The Unseen Cost of Separating Verification and Execution

When a rollup's sequencer is temporarily offline, users can submit transactions directly to L1, but this opens a window for MEV extraction. Attackers can reorg the L1 chain to censor or front-run these forced transactions.

• Key Risk: Breaks the liveness guarantee for users during sequencer downtime.
• Real-World Impact: Seen in early Arbitrum and Optimism deployments, requiring protocol-level mitigations.

If a rollup's data availability layer (e.g., Celestia, EigenDA) fails or censors, the L1 can no longer verify state transitions. This triggers a mass exit, but without data, users cannot prove their L2 balance.

• Key Risk: Transforms a temporary DA failure into permanent fund loss.
• Systemic Consequence: Creates a $10B+ TVL hostage situation, undermining the entire modular security model.

Most rollups (Arbitrum, Optimism, zkSync Era) use a multi-sig to upgrade core contracts. This centralizes trust, creating a catastrophic failure mode orthogonal to cryptographic security.

• Key Risk: A compromised multi-sig can steal all funds or alter protocol rules.
• Practical Reality: This is the dominant real-world risk today, making a mockery of "decentralized" L2 security claims.

Bridges between modular chains (e.g., LayerZero, Axelar) must now trust both chains' verification and execution layers. A failure in one layer can invalidate the bridge's security model, leading to frozen or stolen funds.

• Key Risk: Compounding trust assumptions across multiple, potentially faulty, modular components.
• Amplified Surface: Turns a single-layer bug into a cross-chain contagion vector, as seen in the Wormhole and Nomad hacks.

Separating layers creates a critical coordination failure. A fast execution layer can process transactions, but if the verification/settlement layer is congested or halted, those transactions are worthless. This is the core risk of optimistic rollups and modular DA layers.

• Real Consequence: User funds are effectively locked during a settlement layer outage.
• Systemic Risk: Creates a single point of failure, negating the liveness guarantees of the execution environment.

Modular designs multiply MEV surfaces. Sequencers on execution layers and proposers on settlement layers can extract value independently, creating a double-dipping problem. Liquidity fragments across these layers, increasing slippage.

• Example: A user's cross-rollup swap via a shared sequencer like Astria or Espresso still faces MEV on the destination L1.
• Cost: ~10-30% higher effective costs for users when accounting for fragmented liquidity and layered MEV.

Communication between modular components (e.g., rollup → DA layer → settlement) is not free. Every hop adds latency, cost, and trust assumptions, making intent-based bridges like Across and LayerZero essential but expensive bandaids.

• Latency Cost: Adds ~2-10 seconds per hop versus monolithic chain finality.
• Economic Cost: Each bridging step takes a fee, often hidden from the end-user but paid by the protocol's economic model.

Using an external DA layer like Celestia trades security for cost. While it reduces L1 calldata fees, it introduces a new trust assumption and a liveness dependency separate from Ethereum. If Celestia censors or fails, rollups built on it cannot reconstruct their state.

• Trade-off: ~100x cheaper data posting vs. introducing a non-Ethereum security assumption.
• Architectural Risk: Creates a verification stack (Ethereum for settlement, Celestia for DA) that is only as strong as its weakest link.

These chains reject modularity, arguing that tightly integrated verification and execution enable superior performance and simpler security. Solana's single-state machine and Monad's parallelized EVM show that monolithic scaling can achieve ~10k+ TPS with atomic composability and a single liveness guarantee.

• Key Advantage: No cross-layer coordination overhead means sub-second finality and unified liquidity.
• The Trade-off: Demands extreme hardware requirements and optimized client software.

Projects like Astria and Espresso propose shared sequencers to solve fragmentation, but they simply move the centralization point. They create a new meta-layer that must be trusted for censorship resistance and cross-rollup atomicity, reintroducing the very problems decentralization aims to solve.

• Hidden Cost: Adds another fee layer and a new consensus mechanism that rollups must trust.
• Outcome: Replaces L1 proposer/builder centralization with sequencer set centralization.