Ethereum Upgrades Expose Hidden System Assumptions

The monolithic L1 model assumed all state updates happen instantly and atomically. Rollups and L2s shatter this, creating a fragmented liquidity and execution environment. This breaks DeFi's core promise.

• ~$10B+ TVL is now siloed across L2s
• Native cross-chain swaps add ~30-60s latency
• Protocols like Uniswap and Aave must deploy fragmented instances

Instead of forcing users to manage fragmented liquidity, new systems let users declare a desired outcome (an intent). Solvers compete to fulfill it across any liquidity source, abstracting away the underlying complexity.

• UniswapX outsources routing to a network of fillers
• Across uses bonded relayers for canonical bridging
• Users get better prices without managing cross-chain state

Optimistic and ZK Rollups rely on a single sequencer to order transactions and post data/proofs to L1. This creates a single point of censorship and a systemic oracle risk—the L1 only sees what the sequencer shows it.

• ~100% of major L2s use a centralized sequencer
• MEV extraction is opaque and uncompetitive
• Creates reorg risks if the sequencer fails

Decouple transaction ordering from execution by creating a neutral, decentralized marketplace for block space. This mirrors Ethereum's PBS (Proposer-Builder Separation) and enables cross-rollup atomic composability.

• Espresso Systems provides a shared sequencer network
• Astria offers a rollup-agnostic sequencing layer
• Enables native cross-rollup MEV capture and censorship resistance

Scaling was wrongly framed as a compute problem. The real constraint is ensuring data is available to verify state transitions. Full on-chain data (calldata) is prohibitively expensive at scale, creating a security-scalability trilemma.

• ~80% of rollup cost is L1 data posting
• Forces trade-offs between security (Ethereum DA) and low cost (external DA)
• Celestia and EigenDA emerged to exploit this assumption

Separate data availability into a dedicated, optimized layer. This allows rollups to choose their security budget and enables light clients to verify data without running a full node. ZK-proofs then compress verification.

• Celestia pioneered modular DA with data availability sampling
• EigenDA provides high-throughput DA secured by Ethereum restaking
• Avail focuses on validator scalability and cross-chain proofs

PBS decouples block building from proposing to prevent MEV centralization, but creates a new cartel risk. Builders now control transaction ordering and inclusion, creating a single point of censorship. Without a trustless, in-protocol PBS solution, we rely on a builder market dominated by a few entities like Flashbots, bloXroute, and builder0x69.

• Risk: Builder cartels can front-run, censor, or extract maximal value.
• Exposure: All L2s and cross-chain bridges (LayerZero, Across) that assume timely, fair inclusion.

Restaking pools $15B+ in TVL to secure new services (AVSs), creating unprecedented systemic leverage. This re-hypothecates Ethereum's consensus security, creating correlated slashing risk. A critical bug in a major AVS like EigenDA or a cross-chain bridge could trigger a cascading slash, destabilizing the core Ethereum validator set.

• Risk: Security is diluted, not multiplied; a failure propagates upstream.
• Exposure: Every protocol using EigenLayer for security now inherits its tail risk.

Proto-danksharding (EIP-4844) introduces blob-carrying transactions with a separate fee market. This creates a new resource contention layer. During high demand, blob fees will spike, making L2s like Arbitrum and Optimism prohibitively expensive. The system assumes blobs are cheap and abundant; reality is a volatile auction.

• Risk: L2 throughput and cost stability are now at the mercy of a nascent, untested fee market.
• Exposure: All rollups and hybrid solutions (zkSync, Polygon zkEVM) that depend on cheap calldata.

Over 90% of Ethereum blocks are built via MEV-Boost, an off-protocol marketplace. This creates liveness fragility. If the dominant relay set (e.g., Flashbots, Agnostic, bloXroute) colludes or fails, block production halts. The network's health depends on the goodwill and infrastructure of a few private entities, violating decentralization assumptions.

• Risk: Centralized relays are a kill switch; a regulatory action could cripple chain progress.
• Exposure: Every application assuming constant 12-second block times.

Today's L2s (Arbitrum, Optimism, Base) use a single, permissioned sequencer for speed and low cost. This is a temporary, centralized crutch. The assumption is that decentralized sequencing (e.g., Espresso, Astria) will replace it before it matters. If decentralization lags, these sequencers become massive points of failure and censorship.

• Risk: A sequencer outage halts the entire L2 chain, freezing billions in DeFi (Uniswap, Aave).
• Exposure: All L2-native assets and cross-chain messaging (like Wormhole, CCTP).

The shift to ZK-proof based L2s (zkSync, Scroll, Polygon zkEVM) and zkEVMs moves critical security logic into complex, audited-but-unproven cryptographic circuits. A single verifier bug is catastrophic and potentially undiscoverable until exploited. The system assumes verifier code is perfect, but it's written by fallible humans and compilers.

• Risk: A zero-day in a ZK verifier could allow infinite minting or state corruption with no recourse.
• Exposure: Every bridge and protocol that trusts the L2's state root.

Rollups and L2s fragment liquidity and state. The assumption that any contract can call any other contract in the same atomic block is now a local property, not a global one.

• Key Consequence: Apps designed for synchronous, on-chain arbitrage (e.g., classic DeFi legos) break across domains.
• Architectural Shift: Protocols must now be designed for asynchronous messaging (LayerZero, CCIP) and intent-based settlement (UniswapX, Across).

The security bedrock is shifting from ETH PoW/PoS consensus to verifiable computation. Validity proofs (zk) and fault proofs (op) are the new system invariants.

• Key Benefit: Trustless bridging between layers becomes possible, as state transitions are cryptographically verified.
• Build For: Designing circuits (zk) or fraud-proof games (op). Your cost model is now proof generation gas, not just execution gas.

PBS and proposer-builder separation formalize MEV extraction. You can no longer assume a benign, passive sequencer. Your transaction's lifecycle is now an optimization game.

• Key Consequence: User experience is dictated by latency and ordering, not just gas price. Front-running and sandwich attacks are structural.
• Architectural Shift: Integrate with MEV-aware RPCs (Flashbots Protect), private mempools, or design for batch auctions (CowSwap).

Execution is cheap and parallelizable. The real constraint is getting data on-chain for verification. Blobs via EIP-4844 are a temporary fix, not a final solution.

• Key Benefit: Architectures that minimize on-chain data (zk-validiums, sovereign rollups) can achieve 100x+ lower costs but trade off for different security models.
• Build For: Modular DA layers (Celestia, EigenDA, Avail) and understand the data attestation vs. data availability spectrum.

Multi-dimensional resource pricing (EIP-4844 blobs, EIP-7623 for calldata) and L2-specific fee markets mean the simple gasUsed * gasPrice model is obsolete.

• Key Consequence: Cost forecasting requires modeling separate markets for execution, data, and state access. Your users will pay three different gas fees.
• Architectural Shift: Implement unified fee estimation APIs that abstract L1/L2 complexity and design for account abstraction (ERC-4337) to hide this complexity.

EVM hegemony is over. The execution layer is diversifying into high-performance VMs (Solana VM, Move VM, Fuel VM) and specialized zk-circuits. Interoperability is a VM translation problem.

• Key Benefit: Escape EVM constraints for parallel execution and native asset models. Your protocol's logic can be deployed optimally across multiple environments.
• Build For: WASM-based VMs, zk-asm languages, and universal state proofs that work across VM boundaries.