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the-modular-blockchain-thesis-explained
Blog

Why Interchain Security is a Stopgap, Not a Solution

A critique of the interchain security model, arguing it fails to address the core coordination problems of modular blockchains, such as cross-domain finality and asynchronous failures, and is merely a transitional architecture.

introduction
THE STOPGAP

Introduction

Interchain security is a temporary fix for blockchain fragmentation, not a scalable solution for a multi-chain future.

Interchain security is a patch. It attempts to retrofit security from a primary chain, like Cosmos Hub, onto smaller consumer chains. This creates a centralized point of failure and fails to address the fundamental problem of fragmented state and liquidity.

The real problem is state fragmentation. A user's assets and data are siloed across Ethereum L2s, Cosmos app-chains, and Solana. Bridging assets via Axelar or LayerZero does not unify application state, forcing developers to manage complex cross-chain logic.

Evidence: The Cosmos Hub secures only 9 chains after years of development, while hundreds of sovereign chains operate independently. This limited adoption demonstrates the model's lack of scalability compared to the growth of rollups.

thesis-statement
THE STOPGAP

The Core Argument: Security Leasing ≠ Coordination

Interchain Security is a temporary delegation of validator power, not a fundamental solution for cross-chain state.

Security is not fungible. Leasing a validator set from Cosmos Hub to a consumer chain creates a shared-fate dependency. The security of the consumer chain is now a derivative of the hub's token economics and social consensus, not its own.

Coordination requires state. True interoperability, like IBC packet relaying, demands a shared understanding of canonical state. A leased validator set does not create a shared data availability layer or a unified settlement guarantee across chains.

Evidence: The Cosmos Hub's market cap directly caps the economic security available for lease. A consumer chain's security budget is a function of another chain's speculative value, creating a fragile, non-native security model.

WHY INTERCHAIN SECURITY IS A STOPGAP

Security Model Comparison: Coordination vs. Provisioning

A first-principles breakdown of how security is sourced and priced across dominant cross-chain models, revealing the economic and technical trade-offs.

Security Feature / MetricInterchain Security (e.g., Cosmos Hub)Provisioned Security (e.g., EigenLayer, Babylon)Coordination Layer (e.g., LayerZero, Chainlink CCIP, Wormhole)

Security Source

Replicated Validator Set

Restaked Capital (ETH or native)

Economic Security + Off-Chain Oracle Network

Capital Efficiency

Low (1:1 security replication)

High (Capital multiplexing across services)

Variable (Bond size vs. message value)

Slashing Scope

Protocol-specific rules

Generalized for AVS violations

For verifiable fraud only

Validator/Operator Overhead

High (Must validate all chains)

Medium (Opt-in to specific AVSs)

Low (Off-chain attestation)

Time to Finality for New Chain

Weeks (Governance & bonding)

Days (AVS deployment & opt-in)

Minutes (Smart contract deployment)

Economic Attack Cost

~$2B (Cosmos Hub stake)

Correlated to total restaked TVL (~$20B)

Per-message bond (e.g., 1-10x message value)

Primary Risk Vector

Hub compromise cascades

Correlated slashing & dilution

Oracle network corruption

Pricing Model

Chain pays in native token inflation

AVS pays fees to operators

User pays per message fee

deep-dive
THE STOPGAP

The Unaddressed Coordination Problems

Interchain security models fail to solve the fundamental coordination problems that fragment liquidity and user experience across blockchains.

Interchain security is reactive. It treats the symptom—validator set integrity—while ignoring the root cause: economic misalignment between sovereign chains. A secured bridge between two chains does not solve for fragmented liquidity or state inconsistencies.

Coordination requires shared state. Protocols like Cosmos IBC and LayerZero create secure message channels, but the execution environments remain isolated. This forces applications to build complex, bespoke relayers, as seen with Axelar's GMP and Wormhole's Connect.

The validator-centric model fails. Shared security, like Cosmos Hub's ICS, centralizes validation for a fee but does not unify execution. This creates a rent-seeking intermediary layer that applications must pay, adding latency and cost without solving composability.

Evidence: The $2.3B TVL in bridging protocols proves demand for connectivity, but the continued dominance of centralized exchanges for large transfers shows users reject the fragmented UX of current 'secure' bridges.

case-study
WHY INTERCHAIN SECURITY IS A STOPGAP

Case Studies in Fragility

Real-world failures expose the fundamental limitations of relying on external validators for cross-chain security.

01

The Wormhole Hack: $326M Bridge Exploit

A signature verification flaw in the Wormhole bridge's guardian set allowed the minting of 120,000 wETH from nothing. This highlights the single point of failure in multi-sig bridge security models.\n- Core Flaw: Trust in a 19-of-21 guardian set rather than the underlying chain's consensus.\n- Outcome: Jump Crypto covered the loss, proving the model relies on deep-pocketed backstops, not cryptography.

$326M
Exploit Value
19/21
Guardian Set
02

Axie's Ronin Bridge: $625M Multi-Sig Compromise

Attackers gained control of 5 out of 9 validator private keys, bypassing the Ronin chain's own PoA consensus. This demonstrates the fragility of permissioned validator sets securing massive value.\n- Core Flaw: Centralized attack surface; compromising a few entities defeats the system.\n- Outcome: The exploit remained undetected for 6 days, underscoring poor operational security and monitoring in federated models.

$625M
Drained
5/9
Keys Compromised
03

Cosmos Hub's Limited Scope

The Cosmos Interchain Security (ICS) model allows consumer chains to lease security from the Cosmos Hub's validator set. However, this creates asymmetric risk and economic misalignment.\n- Core Flaw: Hub validators bear slashing risk for chains they have no stake in, creating weak incentives.\n- Outcome: Limited adoption; major chains like dYdX chose their own validator set over ICS, highlighting its stopgap nature for sovereign chains.

~1%
Fee Share to Hub
0
Major Apps Using ICS
04

LayerZero's Oracle & Relayer Model

LayerZero's security depends on the independence of its Oracle (Chainlink) and Relayer (often the app itself). This introduces liveness assumptions and potential for collusion.\n- Core Flaw: Security is only as strong as the weaker of the two parties, a subtle trust assumption.\n- Outcome: While efficient, it's a stopgap awaiting proof systems like zkLight clients; the model has not been battle-tested at the scale of $10B+ in messages.

2
Trusted Parties
$10B+
Message Value
counter-argument
THE REALITY CHECK

Steelman: The Pragmatic Stopgap

Interchain Security is a necessary but fundamentally limited mechanism for securing new Cosmos chains.

Interchain Security is a subsidy. It allows new chains to bootstrap security by renting validators from the Cosmos Hub, avoiding the initial capital and coordination cost of bootstrapping a new validator set. This is the core value proposition for early-stage projects.

The model creates economic misalignment. The Hub's validators secure chains based on ATOM staking rewards, not the success of the consumer chain. This is a principal-agent problem where the security providers have no direct stake in the consumer chain's token economics.

Compare this to EigenLayer. Restaking on Ethereum allows operators to be slashed based on the performance of the service they secure, creating direct accountability. Interchain Security lacks this granular, service-specific slashing mechanism.

Evidence: The first major consumer chain, Neutron, pays the Hub ~$1M monthly in fees. This is a revenue stream for ATOM stakers, but does not prove the system scales to secure dozens of chains without diluting ATOM's security budget.

takeaways
INTERCHAIN SECURITY REALITIES

Key Takeaways for Builders

Interchain security models like IBC and optimistic verification are architectural compromises, not final solutions. Here's what to build instead.

01

The Sovereign Appchain Dilemma

Projects like dYdX and Injective forked out for performance, inheriting the core security trade-off: you either rent security from a larger chain (high cost, limited sovereignty) or bootstrap your own (fragile, high overhead).

  • Cost: Validator sets cost $1M+/year to secure meaningfully.
  • Risk: New chains start with ~$100M economic security vs. Ethereum's $90B+.
  • Reality: This is a capital-intensive stopgap until light clients are viable.
$1M+/yr
Validator Cost
100x
Sec. Gap
02

IBC's Light Client Bottleneck

The Inter-Blockchain Communication protocol is elegant but hits a fundamental scaling wall. Its security model requires each chain to run a light client of every other, creating O(n²) state growth.

  • Overhead: Maintaining a Cosmos Hub light client requires constant header verification and ~500MB of trusted state.
  • Latency: Finality delays of ~6 seconds per hop hinder DeFi composability.
  • Limit: This doesn't scale to thousands of chains, making it a hub-and-spoke model by necessity.
O(n²)
State Growth
~6s
Hop Latency
03

Build for ZK-Proof Finality

The endgame is ZK light clients and proof aggregation. Projects like Succinct, Polymer, and zkBridge are pioneering this. Stop optimizing the stopgap; build for the world where a chain's state is verified by a SNARK, not a social consensus.

  • Throughput: A single proof can verify 1 week of block headers.
  • Cost: Verification cost is constant, ~200K gas, regardless of chain activity.
  • Action: Integrate ZK verification precompiles and design for asynchronous, provable cross-chain state.
~200K gas
Verify Cost
Constant
Overhead
04

The Shared Sequencer Imperative

The real security primitive isn't validator sets—it's decentralized sequencing. Astria, Espresso, and Shared Sequencer networks let rollups/sovereign chains outsource ordering while retaining execution and settlement. This decouples security from sovereignty.

  • Benefit: Inherit Ethereum-level liveness and MEV resistance without being an L2.
  • Model: Pay for sequencing as a utility ($0.01 per tx), not security as a CAPEX.
  • Future: This is the bridge to a modular stack where security is a service.
$0.01
Per Tx Cost
L1 Grade
Liveness
ENQUIRY

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