settlement layers operate on thin, commoditized margins. This is unsustainable.

• Fee Capture: L2s capture ~90% of transaction fees, while DA layers earn pennies.
• Incentive Misalignment: Cheap DA is a race to the bottom, disincentivizing long-term security investment.
• Fracture Point: The first major DA outage or security failure will trigger a re-evaluation of this model.

Protocols like UniswapX, CowSwap, and Across are pioneering intent-based architectures that internalize value flow. By owning the routing and settlement path, they can capture and redistribute fees and MEV back to the protocol treasury and users.

• Direct Capture: Fees from cross-chain swaps are retained, not leaked to third-party bridges.
• MEV Redistribution: Surplus from order flow auction (OFA) mechanisms is shared, not extracted.
• Strategic Shift: This turns infrastructure from a cost center into a revenue-generating core component.

The fight will converge on the settlement layer. Ethereum as a monolithic settlement is being challenged by Cosmos app-chains, Solana as a rollup settlement layer, and shared sequencer networks like Astria and Espresso. Whoever controls the ordering of cross-domain transactions controls the fee pool.

• Sequencer Revenue: The entity that orders transactions captures the right to extract and share value.
• Interoperability Standard: The winner will set the de facto standard for cross-protocol fee sharing agreements.
• Outcome: A new financial primitive emerges: a trust-minimized, programmable revenue-sharing agreement for modular blockchains.

Standard bridges are dumb pipes, leaking value to external searchers. They transport assets but forfeit the ~$1B+ annual cross-chain MEV opportunity to third parties like Across and LayerZero's OFT standard, which don't share revenue with source chains.

• Value Leakage: Searchers capture arbitrage between L1 and L2.
• No Stakeholder Alignment: The originating chain's security budget sees no benefit.

Arbitrum is building a vertically integrated environment where execution (Stylus), sequencing (BOLD), and bridging are native. This stack enables native cross-chain intent routing where fees from bridging and execution are captured and shared back to the protocol treasury and stakers.

• Fee Capture: MEV from cross-chain swaps is internalized.
• Staker Yield: Sequencer and bridge fees boost ARB staking rewards, creating a positive feedback loop for security.

UniswapX abstracts liquidity sourcing through a Dutch auction model, but its true power is becoming the default intent-based bridge. By routing orders through its own fillers, Uniswap can capture cross-chain swap fees that would otherwise go to CowSwap or 1inch Fusion.

• Protocol-Owned Liquidity: Fillers are incentivized with UNI, not just profit.
• Cross-Chain Dominance: Becomes the default bridge for any app integrating its swap widget.

The battle shifts from pure TPS to economic capture and redistribution. Successful L2s will be those whose native bridges and sequencers become profitable businesses, subsidizing user acquisition and staker yields. This creates unbreakable moats for ecosystems like Arbitrum and Optimism's Superchain.

• Winner-Take-Most Economics: Integrated stacks with fee sharing attract more developers and capital.
• Commoditization of Vanilla L2s: Chains without a strategic stack become low-margin commodities.

In a modular world (Celestia, EigenDA, Arbitrum), the execution layer captures all fees while underlying data/security layers are commoditized. This creates unsustainable economic models and security risks.

• Example: A rollup pays ~$0.01 for data but generates $1.00 in sequencer fees.
• Risk: Data availability layers become public goods with no direct revenue, threatening long-term security.

Protocols are hardcoding fee splits into their consensus or smart contract layers. This isn't optional tipping; it's mandatory value routing.

• EigenLayer: Actively Validated Services (AVS) must share fees with restakers.
• Celestia Blobstream: Could enforce a fee share for data attestations.
• Result: Creates a native yield source for security providers, moving beyond pure inflation.

The largest fee pool is MEV, which currently bleeds to block builders and searchers. The fight is to recapture it for protocol treasuries and stakers.

• Flashbots SUAVE: Aims to become a neutral, cross-chain MEV market.
• Cosmos & Skip Protocol: Building app-chain native MEV capture via x/builder module.
• Stake: Whoever controls the MEV order flow controls the most lucrative fee stream.

Infrastructure is emerging to let any protocol easily implement and manage complex fee-sharing logic across its stack.

• Analogous to Uniswap's Fee Switch: But for the entire protocol supply chain.
• Builders: Look for projects like Catalyst or Exponential that abstract the complexity.
• Investors: The winners will be the pipes, not just the protocols using them.

Two competing visions will emerge: vertically integrated ecosystems that keep fees internal (e.g., Polygon Supernets, Avalanche Subnets) vs. neutral hubs that facilitate sharing between sovereign chains.

• Cartel Model: Better UX, faster iteration, but closed and potentially extractive.
• Neutral Hub Model: More composable and resilient, but harder to bootstrap. LayerZero and Cosmos IBC are positioned here.
• Bet: Neutrality wins in the long tail; cartels win in high-value verticals.

If you're building infrastructure, design with a first-class fee-sharing mechanism from day one. If you're investing, evaluate teams on their economic design, not just their tech.

• For Builders: Your fee router is your moat. Make it flexible and verifiable.
• For Investors: The protocols that redistribute value most fairly will attract the highest-quality stake and developers.
• Metric to Watch: Protocol-Captured Value (PCV) as a % of total fees generated.