Why Execution Layers Will Become Application-Specific

Every dApp on a monolithic chain like Ethereum pays for the global state of all others. This creates a quadratic scaling problem for node operators and forces high, inelastic gas fees for simple transactions.

• Result: A ~$1B/year security budget is spent validating unrelated DeFi and NFT state.
• Solution: App-chains only pay to secure and replicate their own application state.

A shared execution environment creates unbounded contention. A single hot NFT mint or memecoin launch on Solana or a base layer can congest the entire network, creating a negative externality for all other applications.

• Result: Predictable performance is impossible; latency spikes from ~400ms to 10s+.
• Solution: Dedicated execution layers (like Fuel, Eclipse) guarantee deterministic throughput for their app, decoupled from network noise.

Monolithic chains enforce a one-size-fits-all governance and upgrade model. Protocol changes require ecosystem-wide consensus, stifling innovation. See the slow adoption of EIP-4844 for blobs or Solana's scheduler debates.

• Result: 12-24 month upgrade cycles vs. weeks for an app-chain.
• Solution: Application-specific chains enable tailored VM choices (WASM, SVM, Move), custom fee markets, and instant feature deployment.

In a shared mempool, sophisticated searchers extract value from retail users and predictable DeFi flows. This value leakage is a direct tax on application logic and user experience.

• Result: $500M+ in extracted MEV annually creates adversarial economics.
• Solution: App-specific chains can implement native, order-flow-aware mechanisms like CowSwap's batch auctions or Flashbots SUAVE, baking protection directly into the protocol.

Migrated from StarkEx L2 to its own Cosmos SDK chain. The Problem: Generic L2s couldn't match the throughput and composability needed for a leading perpetuals exchange. The Solution: A sovereign chain with a custom mempool, order book module, and zero gas fees for trading.\n- ~2,000 TPS for order matching vs. ~50 TPS on Ethereum L1\n- Proposer-Builder-Separation (PBS) for MEV management\n- Validator rewards directly tied to protocol fees

An Optimistic Rollup built with the OP Stack, exclusively for options and perpetuals. The Problem: Options require complex, stateful logic (settlements, expiries) that is expensive and slow on general-purpose chains. The Solution: A dedicated environment with a centralized sequencer for sub-second block times and custom precompiles.\n- ~500ms block times enable near-CEX latency\n- Custom fraud proof system for financial primitives\n- Shared security and bridging via Ethereum

A monolithic L1 built on Tendermint, purpose-built as a decentralized derivatives exchange. The Problem: Relying on external execution layers creates bottlenecks in sovereignty, upgradeability, and fee capture. The Solution: Full-stack control over the consensus client, mempool, and matching engine.\n- > $500M peak TVL as a standalone chain\n- Native perpetuals with up to 50x leverage\n- All fees accrue to stakers and the protocol treasury

Provides a customizable rollup using the Solana Virtual Machine (SVM) for execution, settled to any settlement layer. The Problem: Developers want Solana's performance but require Ethereum's security or Celestia's data availability. The Solution: A modular rollup that decouples execution (SVM), settlement (Ethereum), and data availability (Celestia).\n- 10k+ TPS potential via parallel execution\n- Familiar tooling for Solana developers (Rust, Anchor)\n- Enables app-specific chains without building a new VM

Infrastructure to outsource sequencing for multiple rollups, enabling cross-rollup composability. The Problem: Isolated rollup sequencers create fragmented liquidity and user experience. The Solution: A shared, decentralized network of sequencers that can order transactions across many app-chains atomically.\n- Enables atomic cross-rollup arbitrage and composability\n- Provides credible neutrality vs. a single-entity sequencer\n- Reduces overhead for individual appchain teams

A modular execution layer designed from the ground up for parallel transaction processing. The Problem: EVM and most VMs process transactions sequentially, capping throughput for high-volume applications. The Solution: A UTXO-based model with strict state access lists, enabling massive parallelization.\n- Theoretical TPS limited only by hardware\n- Native account abstraction and predicate scripts\n- Sits as an execution layer between DA and settlement

General-purpose L1s and L2s force all apps to compete for the same, expensive, and often bloated execution environment. This creates a fundamental misalignment between an app's needs and the chain's capabilities.

• Performance Contention: A high-frequency DEX and an NFT mint compete for the same blockspace, degrading UX for both.
• Inefficient Resource Pricing: Apps pay for generic VM opcodes they don't use, while lacking optimized primitives they need.
• Innovation Lag: Protocol upgrades require hard forks or L2-wide governance, slowing down application-layer iteration.

Application-specific chains (like dYdX v4, Aevo) and rollups (powered by stacks like Arbitrum Orbit, OP Stack, Polygon CDK) allow developers to own their execution layer.

• Tailored Architecture: Build with a custom VM (e.g., FuelVM, Eclipse SVM), gas token, data availability layer (Celestia, EigenDA), and sequencer.
• Predictable Economics: Capture MEV, set your own fee market, and monetize the chain's blockspace directly.
• Sovereign Upgrades: Deploy protocol changes without third-party permission, enabling rapid feature deployment and experimentation.

The rise of shared security (EigenLayer), modular DA (Avail, Celestia), and interoperability layers (LayerZero, Axelar, Wormhole) commoditizes chain deployment. This turns 'building a chain' into a configuration problem.

• Security-as-a-Service: Bootstrap validator sets via restaking, avoiding the cold-start security problem.
• Composable Liquidity: Use intent-based bridges and shared sequencing networks (Espresso, Astria) for seamless cross-chain UX.
• Specialized VMs: Choose execution environments optimized for gaming (Paima), DeFi (Fuel), or AI (Ritual).

The value accrual shifts from generic L1 tokens to the application's own token and the underlying modular infrastructure providers. This creates a new investment landscape.

• App-Token Utility: The chain's native token becomes essential for fees, staking, and governance, directly correlating with usage.
• Infrastructure Moats: Winners will be platforms that dominate a key modular layer (DA, interoperability, sequencing) or offer the best vertical stack (AltLayer, Caldera).
• VC Play: Early investment in teams building the foundational primitives for specific verticals (e.g., decentralized social, RWA, on-chain gaming).