Free 30-min Web3 Consultation
Book Consultation
Smart Contract Security Audits
View Audit Services
Custom DeFi Protocol Development
Explore DeFi
Full-Stack Web3 dApp Development
View App Services
Free 30-min Web3 Consultation
Book Consultation
Smart Contract Security Audits
View Audit Services
Custom DeFi Protocol Development
Explore DeFi
Full-Stack Web3 dApp Development
View App Services
Free 30-min Web3 Consultation
Book Consultation
Smart Contract Security Audits
View Audit Services
Custom DeFi Protocol Development
Explore DeFi
Full-Stack Web3 dApp Development
View App Services
Free 30-min Web3 Consultation
Book Consultation
Smart Contract Security Audits
View Audit Services
Custom DeFi Protocol Development
Explore DeFi
Full-Stack Web3 dApp Development
View App Services
depin-building-physical-infra-on-chain
Blog

Why Shared Security Models Fail for DePIN Interoperability

Restaking and shared validator sets like EigenLayer are ill-suited for securing the physical truthfulness of data between DePINs. This analysis argues that the oracle problem demands a specialized, context-aware security layer, not generalized cryptoeconomic security.

introduction
THE FLAWED FOUNDATION

Introduction

Shared security models, while effective for L2s, create critical vulnerabilities for cross-chain DePIN applications.

Shared security is insufficient for DePIN. It secures the messaging layer but ignores the physical execution of off-chain compute and data. A secure message about a sensor reading is worthless if the sensor or its oracle is compromised.

The attack surface shifts from consensus to oracles and hardware. Protocols like Helium and Render rely on external data feeds and physical infrastructure, creating trust assumptions that a shared security model like EigenLayer or Babylon cannot secure.

This creates a false sense of security. A DePIN dApp built on a shared-secured rollup like Arbitrum inherits L1 security for its on-chain state, but its core value—verified real-world data—remains secured only by its own, often weaker, oracle network.

key-insights
THE ARCHITECTURAL MISMATCH

Executive Summary

Shared security models like rollups and validiums are ill-suited for DePIN's physical world demands, creating a critical interoperability bottleneck.

01

The Problem: Shared Security = Shared Failure

DePINs require deterministic, real-world state transitions (e.g., sensor data, device control). A single sequencer failure or liveness attack on a shared L2 halts all connected DePINs, creating systemic risk.\n- Cross-chain slashing is impossible for off-chain actors.\n- A validator's mistake in a DeFi app shouldn't brick a fleet of autonomous vehicles.

100%
Correlated Risk
~0s
Tolerance for Downtime
02

The Problem: Economic Abstraction Breaks

Shared security pools capital to protect digital assets, but DePIN security is about physical performance and data integrity. You cannot slash a validator to compensate for a faulty IoT device or a delayed data feed. The security fee (gas) becomes a tax with no aligned insurance mechanism.\n- Security budget is misallocated to highest TVL, not highest stake.\n- Creates moral hazard between virtual and physical fault.

$0
Physical Collateral
Misaligned
Incentives
03

The Solution: Sovereign Security Stacks

DePINs need dedicated, verifiable execution layers that bundle their own security (proofs, attestation committees) and connect via light-client bridges (like IBC) or proof aggregation layers (like Polymer, Electron).\n- Isolate fault domains: A failure in Helium doesn't affect Hivemapper.\n- Custom consensus: Optimize for latency (<500ms) or data throughput, not just TPS.

Isolated
Fault Domain
<500ms
Target Latency
04

The Solution: Proof-Centric Interop Layer

Interoperability must shift from validator-set trust (like LayerZero, Axelar) to verifiable proof systems. Light clients verify state proofs, not signatures. This enables trust-minimized bridges where security is inherent to the message, not the middleware.\n- Leverage ZK proofs for compact state verification (Succinct, Polygon zkEVM).\n- Enables physical data attestations to be treated as first-class cryptographic proofs.

Trust-Minimized
Bridges
ZK
Proof Standard
05

The Problem: The Latency vs. Finality Trade-Off

Shared L2s optimize for economic finality (e.g., 12-second blocks) which is useless for real-time device coordination. DePINs need sub-second pre-confirmations with physical recourse. The shared sequencer becomes a bottleneck, adding ~2-10s of unnecessary latency for cross-DePIN messages.\n- Rollups batch transactions, destroying time-sensitive guarantees.\n- Creates a mismatch between blockchain time and real-world time.

2-10s
Added Latency
Sub-second
DePIN Need
06

The Solution: Intent-Based Physical Orchestration

Move beyond simple token transfers. Use intent-based architectures (like UniswapX, CowSwap) for cross-DePIN resource allocation. A user's intent to "store 1TB" is fulfilled by a solver network across Filecoin, Arweave, and Storj, with settlement on a neutral L1.\n- Solvers compete on physical performance metrics (latency, uptime).\n- Separates execution liability from settlement security.

Intent-Based
Architecture
Solver Network
Execution Layer
thesis-statement
THE ARCHITECTURAL FLAW

The Core Argument: The Oracle Problem is Not a Consensus Problem

Shared security models misdiagnose the root cause of cross-chain data validation, creating systemic risk for DePIN.

Shared security is misapplied. Projects like LayerZero and Wormhole treat data authenticity as a consensus problem. Their validator sets or multi-sigs vote on truth, but this only secures the vote, not the underlying data source. This creates a systemic risk for DePIN, where sensor data or compute proofs are external.

The core failure is attestation. A DePIN oracle must attest that a specific data payload (e.g., a Helium hotspot location proof) is valid according to its native chain's rules. A shared security bridge attests that a message was sent, not that the originating state is correct. This is the critical distinction protocols like Hyperliquid and dYdX v4 avoid by staying sovereign.

Proof, not consensus, is required. The solution is cryptographic proof of state, not social consensus. A zk-proof from the source chain (like a zkIBC light client) provides cryptographic certainty. Shared security models like Polymer or Cosmos IBC with light clients move in this direction, but most 'omnichain' middleware still relies on trusted committees.

Evidence: The bridge hack pattern. Over $2.8B has been stolen from cross-chain bridges since 2020, primarily via validator compromise (Wormhole, Ronin). These attacks prove that securing a voting layer is insufficient when the attack surface is the data origin—a flaw fatal for DePIN's physical-world dependencies.

WHY SHARED SECURITY MODELS FAIL

Security Model Mismatch: DePIN vs. Financial dApps

Comparing core security assumptions between DePIN and financial applications, highlighting why shared validator sets (like in Cosmos) or optimistic systems are insufficient for cross-chain DePIN interoperability.

Security PropertyDePIN (Physical Asset)Financial dApp (Digital Asset)Shared Security Model (e.g., Cosmos IBC)

Finality Guarantee Required

Deterministic, >99.9%

Probabilistic, ~99.5%

Probabilistic, ~99.5%

Slashable Fault Window

7 days (physical ops)

<1 day (digital state)

<21 days (unbonding period)

Data Integrity Proof

ZK Proof of Physical Work

Merkle Proof of State

IBC Packet Receipt Proof

Oracle Dependency for State

Tolerates Liveness Failure

Cross-Chain Message Cost

$10-50 (ZK proof cost)

<$0.01 (light client verify)

<$0.001 (IBC packet)

Primary Attack Vector

Data Source Corruption

Economic Exploit

Validator Collusion

deep-dive
THE MISMATCH

The Three Fatal Flaws of Shared Security for Physical Data

Shared security models, like those from EigenLayer or Cosmos IBC, fail for DePIN because they secure digital consensus, not the physical world.

Shared security secures consensus, not sensors. Protocols like EigenLayer or Cosmos IBC validate state transitions on a blockchain. A DePIN oracle reporting a temperature reading from a physical sensor is a data attestation, not a consensus event. The security model is orthogonal to the data's real-world provenance and integrity.

The slashing condition problem is intractable. Slashing a validator for submitting 'bad' physical data requires an objective, on-chain truth, which does not exist for real-world events. This creates a circular dependency where the system needs a trusted oracle to police its own oracles, defeating the purpose of decentralized security.

Economic alignment diverges violently. In a rollup, sequencer incentives align with L1 security. In DePIN, a sensor operator's incentive is to provide cheap, reliable data to an application like Helium or Hivemapper, not to maximize the shared security pool's yield. These misaligned economic vectors create systemic risk.

Evidence: The Helium Network's migration from its own L1 to Solana demonstrates that native chain security was a liability, not an asset, for scaling physical device coordination and data throughput.

case-study
WHY ONE-SIZE-FITS-ALL SECURITY BREAKS

Case Studies in Specialized Security

Shared security models, like those from rollups or general-purpose L1s, fail to meet the unique physical and economic demands of DePIN interoperability.

01

The Physical Data Oracle Problem

Using a general-purpose L1 like Ethereum for sensor data consensus is economically broken. Finality times of ~12 minutes are useless for real-world actuators. The solution is a purpose-built oracle network with sub-second attestation and slashing for data manipulation.

  • Key Benefit: Enables real-time, cryptographically verifiable physical state.
  • Key Benefit: ~99.9% lower cost per data point vs. L1 settlement.
>99.9%
Cost Reduction
<1s
Attestation
02

Cross-Chain Resource Markets (Helium IOT -> Solana)

Helium's migration exposed the failure of monolithic chain security for asset-heavy DePINs. Their original L1 couldn't scale for ~1M hotspots. The 'solution' was a full chain migration—a nuclear option. The correct architecture is a specialized settlement layer for resource credits, bridged via light clients, not a shared security blanket.

  • Key Benefit: Isolated economic security for resource tokens.
  • Key Benefit: Prevents contamination of DePIN state by unrelated DeFi exploits.
1M+
Devices
Zero
Shared Risk
03

Intent-Based Bandwidth Trading (Across, Socket)

DePINs like Helium Mobile or WiFi hotspots need to sell bandwidth in real-time. Generalized bridges (LayerZero, Axelar) add latency and trust layers for simple swaps. The solution is intent-based pathways where fulfillment is the physical service delivery, settled on the optimal chain. UniswapX and CowSwap prove the model for digital assets.

  • Key Benefit: Atomic swap of resource for payment.
  • Key Benefit: Removes intermediary liquidity pools, reducing fees by >60%.
~60%
Fee Reduction
Atomic
Settlement
04

The Shared Sequencer Fallacy for DePINs

Projects like Astria or Espresso offer shared sequencing for rollups, promising decentralized ordering. For DePINs, this is a trap. A sequencer for Tesla vehicle data has zero overlap with a sequencer for weather sensors. Specialized sequencers with physical attestation (e.g., GPS proof) are required, not a generic FIFO queue.

  • Key Benefit: Context-aware transaction ordering based on physical events.
  • Key Benefit: Eliminates malicious front-running of real-world actions.
Zero
Context Overlap
100%
Event-Driven
05

Hardware-Bound Key Management vs. Smart Accounts

DePIN devices cannot rely on social recovery or multisigs. A stolen sensor must be cryptographically bricked, not 'recovered'. The solution is a hardware secure enclave (e.g., TPM, Secure Element) generating device-specific keys, with revocation rooted in physical proof. Ethereum's ERC-4337 is irrelevant here.

  • Key Benefit: Physical compromise = cryptographic revocation.
  • Key Benefit: No wallet dependency on volatile L1 gas markets.
Hardware
Root of Trust
Zero
Social Risk
06

Economic Security: Staking Sensors, Not Tokens

Generalized chains secure value with liquid staking derivatives (LSDs). DePINs secure physical performance. The model must slash for uptime failure or data fraud, not just double-signing. Projects like Render Network and Filecoin pioneered this, but their models are siloed. Interoperability requires standardized slashing conditions that travel across chains.

  • Key Benefit: Collateral is the physical asset, not a volatile token.
  • Key Benefit: Cross-chain slashing enforces performance globally.
Physical
Collateral
Global
Slashing
future-outlook
THE ARCHITECTURAL SHIFT

The Path Forward: Specialized Attestation Layers

DePIN interoperability requires purpose-built attestation layers, not generalized shared security models.

Generalized shared security fails for DePIN because it treats all data as equal. A Helium hotspot's location proof and a Render GPU's work unit require different validation logic, latency, and cost profiles that monolithic chains like Ethereum or Cosmos cannot optimize.

Specialized attestation layers win by decoupling verification from consensus. Protocols like EigenLayer AVS and Hyperliquid's L1 demonstrate that dedicated, verifiable compute for specific tasks (e.g., proving) is more efficient than forcing everything through a general-purpose VM.

The counter-intuitive insight is that more fragmentation in the attestation layer creates stronger, not weaker, interoperability. A standard like IBC or CCIP routes messages, but specialized attestors (e.g., for geospatial data, bandwidth proofs) become the trusted truth source for cross-chain state.

Evidence: The Helium migration to Solana proved that offloading consensus to a high-throughput L1 while retaining a lightweight data attestation layer (the Oracles) increased scalability 1000x without compromising data integrity for its DePIN use case.

takeaways
WHY SHARED SECURITY FAILS FOR DEPIN

Key Takeaways for Builders and Investors

Shared security models like those used by Cosmos IBC or Polkadot parachains are fundamentally misaligned with the physical and economic realities of DePIN networks.

01

The Physical Asset Mismatch

Shared security pools capital to protect virtual state, but DePIN value is anchored in off-chain hardware. A validator slashing in a shared chain does nothing to secure a fleet of sensors or GPUs. This creates a critical security gap where the most valuable assets are unprotected.

  • Security Surface Mismatch: Virtual slashing vs. physical asset integrity.
  • Oracle Problem: Shared security has no native mechanism to verify real-world data feeds from hardware.
  • Collateral Disconnect: Staked tokens secure the chain, not the physical performance of the underlying infrastructure.
0%
Physical Coverage
100%
Virtual Focus
02

The Sovereignty Tax

DePIN networks require granular, application-specific governance for hardware provisioning, data pricing, and geographic rollout. Ceding finality to a shared validator set introduces crippling overhead and misaligned incentives.

  • Governance Bottleneck: Every hardware update or pricing change requires cross-chain governance, creating ~2-4 week delays.
  • Incentive Misalignment: General-purpose validators lack the expertise to adjudicate DePIN-specific disputes (e.g., proof-of-location fraud).
  • Cost Inefficiency: Paying for blanket L1 security is overkill for networks whose value is 80%+ off-chain.
2-4 weeks
Change Latency
80%+
Off-Chain Value
03

The Interoperability Illusion

Projects like Cosmos IBC and LayerZero enable token transfers, not stateful interoperability for DePIN workflows. A drone network cannot securely trigger a compute job on another chain via a generic message-passing bridge without introducing unacceptable trust assumptions.

  • Trusted Relayers: IBC and LayerZero often rely on permissioned relayers or off-chain committees for cross-chain attestations.
  • State Complexity: Moving tokenized data or compute credits is trivial; orchestrating verifiable physical work is not.
  • Solution: Native DePIN interoperability requires purpose-built, attestation-based bridges like Hyperlane with custom ISMs, not generalized shared security.
High
Trust Assumptions
Low
Workflow Utility
04

The Modular Alternative: Dedicated Settlement + Purpose-Bridging

The winning stack is a dedicated DePIN settlement layer (e.g., a Rollup on Celestia or EigenLayer) for internal consensus, paired with light-client bridges for specific asset transfers. This preserves sovereignty while enabling liquidity connectivity.

  • Sovereign Execution: Dedicated chain manages hardware ops and tokenomics with sub-second finality.
  • Targeted Bridging: Use Across or Chainlink CCIP for asset inflows; use native attestation bridges for cross-DePIN commands.
  • Economic Efficiency: Pay only for the security you need (settlement) and the interoperability you use (specific bridges).
Sub-second
Sovereign Finality
-70%
Security Overhead
ENQUIRY

Get In Touch
today.

Our experts will offer a free quote and a 30min call to discuss your project.

NDA Protected
24h Response
Directly to Engineering Team
10+
Protocols Shipped
$20M+
TVL Overall
NDA Protected Directly to Engineering Team