Why Rollups Are Just Leasehold, Not Freehold, Sovereignty

Rollup sovereignty is a myth without true data independence. Your chain's security is leased from the underlying L1's consensus.

• Security = L1 Validators: State validity depends entirely on Ethereum's ~$100B+ security budget.
• Censorship Risk: L1 sequencer/proposer failures or MEV can halt your chain's state progression.
• Cost Anchor: ~80-90% of rollup transaction fees are L1 data posting costs, a permanent tax.

Smart contract rollups cannot upgrade without L1 governance approval (e.g., Optimism's Security Council, Arbitrum DAO). This is administrative leasehold.

• Permissioned Evolution: Critical fixes or feature upgrades require a multi-sig on Ethereum, creating a 7-14 day delay vector.
• Protocol Capture: The upgrade mechanism itself becomes a centralization and political attack surface.
• Contrast with Validiums/Sovereign Rollups: They can fork and upgrade independently, demonstrating true freehold sovereignty.

Rollups do not capture the full value of their economic activity; it leaks back to the L1 in the form of ETH staking rewards and MEV.

• Value Extraction: L1 validators earn MEV and priority fees from rollup block space auctions, not the rollup's native token holders.
• Fee Market Dependency: Rollup throughput and cost are gated by L1's volatile basefee, preventing independent economic policy.
• Sovereign Counterexample: Celestia and EigenDA enable chains to lease only DA, keeping execution economics and MEV internally.

Cross-rollup communication (e.g., bridging, shared liquidity) is not sovereign; it routes through slow, expensive L1 settlement layers.

• The Hub-and-Spoke Model: Direct rollup-to-rollup messaging doesn't exist without L1 as a trust anchor, adding ~20 min finality latency.
• Contrast with Sovereign Chains: True sovereign stacks (e.g., Cosmos, Polkadot) can establish IBC or XCMP for sub-second, trust-minimized communication.
• Vendor Lock-in: Your interoperability suite is limited by your host L1's ecosystem and bridge security assumptions.

The DAO for Arbitrum One cannot unilaterally change its core L1 contracts. A malicious L1 multisig could force a hard fork, redirecting sequencer fees and censoring transactions. This demonstrates that political sovereignty is leased from Ethereum's social layer.

• Contingency: Social consensus on L1 overrides L2 governance.
• Precedent: The DAO fork of 2016 established Ethereum's ultimate authority.

Optimism's Security Council holds a 2-of-2 veto on all upgrades via a timelock. While decentralized, this structure explicitly delegates final sovereignty. The L1 contract upgrade path is controlled by this entity, making the chain's technical evolution contingent on its approval.

• Mechanism: L1 ProxyAdmin contract upgradeability.
• Implication: True hard fork requires council non-cooperation or L1 social consensus.

As an OP Stack chain, Base's upgrade keys are held in a 2-of-2 multisig shared with the Optimism Foundation. Coinbase cannot unilaterally upgrade the L1 contracts. This 'leasehold' model trades full sovereignty for shared security and ecosystem alignment, proving rollups are tenants, not landowners.

• Constraint: No solo hard fork capability.
• Trade-off: Security and interoperability over absolute control.

Matter Labs executed the Boojum proof system upgrade via a governor contract on L1. While the zkSync DAO governs tokenomics, the L1 upgrade path remains under technical team control. This separation shows that even advanced ZK-rollups lease execution sovereignty from their verifier contracts on Ethereum.

• Reality: L1 verifier contract is the ultimate gatekeeper.
• Limit: DAO cannot force a new proof system without L1 keyholder consent.

Rollup operators control transaction ordering and censorship. This is a single point of failure and rent extraction.\n- Centralized Control: Most sequencers are run by the founding team, creating a trusted intermediary.\n- MEV Capture: Sequencers can front-run user transactions, extracting value that should go to validators/users.\n- Forced Upgrade Path: The only escape is building your own chain (sovereign rollup) or using a shared sequencer network like Astria or Espresso.

Your rollup's security and upgrade keys are ultimately held by the L1's social consensus (e.g., Ethereum core devs, Polygon federation).\n- Hard Fork Risk: An L1 governance attack or bug can compromise your chain. See the Polygon checkpoint mechanism.\n- Protocol Politics: You are subject to the L1's roadmap and fee market changes (e.g., EIP-4844).\n- Sovereign Contrast: Celestia and EigenLayer enable rollups with independent governance, separating execution from base-layer politics.

Paying for L1 block space for data is the primary ongoing cost. It's a variable lease, not a fixed asset.\n- Cost Volatility: Fees spike with L1 congestion (e.g., NFT mints, airdrops). EIP-4844 blobs only partially solve this.\n- Capacity Limits: Throughput is capped by the L1's data bandwidth, creating a scalability ceiling.\n- Alternative Landlords: Celestia, Avail, and EigenDA offer cheaper, dedicated DA leases, reducing reliance on a single L1.

Canonical bridges to the L1 are the only secure exit, but they are slow and controlled by a multisig. This creates liquidity fragmentation.\n- 7-Day Challenge Period: Standard Optimistic Rollup withdrawals are capital-inefficient and user-hostile.\n- Multisig Risk: Bridge upgrades often rely on a 5-of-8 council, a softer security target than the L1 itself.\n- Ecosystem Lock-in: Fast bridges like Hop or Across introduce new trust assumptions, fracturing security models.

Native cross-rollup communication doesn't exist. You must route through the expensive L1 or trust third-party bridges.\n- L1 as a Hub: Every message passes through the settlement layer, paying gas and incurring latency.\n- Security Mismatch: Using LayerZero or Wormhole means adopting their validator set, diluting your L1 security guarantee.\n- Sovereign Advantage: IBC on Cosmos or native communication in Fuel shows true interop is a feature of peer chains, not tenants.

The logical conclusion is to own your data and sequencing. This is the shift from leasehold to freehold.\n- Full Control: Own your DA layer (e.g., on Celestia) and use a decentralized sequencer set.\n- Custom Security: Choose validators via EigenLayer restaking or a purpose-built PoS system.\n- Trade-off: You now bear the full cost and complexity of bootstrapping security and liquidity, the original problems L1s solve.