Why Economic Security Cannot Be Truly Shared

Security is not fungible. A validator's stake on Optimism is worthless for securing Base. The economic value securing each chain is siloed, making the 'shared' claim a branding exercise, not a technical reality.

Incentives diverge at scale. A validator for Polygon zkEVM prioritizes that chain's fees and MEV. Cross-chain slashing is impossible without a unified governance and enforcement layer, which no major L2 stack provides.

The re-staking loophole. Protocols like EigenLayer attempt to re-hypothecate Ethereum security, but this creates systemic risk and validator centralization pressures, trading one problem for another.

Evidence: The combined TVL of Arbitrum, Optimism, and Base exceeds $10B, yet their validator sets and staking contracts are completely independent. No slashing event on one chain affects another.

Security is not a liquid asset. You cannot fractionalize and re-stake the economic security of Ethereum's L1 validators onto an L2 like Arbitrum or Optimism. These L2s rely on a separate, weaker security budget derived from their own sequencer profits and fraud proof bonds, which are orders of magnitude smaller than the ~$100B staked on Ethereum.

Shared security is a branding exercise. Protocols like Cosmos' Interchain Security or EigenLayer's restaking create the illusion of pooled safety. In reality, they create new slashing conditions and validator subsets, fragmenting the very capital they claim to unify. A validator's stake on Ethereum is not natively at risk for a fault on a consumer chain.

The data proves decentralization is the bottleneck. The security of a chain like Polygon zkEVM or a rollup is capped by its sequencer decentralization and proof system, not by the theoretical security of the layer it settles to. A highly centralized sequencer is a single point of failure, regardless of the L1's robustness.

Economic security is not fungible. The security of a rollup is the cost to corrupt its sequencer or data availability layer. This cost is a function of a specific validator set and its staked asset, which cannot be fractionalized and reallocated without creating systemic risk.

Shared security creates correlated failure. Protocols like EigenLayer and Babylon pool stake from the same Ethereum validator set. A slashable event on one restaked chain triggers slashing across all, creating a contagion vector that defeats the purpose of diversification.

The market has already voted. Major L2s like Arbitrum and Optimism have explicitly rejected shared security for their own, dedicated validator sets and governance tokens. They prioritize sovereign security and credible neutrality over a theoretically shared but practically monolithic model.

Evidence: The total value restaked in EigenLayer exceeds $20B, representing massive concentration risk within Ethereum's ~$100B validator stake. This concentration, not distribution, is the system's defining characteristic.

Shared security is a systemic risk. It transforms an isolated application failure into a network-wide solvency crisis. A major exploit on a single rollup or L2 can drain the shared staking pool, compromising the security of every other chain that depends on it.

The weakest link dictates security. The economic security of the entire system is not the sum of its parts; it is defined by the most vulnerable application. A poorly audited DeFi protocol on an optimistic rollup like Arbitrum can jeopardize the base layer's Ethereum staked ETH, creating a contagion vector.

This creates a moral hazard. Application developers are incentivized to free-ride on pooled security while externalizing their risk. Projects like Celestia and EigenLayer attempt to modularize and re-stake security, but they merely redistribute, not eliminate, this fundamental concentration of tail risk.

Evidence: The 2022 Wormhole bridge hack resulted in a $326M loss. In a fully shared security model, that loss would have directly drained the collateral backing dozens of unrelated chains, triggering a cascade of insolvencies across the ecosystem.

Shared sequencers are not shared security. A sequencer ordering transactions for multiple rollups provides liveness, not settlement. The economic stake securing the sequencer's actions is not automatically slashed for fraud on a constituent rollup. This is a coordination layer, not a security primitive.

Optimistic systems externalize verification costs. Protocols like Arbitrum's BOLD or AltLayer's restaked rollups rely on a permissionless set of watchers to detect fraud. This creates a public goods problem where the cost of securing the system is borne by altruistic actors, not the value being secured.

Economic security is non-fungible across state. The capital staked to secure Ethereum's consensus cannot be simultaneously used to slash a rollup's invalid state transition without a verifiable fraud proof. This is the core innovation of EigenLayer's cryptoeconomic security, which explicitly re-stakes ETH to back new services.

Evidence: The TVL secured by restaking protocols like EigenLayer and Babylon exceeds $15B, demonstrating market demand for a formalized security primitive. In contrast, shared sequencer networks like Espresso or Astria operate with testnet-level capital, proving they address liveness, not security.

Security is not a commodity. It is a property derived from the cost to corrupt a specific state. A validator's stake secures the chain where it is slashed, not a foreign chain that cannot enforce penalties.

Shared security is a misnomer. Projects like Cosmos Interchain Security and EigenLayer AVSs do not share security; they rent validator attention. The underlying capital remains secured to the primary chain, creating alignment, not a shared pool.

The alignment is transactional. Protocols like Across and Stargate use bonded relayers, not shared validators. Their security stems from the relayers' stake being forfeitable for malfeasance on that specific bridge, creating a direct incentive alignment.

Evidence: The Polygon Avail data availability layer uses EigenLayer restakers for security. The restakers' ETH stake remains on Ethereum; their commitment to Avail is enforced by smart contract slashing, proving security is delegated, not shared.