Rollup tokens create liquidity silos. Each new L2 token fragments capital, forcing users to bridge and swap assets for every cross-rollup transaction, a process dominated by slow, expensive bridges like Arbitrum Bridge or Optimism Gateway.
zk-rollups-the-endgame-for-scaling
Blog
Why Rollup Tokens Must Die for True Interoperability
Native gas tokens are a UX and liquidity dead end. This analysis argues for fee abstraction and intents as the only path to a seamless, unified L2 ecosystem, using ZK-rollups as the settlement layer.
introduction
THE FRAGMENTATION TRAP
Introduction
The proliferation of rollup-native tokens is the primary obstacle to a unified, user-centric blockchain ecosystem.
Interoperability requires asset-agnostic settlement. True composability, as seen in intents-based systems like UniswapX or Across, demands a shared settlement layer where value is native, not a derivative of a rollup's local token.
The evidence is in the TVL. Ethereum's dominant DeFi TVL persists because its native ETH is the universal settlement asset. Rollups that prioritize their own token over ETH adoption sacrifice network effects for short-term tokenomics.
thesis-statement
THE FRAGMENTATION TRAP
The Core Thesis
Rollup tokens create isolated economic zones that directly oppose the core value proposition of a unified blockchain ecosystem.
Rollup tokens are security theater. They exist to capture value for the sequencer, not to secure the chain. Proof-of-Stake validation is centralized to a single entity, making the token's staking function redundant and extractive.
Fragmented liquidity kills composability. Applications on Arbitrum cannot natively interact with assets on Optimism without a bridge, creating a user experience of isolated islands. This is the antithesis of the global, unified computer Ethereum promised.
The future is shared security. Validiums and Optimiums using Ethereum's EigenLayer for data availability and proof verification demonstrate that security can be a commodity. The value accrual shifts to the application layer, where it belongs.
Evidence: Over $2B in TVL is locked in cross-chain bridges like LayerZero and Axelar, a direct tax on interoperability created by rollup fragmentation. This is capital that should be building, not bridging.
key-trends
THE L2 FRAGMENTATION TRAP
Key Trends: The Market is Already Moving
Rollup tokens create isolated economic fiefdoms, directly opposing the composable, unified internet of value blockchains promise.
01
The Problem: Liquidity Silos & Capital Inefficiency
Every new rollup token fragments liquidity, creating $10B+ in stranded capital. This forces users into complex bridging, staking, and governance for each chain, killing UX.
- Capital Inefficiency: TVL is locked per-chain, not network-wide.
- Fragmented Security: Economic security is siloed, not additive.
- Broken Compossibility: Smart contracts cannot natively interact across sovereign token domains.
10B+
Stranded TVL
50+
L2 Tokens
02
The Solution: Shared Sequencing & Native ETH Staking
Decouple execution from settlement and consensus. Use Ethereum (ETH) as the universal economic and security backbone.
- Shared Sequencers: Projects like Espresso Systems and Astria provide neutral ordering, enabling atomic cross-rollup composability.
- Restaking: EigenLayer allows ETH stakers to secure AVSs (Active Validation Services), including rollups, without a new token.
- Verkle Trees & EIP-4844: Reduce data costs, making L2 profitability less dependent on a proprietary fee token.
1
Base Asset (ETH)
Atomic
Cross-Rollup TXs
03
The Model: Starknet's No-Token Strategy
Starknet uses ETH for fees and will use staked ETH (via restaking) for sequencing. This is the blueprint.
- Network Effects: Taps into Ethereum's $500B+ security and liquidity pool from day one.
- Developer Alignment: Builders target a single, deep economic ecosystem, not a niche.
- User Clarity: No mental overhead of managing a new gas asset. The path for zkSync, Scroll, and Polygon zkEVM is clear.
ETH
Fee Token
500B+
Security Pool
04
The Endgame: Intents & Unified Liquidity Layers
The future is intent-based architectures that abstract chains away, powered by shared liquidity networks.
- Intent Protocols: UniswapX, CowSwap, and Across solve for the best execution across all liquidity sources, making the underlying rollup token irrelevant.
- Unified Liquidity: Layers like Chainlink CCIP and LayerZero enable messaging, but the value flow remains ETH-denominated.
- Aggregation: Users express a goal ("swap X for Y"), and a solver network competes across rollups to fulfill it. The winning chain is a detail.
0
Chain Awareness
Best Execution
User Outcome
WHY ROLLUP TOKENS ARE A LIABILITY
The Friction Tax: A Comparative Analysis
Comparing the economic and technical overhead of rollup-specific tokens versus native gas and intent-based interoperability models.
| Friction Metric | Rollup-Specific Token (e.g., OP, ARB, STRK) | Native Gas Token (e.g., ETH, SOL) | Intent-Based Abstraction (e.g., UniswapX, Across) |
|---|---|---|---|
User Gas Payment Complexity | 2-step: Acquire token, then bridge to L2 | 1-step: Use native wallet balance | 0-step: Pay in any token, solver handles conversion |
Liquidity Fragmentation Tax |
| <1% price impact on mainnet DEXs | ~0%: Aggregates liquidity across all venues |
Settlement Finality Delay | 7 days (for fraud proofs) + bridge delay | ~12 minutes (Ethereum) or <400ms (Solana) | <5 minutes via optimistic verification |
Protocol Revenue Model | Seigniorage & MEV capture from sequencer | Base fee burn & priority fee to validators | Solver competition & fee auction |
Cross-Chain Messaging Cost | $5-50+ (3rd party bridge fee + gas) | $0 (native to L2 via canonical bridge) | $2-10 (bundled intent execution fee) |
Developer Integration Burden | High: Custom token logic & bridge UI | Medium: Standard EIP-1559 or priority fee | Low: Single API call for cross-chain intent |
Security Assumption Stack | L1 Security + Rollup Code + Bridge Contract | L1 Security Only | L1 Security + Solver Bonding + Fraud Proof |
deep-dive
THE INTEROPERABILITY IMPERATIVE
Deep Dive: The Mechanics of a Tokenless Future
Rollup-native tokens create liquidity fragmentation and security illusions that directly block seamless cross-chain user experiences.
Rollup tokens are liquidity silos. Each new token like $ARB or $OP fragments capital, forcing users to bridge assets and manage multiple gas tokens. This creates friction that protocols like UniswapX and Across are designed to abstract away, proving the demand for a tokenless flow.
Security is a shared resource. A rollup's security derives from its underlying L1, not its governance token. Promoting a native token implies a false sense of independent security, distracting from the real work of optimizing fraud proof or validium data availability.
The standard is universal gas. True interoperability requires a single economic layer. Users must pay for L1 settlement in the base chain's asset (ETH, MATIC). Layer 2s should be execution shards, not economic fiefdoms. zkSync's use of paymasters for gas abstraction points toward this future.
Evidence: Ethereum's rollups already settle over $20B in value using ETH. The complexity of managing 50 different gas tokens for a simple cross-chain swap is a UX failure that intent-based architectures are solving.
counter-argument
THE MISALIGNED INCENTIVE
Counter-Argument: But Tokens Are Necessary for Security!
Rollup tokens create security theater while fragmenting liquidity and user experience.
Security is a commodity. The argument that a native token is needed for decentralized sequencing or proving is a vendor lock-in strategy, not a technical requirement. A rollup can pay for these services in ETH via a credibly neutral marketplace like Espresso or Astria.
Fragmented liquidity kills interoperability. A user bridging from Arbitrum to Base must swap ARB for ETH, then ETH for BASE, incurring slippage and MEV. Intent-based architectures like UniswapX and Across abstract this, but the underlying asset fragmentation remains a tax.
The real security is economic finality. A rollup secured by its own token has a weaker security budget than one backed by Ethereum's consensus and ETH's $500B+ market cap. The shared security model of Ethereum L2s makes a proprietary token redundant for safety.
Evidence: Optimism's OP token governs the protocol but does not secure the chain; that's Ethereum's job. Its primary utility is funding grants, a function that could be managed by a canonical ETH treasury without creating a new monetary layer.
protocol-spotlight
THE END OF ROLLUP TOKENS
Protocol Spotlight: Who's Building the Future?
Native gas tokens create liquidity silos and user friction. The future is shared security and unified settlement.
01
EigenLayer: Shared Security as a Primitive
Rollups don't need their own validator set or token for security. EigenLayer allows them to rent cryptoeconomic security from Ethereum stakers, creating a capital-efficient security marketplace.\n- Re-staked ETH secures new chains, eliminating the need for a bespoke token bootstrap.\n- Decouples security from governance, allowing rollups to focus on execution and UX.
$15B+
TVL Secured
1
Native Asset
02
Arbitrum Orbit & OP Stack: The L3 Play
Sovereign L3s built on these stacks inherit the security and liquidity of their L2 parent. The L2's token (ETH) pays for L1 security, making a separate L3 gas token redundant.\n- Settlement and DA on L2 means L3s are execution-only layers.\n- Unified liquidity pool across the ecosystem, as all assets ultimately settle to the same base layer token.
100%
ETH Gas
Zero
New Token
03
Celestia & Avail: Modular Data Availability
By separating data availability (DA) from execution, these protocols enable ultra-lightweight rollups. Rollups pay for DA in the native chain token (TIA, etc.), not a custom gas token.\n- Reduces launch overhead; no need to bootstrap a token for blob space.\n- Enforces economic alignment between the rollup and a neutral data layer, not a captive token holder base.
~$0.001
Per KB DA Cost
Minutes
Chain Launch
04
The Problem: Liquidity Fragmentation
Every new rollup token fractures DeFi liquidity. Users must bridge, swap, and manage dozens of gas tokens, creating systemic friction and capital inefficiency.\n- Siloed TVL: Liquidity trapped in native bridges, not in productive DeFi pools.\n- UX Nightmare: Users face constant gas token swaps, killing composability.
$5B+
Bridge TVL
5+ Steps
Per Swap
05
The Solution: Intents & Shared Sequencing
Networks like Espresso and Astria provide neutral sequencing. Users sign intents (e.g., "swap X for Y across chains"), and solvers compete to fulfill them using shared liquidity, abstracting away the underlying gas token.\n- User pays in any asset; solver handles gas.\n- Atomic cross-rollup composability without manual bridging, enabled by a shared sequencer set.
~500ms
Cross-Chain Latency
1
User Signature
06
zkSync & Starknet: The ETH-Only Future
These major L2s have explicitly rejected a native gas token, using ETH for all fees. This is a strategic bet on unified liquidity and simpler UX.\n- Protocol revenue accrues to ETH stakers (via L1 settlement), not a new token.\n- Proves viability: Major ecosystems can scale without a custom token, relying on Ethereum's monetary premium.
$3B+
ETH-Only TVL
$0
Token Launch Cost
risk-analysis
THE FRAGMENTATION TRAP
Risk Analysis: What Could Go Wrong?
Rollup tokens create a new class of systemic risk, undermining the very interoperability they promise to enable.
01
The Liquidity Silos Problem
Each rollup token (e.g., Arbitrum's ARB, Optimism's OP) creates a captive liquidity pool. This fragments capital, increasing slippage and volatility for cross-chain users. The result is a network of walled gardens.
- ~$2B+ TVL locked in governance staking, not DeFi utility.
- >30% higher slippage on native token bridges vs. canonical assets.
- Forces protocols to deploy duplicate liquidity across chains, a capital inefficiency.
>30%
Slippage Penalty
$2B+
Captive TVL
02
Security Theater & Centralization Vectors
Rollup tokens are often marketed as security mechanisms but function as governance tokens with minimal slashing. This creates a false sense of security while concentrating upgrade keys and sequencing rights.
- Multisig override: Most "decentralized" sequencers can be frozen by a 5/9 council.
- Validator centralization: Staking rewards attract cartels, not decentralized validator sets.
- Creates a single point of failure distinct from Ethereum's base layer security.
5/9
Multisig Control
>60%
Top 5 Validators
03
The Interoperability Tax
Every new rollup token imposes a tax on the composability of the modular stack. Apps must integrate custom bridges, manage gas abstractions, and handle failed transactions for a non-standard asset.
- Adds ~500ms latency for intent-based solvers (like UniswapX, CowSwap) to route through wrapped versions.
- Increases integration surface for protocols and wallets by N chains.
- Across, LayerZero, and other interoperability layers become mandatory, adding cost and complexity.
~500ms
Latency Tax
N Chains
Integration Cost
04
The Solution: Canonical ETH-Only Staking
The endgame is a unified staking layer where Ethereum (ETH) is the sole bond and fee token for rollup security. This aligns economic security with the base layer and eliminates fragmentation.
- Shared Security: Validators stake ETH to secure a basket of rollups via EigenLayer or native restaking.
- Native Gas: Users pay fees in ETH, eliminating the need for bridging and wrapping for every interaction.
- True Portability: User identity and capital move seamlessly across the modular ecosystem.
1 Asset
ETH for Security
0 Wraps
Native Gas
future-outlook
THE END OF THE ROLLUP TOKEN
Future Outlook: The 24-Month Horizon
The current rollup token model creates liquidity silos and must be replaced by shared security and native asset settlement for true interoperability.
Rollup tokens are friction assets. They exist to capture value for sequencers and fund DAOs, but they create a tax on every cross-chain transaction, fragmenting liquidity and user experience across Arbitrum, Optimism, and Base.
Interoperability requires shared security. The future is a modular stack where execution layers (rollups) lease security from a base layer like Ethereum or Celestia, eliminating the need for a proprietary token to pay for data availability or fraud proofs.
Settlement will happen in native assets. Protocols like UniswapX and intents-based systems (Across, Socket) demonstrate that users demand direct ETH/USDC transfers, not intermediary token wraps. Rollups become feature layers, not sovereign economies.
Evidence: The TVL and activity gap between Ethereum L1 and its major L2s is already shrinking as shared sequencing (Espresso) and alt-DA solutions reduce the economic moat of individual rollup tokens.
takeaways
THE ROLLUP TOKEN DILEMMA
Key Takeaways for Builders & Investors
Rollup tokens create liquidity silos and governance capture, directly opposing the composable future of Web3. True interoperability demands a shift in economic and technical design.
01
The Problem: Fragmented Liquidity Silos
Native rollup tokens like ARB and OP force users to bridge and hold speculative assets just to pay for execution. This creates $10B+ in trapped capital and kills cross-chain composability.
- User Friction: Paying for gas requires pre-funding a non-native token.
- Protocol Risk: DApps must deploy and manage liquidity on dozens of chains.
- Economic Inefficiency: Capital is tied up in gas tokens instead of productive DeFi.
$10B+
Trapped Capital
50+
Liquidity Pools
02
The Solution: Abstracted Gas & Intent-Based Systems
Separate payment from execution. Let users pay in any asset (e.g., USDC, ETH) while the system abstracts gas settlement. This is the core innovation behind UniswapX, CowSwap, and Across.
- User Experience: 'Sign and forget' transactions without managing gas tokens.
- Capital Efficiency: Users retain exposure to productive assets.
- Builder Benefit: DApps can integrate a single, chain-agnostic payment rail.
0
Gas Tokens Needed
~500ms
Quote Latency
03
The Architecture: Shared Sequencing & Settlement
Kill the rollup token by decoupling sequencing and DA from execution. Shared sequencers like Astria and Espresso enable atomic cross-rollup composability without a shared token.
- Interoperability: Atomic transactions across rollups become possible.
- Neutrality: No single rollup's token holds governance over the stack.
- Modular Future: Enables a marketplace of execution layers competing on performance, not tokenomics.
1s
Cross-Rollup Finality
-99%
Bridging Latency
04
The Investment Thesis: Bet on Protocols, Not Chains
The value accrual shifts from L1/L2 tokens to cross-chain infrastructure and application-layer protocols. LayerZero, Axelar, and intent solvers are the new plumbing.
- Infrastructure Moats: Cross-chain messaging and proving become critical value layers.
- Application Dominance: Winners will be protocols with omnichain user bases, not single-chain deployments.
- VC Mandate: Avoid investments in rollups with extractive token models; back interoperability primitives.
100x
Msg Volume Growth
$1B+
Solver TVL
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