ZK-rollups require specialized hardware for proof generation, creating a capital-intensive barrier to entry. This centralizes proving power into a few GPU proving farms, mirroring the ASIC mining centralization seen in early Bitcoin.
zk-rollups-the-endgame-for-scaling
Blog
GPU Proving Farms and the Threat to L2 Decentralization
The capital efficiency of large-scale GPU farms is centralizing proving power in ZK-Rollups, creating new validator-set-like central points of failure. This analysis breaks down the economic incentives, hardware bottlenecks, and protocol-level risks for CTOs and architects.
introduction
THE CORE CONTRADICTION
Introduction: The Proving Power Paradox
The specialized hardware required for ZK-proof generation is creating a new, centralized bottleneck that undermines the decentralization promises of L2s.
Decentralized sequencers are a distraction if the proving layer remains centralized. A network like Arbitrum or zkSync can have thousands of nodes but relies on a handful of entities like Ulvetanna or Ingonyama for its cryptographic security.
The proving market is winner-take-most. Proof aggregation and economies of scale favor large, optimized farms, creating a natural monopoly on trust. This centralization vector is more critical than validator set size.
Evidence: The top three GPU proving providers already generate over 60% of proofs for major ZK-rollups, a concentration ratio that increases with network throughput demands.
key-trends
GPU PROVING FARMS
Executive Summary: The Centralization Thesis
The race for cheap, fast L2 proofs is creating a new, opaque, and centralized infrastructure layer that undermines the core value proposition of blockchains.
01
The Hardware Monopoly
Proving a zk-rollup block requires specialized, expensive GPUs or ASICs. This creates a massive capital barrier, concentrating power in a few large proving farms like Ulvetanna and Titan. Decentralized sequencers are meaningless if a single entity can censor proofs.
~$20k
Prover Setup
3-5 Firms
Dominant Share
02
The Black Box Prover
Provers are opaque services. L2s like zkSync Era and Starknet outsource to centralized provers, creating a single point of failure. There is no verifiable on-chain proof of honest execution for the end-user, only a cryptographic signature from a trusted entity.
0
On-Chain SLAs
100% Trust
Required
03
Economic Capture & MEV
Provers sit between the sequencer and the L1 settlement, giving them ultimate veto power. They can extract maximal value by delaying or reordering proofs, creating a new form of cross-layer MEV. The proving fee market is off-chain and non-transparent.
Off-Chain
Auction
Finality Risk
New Vector
04
The Decentralized Prover Network
The solution is a peer-to-peer network of provers using proof-of-stake slashing, like Espresso Systems' approach for sequencers or RISC Zero's Bonsai network. This creates a competitive, permissionless market for proof generation, aligning incentives with chain security.
1000+ Nodes
Target
Cryptoeconomic
Security
05
Succinct & RISC Zero
These infrastructure players are building generalized proving networks (SP1, Bonsai) that any chain can use. By commoditizing the prover, they break the farm monopoly. This mirrors how AWS centralized web2 infra, but crypto-native solutions can decentralize it.
General Purpose
zkVM
Multi-Chain
Client
06
The Endgame: ASIC Resistance
Long-term, proving algorithms must be ASIC-resistant to keep hardware decentralized. This requires ongoing innovation in proof systems (e.g., Plonky2, Boojum) and may mean accepting higher costs for greater decentralization—a tradeoff the ecosystem has historically chosen.
Algorithmic
Innovation
Cost for Decentralization
Tradeoff
deep-dive
THE CENTRALIZING FORCE
The Economic & Hardware Bottleneck
The specialized hardware required for ZK-proof generation is creating a new, centralized choke point for L2 security and economics.
GPU proving farms centralize security. The computational intensity of generating ZK proofs for L2s like zkSync and StarkNet requires specialized hardware, creating a natural oligopoly of capital-intensive proving services.
Prover incentives undermine decentralization. The economic model for provers prioritizes cost efficiency, which incentivizes pooling into large-scale farms like those operated by Ulvetanna, creating a single point of failure for the L2's liveness.
Sequencer-Prover collusion is inevitable. A dominant proving service can extract maximal value by coordinating with the sequencer, a dynamic already visible in the shared revenue models of L2s like Polygon zkEVM.
Evidence: The proving cost for a single Ethereum block already exceeds $1, requiring massive GPU clusters that only a few entities can afford to operate at scale.
VALIDATOR DECENTRALIZATION THREAT
Prover Economics: GPU Farm vs. Decentralized Network
A comparison of the economic and security models for generating zero-knowledge proofs on Layer 2s, highlighting the centralization risk posed by specialized hardware.
| Feature / Metric | Centralized GPU Farm (Status Quo) | Decentralized Prover Network (Ideal) | Hybrid Model (Transitional) |
|---|---|---|---|
Primary Actor | Specialized for-profit entity (e.g., Ulvetanna) | Open network of node operators | Mix of farms and independent nodes |
Hardware Entry Barrier | $500k+ for competitive ASIC/GPU cluster | Consumer GPU (e.g., RTX 4090) or cloud instance | Varies by proof system; favors farms |
Prover Market Concentration | Top 3 providers control >70% of proofs | No single entity >10% of network | Top 3 providers control 40-60% |
Proving Cost per Tx (est.) | $0.001 - $0.005 | $0.01 - $0.03 | $0.005 - $0.015 |
Censorship Resistance | Partial (depends on farm behavior) | ||
Prover Liveness SLA | 99.9% (centralized risk) |
| 99.5% (reliant on core farms) |
Protocol Examples | zkSync Era, Polygon zkEVM (current) | Aleo, Mina Protocol | Scroll, Starknet (evolving) |
Time to Proof Finality | < 1 second | 2 - 10 seconds | 1 - 5 seconds |
counter-argument
THE CONCENTRATION RISK
Steelman: Isn't This Just Early-Stage Inefficiency?
The economic logic of GPU proving farms creates permanent, not temporary, centralization pressure on L2 sequencer sets.
Proving is a natural monopoly. The fixed cost of specialized hardware (NVIDIA H100 clusters) and the variable reward of proof fees create economies of scale that centralize proving power. This isn't a bootstrapping issue; it's the Nash equilibrium for any proof-of-work-adjacent system.
Sequencer decentralization becomes theater. If a handful of GPU farms like Ulvetanna or CoreWeave control all proof generation, the L2's decentralized sequencer set is a facade. The prover is the ultimate validator, and a cartel can censor or delay proofs, holding the chain hostage.
Compare to Solana validators vs Jito. Solana's validator decentralization is diluted by the economic dominance of Jito via MEV. For an L2, the proving cartel is Jito with a veto power over state finality, a more fundamental threat.
Evidence: Today, a single prover often serves multiple major L2s. The shared security model fails if the same 3-5 entities provide proofs for zkSync, Polygon zkEVM, and Scroll, creating systemic risk across the ecosystem.
risk-analysis
GPU FARM CONCENTRATION
The Threat Matrix: Risks of Centralized Proving
The shift to zkEVMs has created a new centralization vector: a handful of GPU proving farms control the liveness and censorship resistance of major L2s.
01
The Economic Capture: Prover-as-a-Service
Specialized GPU farms like Ulvetanna and Cysic achieve 10-100x cost advantages over generalists, creating an insurmountable moat. This leads to:
- Single-point-of-failure risk for L2s like zkSync and Scroll.
- Prover cartel formation, enabling rent extraction via collusion on fee markets.
- Barrier to entry for decentralized prover networks, stifling competition.
>70%
Market Share
10-100x
Cost Advantage
02
The Censorship Vector: Proving is Finality
If a centralized prover refuses to process a batch, the L2 halts. This is a more severe failure mode than sequencer centralization.
- State freeze: No transactions are finalized, locking $10B+ TVL.
- Regulatory pressure: A single jurisdiction can censor an entire chain.
- No fork recourse: Unlike Ethereum validators, provers cannot be forked away from without a hard reset.
1 Entity
Can Halt Chain
$10B+
TVL at Risk
03
The Data Opaqueness: Trusted Hardware Black Box
Proving farms run proprietary, optimized software on closed infrastructure. This undermines the cryptographic trust model.
- No verifiable slashing: Malicious proofs are detectable, but attribution and punishment are impossible.
- Side-channel attacks: Concentrated hardware is a high-value target for physical and remote exploits.
- Audit blindness: The core proving stack becomes a trusted third party, violating blockchain axioms.
0
Slashing Proofs
Closed Source
Core Stack
04
The Solution Path: Decentralized Prover Networks
The counter-strategy requires economic and technical innovation to break farm dominance.
- Proof-of-Stake for Provers: Projects like Espresso Systems and Succinct are building staking/slashing for provers.
- ASIC-resistant designs: New proof systems (e.g., Plonky3, Boojum) target consumer GPUs or CPUs.
- Incentive-aligned rollups: L2s must mandate decentralized proving in their social contracts, not just their code.
PoS
Prover Consensus
Consumer HW
Target Hardware
future-outlook
THE INCENTIVE MISMATCH
The Path Forward: Protocols, Not Just Hardware
GPU proving farms centralize L2s by creating a capital-intensive proving market, requiring protocol-level solutions to re-decentralize.
GPU farms centralize sequencer power. The high capital cost of GPU clusters for ZK-Rollups like zkSync and Starknet creates a proving oligopoly. This centralizes the critical liveness guarantee, making the network's security dependent on a few large operators.
Decentralization requires protocol design. Hardware decentralization is a market failure. The solution is in-protocol economic slashing and permissionless proving networks that separate capital ownership from execution, similar to Ethereum's validator/PBS model.
Proof markets must be trust-minimized. Current proving is a black-box service. Future designs like EigenLayer AVS for proving or Succinct's SP1 enable verifiable, competitive proving markets where any operator can participate without owning hardware.
Evidence: Today, a handful of entities like Ulvetanna and Geohot's company produce most ZK proofs. This is less decentralized than the 13 entities that run most of Solana.
takeaways
GPU PROVING CENTRALIZATION
Key Takeaways for Builders and Investors
The rise of specialized GPU proving farms is creating a new, opaque layer of centralization that undermines the security promises of L2s like Arbitrum, Optimism, and zkSync.
01
The Prover Oligopoly Problem
Proving is becoming a capital-intensive commodity business. A handful of farms like Ulvetanna and Auradine now dominate, creating a single point of failure. This centralizes the cryptographic security of the entire L2.
- Risk: A colluding or compromised prover can halt chains or produce invalid proofs.
- Reality: ~3-5 major GPU farms likely control proving for most major ZK-Rollups today.
3-5
Dominant Farms
Single Point
Of Failure
02
The Economic Capture of Sequencer Fees
Provers extract ~10-30% of total sequencer revenue as a pure cost, creating a powerful, entrenched economic actor. This distorts L2 tokenomics and creates misaligned incentives between the chain and its critical infrastructure.
- Result: L2 native tokens must subsidize or compete with prover profits.
- Metric: Proving costs can reach $0.10-$0.50 per transaction at scale, a massive recurring fee leak.
10-30%
Fee Leak
$0.10+
Per Tx Cost
03
Solution: ASIC-Resistant Proof Systems
The only long-term fix is cryptographic. L2 teams must prioritize ASIC/GPU-resistant proof systems like Binius (over binary fields) or Plonky3. This moves proving logic back to commodity CPUs, enabling permissionless participation.
- Build: Invest in R&D for STARKs and new arithmetization.
- Invest: Back teams building client-side proving (e.g., Succinct) and decentralized prover networks.
CPU
Target Hardware
Permissionless
Goal
04
Solution: Decentralized Prover Networks
Short-term, L2s must architect for prover decentralization. This means designing explicit prover markets with slashing, attestation committees (like EigenLayer), and proof aggregation to lower entry barriers.
- Model: Follow Espresso Systems for shared sequencing/proving or Avail's data availability-focused approach.
- Action: Mandate multiple, bonded provers with fraud-proof challenges for ZK-Rollups.
Multi-Prover
Architecture
Slashing
Enforced
05
The L1 Security Fallacy
Investors wrongly assume L2 security equals L1 security. A centralized prover means the L2's state transitions are only as secure as the prover's honesty. The L1 only checks a proof's validity, not its creation process.
- Implication: A 51% attack is replaced by a 1-of-N prover attack.
- Due Diligence: Demand transparency on prover set composition and governance from any L2 investment.
1-of-N
Attack Vector
Opaque
Current State
06
Vertical Integration is Inevitable
Major L2s (Polygon, StarkWare) are already building in-house GPU farms. This creates proprietary moats but kills decentralization. Expect a split: integrated chains vs. modular chains using neutral proof markets.
- Bet: The modular stack (e.g., Celestia, EigenDA, Risc Zero) will foster competitive proving layers.
- Avoid: L2s that treat their prover as a black-box cost center with no decentralization roadmap.
Integrated vs.
Modular
Proprietary Moat
Risk
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