Why Modular Economics Favor Vertical Integration Over Time

Sequencers capture billions in MEV and cross-chain arbitrage. This capital subsidizes rollup operations, creating a self-reinforcing moat.\n- Benefit: Can offer negative transaction fees to attract users.\n- Benefit: Funds R&D for proprietary DA layers and faster finality.

Generalized sequencers like Astria or Espresso create a new, fragile coordination layer. This reintroduces the very liveness and economic centralization risks modularity aimed to solve.\n- Problem: Creates a single point of failure for dozens of rollups.\n- Solution: Sovereign chains like dYdX and Aevo vertically integrate their sequencer to guarantee execution sovereignty.

DA is a commodity with near-zero marginal cost. Providers like Celestia or EigenDA compete on price, pushing revenue to zero. The real profit is in bundling DA with execution and settlement.\n- Trend: Rollup-as-a-Service (RaaS) stacks like Conduit or Caldera offer integrated DA+Sequencing.\n- Outcome: Vertical stacks capture value, while standalone DA becomes infrastructure.

Bridging and messaging layers (LayerZero, Axelar, Wormhole) extract a ~10-30 bps tax on all cross-chain value flow. Vertically integrated stacks with native, trust-minimized communication (e.g., Optimism Superchain, Polygon CDK) bypass this tax entirely.\n- Result: Capital efficiency demands drive apps to co-locate within a unified stack.\n- Example: UniswapX uses intents to abstract liquidity sourcing, reducing dependency on expensive canonical bridges.

New L1s and solo rollups must bootstrap $1B+ in stake for credible security. Shared security models (EigenLayer, Babylon) help, but create fragmented, weaker security pools.\n- Efficiency: A dominant vertical stack (e.g., Arbitrum Orbit secured by ETH) amortizes security cost across thousands of app-chains.\n- Outcome: Economic gravity pulls developers to the largest, most secure settlement layer.

Vertically integrated stacks can natively embed liquidity pools and intent-based solvers, capturing fees that would leak to external AMMs. This creates a capital-efficient closed loop.\n- Mechanism: Native order flow is matched internally via a solver network (like CowSwap).\n- Result: Higher yields for LPs and lower slippage for users, creating a sticky ecosystem.

Data availability as a standalone service faces commoditization. The solution is to integrate a high-performance execution layer to capture MEV and transaction fee revenue.

• Celestia provides ~$0.001 per MB DA, creating a low-cost base layer.
• Eclipse integrates a SVM execution environment on top, targeting Solana-level throughput.
• The integrated stack competes directly with monolithic L1s by offering a superior fee market.

Actively Validated Services (AVSs) face unsustainable token emissions to bootstrap operators. The solution is for the AVS to vertically integrate its own execution/settlement to capture native fees.

• Standalone AVSs pay ~15-30% APY in token incentives to attract EigenLayer restakers.
• Integrated chains (e.g., a rollup built with the AVS) replace subsidies with real gas fee revenue.
• This shifts the economic model from inflationary dilution to sustainable cash flow capture.

Providing rollup-as-a-service (RaaS) is a race to the bottom. The solution is to own the entire middleware stack—sequencing, DA, and interoperability—through EigenLayer restaking.

• AltLayer bundles its RaaS with a restaked sequencer, restaked AVS for DA, and a restaked fast finality layer.
• This creates a vertically integrated security and liveness guarantee that commoditized RaaS cannot match.
• The bundle commands a premium and locks in developers to its full ecosystem.

Modular rollups fragment liquidity and user experience. Shared sequencers like Astria and Espresso solve this by controlling cross-rollup block building, but pure sequencing has thin margins.

• The endgame is integrating a native settlement layer or sovereign shared chain to capture value beyond sequencing fees.
• This allows the sequencer to internalize cross-rollup MEV and offer atomic composability as a premium service.
• It transforms from a utility into the central nervous system of an ecosystem.

Standalone shared sequencers like Espresso or Astria face a race to the bottom on fees. Their value accrual is capped at transaction ordering, while the real profit sits in execution and settlement.\n- Revenue Leakage: Fees for proving (e.g., Celestia) and settling (e.g., Ethereum) flow to other layers.\n- Weak Moats: Sequencing is a low-differentiation service; rollups can switch providers easily.

Vertical integration from app logic down through the data availability layer captures the full stack margin. The app becomes the economic sink.\n- Captured Value: Retains MEV, sequencing fees, and gas subsidies within the ecosystem.\n- Optimized Performance: Tight integration enables ~100ms block times and custom fee markets, impossible on shared infra.

Sovereign rollups and alt-DA chains create isolated liquidity pools. Bridging assets between them via LayerZero or Axelar introduces security risks and >30s latency, crippling composability.\n- Capital Inefficiency: $1B+ in TVL can be locked in bridge contracts, not generating yield.\n- User Experience Friction: Multi-chain interactions require manual, slow asset transfers.

A monolithic L1 or a tightly coupled rollup ecosystem with a native AMM and money market at its core acts as a unified liquidity sink. It becomes the settlement layer for its own app-chain constellation.\n- Native Composability: Atomic transactions across hundreds of dApps with zero bridge latency.\n- Sustainable Yield: Protocol revenue from all apps feeds back into a unified token and staking model.

Rollups pay recurring fees for security to an external DA layer (Celestia, EigenDA) and a settlement layer (Ethereum). This is a pure cost center with no equity-like upside for the rollup.\n- Profit Drain: ~10-30% of transaction fees can leak to external providers.\n- Vendor Lock-in: Security dependencies create systemic risk and limit economic sovereignty.

Full-stack frameworks that bundle a VM, sequencer, DA, and settlement into a single, sovereign deployment. The chain's token captures value from the entire operational stack, not just gas.\n- Equity-Like Token: Captures value from execution, data, and sequencing—turning security costs into profit centers.\n- Economic Sovereignty: Enables custom inflation schedules and treasury management independent of external layers.