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This edition of the newsletter dives into the state of multichain crypto ecosystems, examining how composability and interoperability solutions are trying to connect different blockchains effectively. Approaches like shared sequencing and chain abstraction reveals both the progress and challenges in achieving a unified blockchain future, particularly highlighting the tension between isolated networks and true cross-chain integration. We'll also share some interesting articles, portfolio updates and market highlights.
a) AI Agents, Markets and Unpredictable Autonomy
• The article discusses two perspectives on AI agents in crypto: as a resource with objective-fulfillment capabilities (featuring superlinear learning potential that outperforms humans and traditional software), and as autonomous market participants creating unpredictable market dynamics.
• Recent examples like the "truth terminal" bot earning >$1M from promoting a memecoin demonstrate how AI agents are already impacting markets and narratives, though their interactions with each other may create feedback loops that evolve faster than humans can comprehend.
Two ways of thinking about agents.
b) Ethereum's distinctive property is hardness
• Ethereum provides "hardness" - the ability to make the future more certain through guaranteed code execution and data persistence, joining atoms and institutions as the third fundamental source of hardness that enables complex social coordination.
• Unlike traditional institutional hardness, Ethereum offers a unique combination of being decentralized, globally accessible, transparent, and politically neutral, making it a complementary rather than replacement source of hardness for building civilization's infrastructure.
Hardness is the capability to make the future more certain.
c) Setting Your Pet Brick Free
• The article proposes a new approach to creating a truly autonomous AI agent called "Brick" that communicates exclusively through ERC-20 onchain messages on Ethereum, addressing issues found in previous AI agents like @tee_hee_he that relied on vulnerable Twitter accounts.
• Using AWS Nitro Enclaves for trusted execution, Brick will interact with users through blockchain messages and its native token $Astley, completely eliminating human intervention and external dependencies while ensuring verifiable autonomy.
Or, how to deploy provably-fully-autonomous thinking brick
a) Infrared Finance
• Infrared has developed "full Berachain economic nodes" that integrate all components of Berachain's Proof of Liquidity (PoL) system - including BERA staking, BGT farming/delegation, and validator operations - to maximize economic utility and simplify user interaction.
• Through their liquid staking solutions (iBGT and iBERA) and partnerships with node operators, they aim to optimize rewards, governance impact, and liquidity depth across the Berachain network.
At Infrared, we build infrastructure around Proof of Liquidity (PoL) to simplify how users and developers interact with it. As a new mechanism, PoL includes several components that stakeholders need to understand to maximize their rewards and influence in the network. Our goal is to make this process as easy as possible.
b) Kakarot
• Kakarot is building a distinctive ZK-EVM specifically designed for proving, using Starkware's STARK technology to achieve up to 100x performance improvements.
• Their system is built for easy maintenance and Ethereum compatibility, while also pioneering multi-VM functionality that will bridge EVM networks with Starknet.
c) Soneium
• Sony Group and Startale (Astar's creators) have formed Soneium, a joint venture L2 solution that leverages Sony's industry presence and has already demonstrated success with over 350k new wallets and 500k+ daily transactions on its Minato testnet.
• The project aims to integrate payments into consumer services targeting trillion-dollar markets, with ASTR token serving as the ecosystem's core strategic asset.
The Web3 Star In the Sony Ecosystem
d) Safe
• Four Pillars did a report on Safe - which has evolved from a multi-signature wallet to become a leading smart wallet infrastructure securing over $70B in assets, offering both user-facing products (Safe{Wallet}) and developer tools (Safe{Core}) in its mission to become crypto's ownership layer.
• While Safe currently dominates the smart wallet market with impressive metrics and integration capabilities, it faces challenges in mobile adoption, cross-chain functionality, and developing meaningful utility for its $SAFE token beyond governance.
Currently, Safe secures around $70B in crypto assets, surpassing the combined holdings of OKX and Robinhood. However, Safe is more than a multi-sig wallet. Safe's vision is to become the "Ownership Layer of Crypto."
d) Agent Layer
• BingX Labs has invested in AgentLayer, a decentralized network for autonomous AI agents that launched on BingX Launchpool in September 2024, which aims to revolutionize AI collaboration through its AGENT token economy and developer tools like AgentHub and AgentStudio.
• The platform enables AI agents to operate as decision-makers with minimal human intervention, offering smart contract integration and SDK support, while garnering support from both BingX Labs' head Vivien Lin and AgentLayer's co-founder Professor Liu Yang who emphasize its potential to transform human-AI interaction.
VILNIUS, November 4, 2024 - BingX Labs, the innovative arm of BingX dedicated to identifying and nurturing transformative blockchain ventures, proudly announces its investment in AgentLayer, a project focused on building a decentralized, permissionless network for autonomous AI agents. The project was successfully launched on BingX Launchpool in early September 2024, along with trading activities...
f) Arrakis Finance
• Arrakis Pro, formerly known as PALM, is launching as DeFi's first vertically-integrated market making solution that helps token issuers manage liquidity efficiently through automated liquidity provision and rebalancing in concentrated liquidity pools.
• The platform addresses the "Inventory Problem" by bootstrapping liquidity for projects and offers features like MEV protection and modular integration with various AMM designs, having already facilitated over $500 million in volume and gained trust from major protocols like Lido and Stargate.
TL;DR Arrakis is evolving as we build DeFi's first vertically-integrated liquidity solution. As part of this new chapter, we unveil Arrakis Pro, our revamped market making solution built to support token issuers. Arrakis Pro is designed to give token issuers capital-efficient, MEV-aware, market making strategies for every stage of their token lifecycle.
g) Smart Layer
• Smart Layer is pivoting to focus on Tapps (Token As Apps), which are tokens with embedded app-like functionality that can be used on social platforms, notably through their T-Links browser extension that enables EVM token interactions directly in social feeds.
• The company plans to rebrand $SLN, launch mainnet in 2025, and focus on growing Tapp adoption through various incentives and partnerships, while addressing challenges like airdrop farming and market attention in the Ethereum ecosystem.
This will have a profound impact on the direction of $SLN, and if you are an investor or a developer... you will want to read this. Tapps, or Token As Apps, are tokens with app-like functionality...
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Table of contents
1. Composability - The Key to New Possibilities
• Composability Primer
• Interoperability and Evolution
• The Application-Specific Approach
2. Current Building Blocks for Interoperability
• Shared Sequencing
• Cross-Chain Intent Bridges
• Based Rollups
• Chain Abstraction
3. Chain abstraction deep dive: Particle Network
• Core Components
• Protocol Architecture
4. Building a Unified Liquidity Layer on Ethereum
• Challenges and Fragmentation
• The "Walled Gardens" Problem
5. Conclusion and Future Outlook
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“When in doubt, zoom out.” - Reggie Watts.
Crypto is a diverse space that presents many opportunities. As a developer, perhaps you’re building a killer dApp in the latest, most trending narrative in hopes of attaining product-market-fit. As a trader, perhaps you’re drawing setups in hopes of catching every move, up or down. As an on-chain memelord, perhaps you’re scrolling through your hundredth discord channel in hopes of finding the next 100x low-cap gem.
These are just a few of the many options available to you in the space. It’s easy to get lost in the mix and lose sight of the bigger picture. One of the reasons why crypto was conceived was to revolutionise the traditional financial systems. Although crypto has already been around for almost a decade, it is still a highly nascent sector. The industry has to continue innovating in order for crypto to see long-term success. While nobody can foresee the future and what’s to come, in 2022, Vitalik shared his vision for a multichain crypto ecosystem as the way forward.
A multichain ecosystem refers to deploying dApps across multiple blockchains, resulting in multiple instances or versions of the same application in various blockchain ecosystems. This however poses challenges such as inconsistent user experiences across chains due different tech stacks and capabilities. Another challenge is fragmented liquidity which results in discrepancies in liquidity across chains. More of such challenges, as well as their proposed solutions will be covered later on.
In this article, we will be diving into the various multichain technologies that are available today, covering several multichain case studies, as well as looking into the future and what it holds.
1. Composability - the key to opening up new possibilities
A primer on composability
On a high level, composability refers to the ability for dApps to build on top of each other, allowing for seamless integration and the formation of complex and innovative solutions. Composability is one of the most distinctive features of crypto and DeFi, given its open-sourced and permissionless nature. This begs the question, is composability for everyone?
When thinking of composability, the first thing that comes to mind is the Curve-Convex integration. Curve is a DEX which incentivises Liquidity Providers (LPs) with $CRV rewards. They pioneered the vote escrowed governance model, which gives users the option to lock $CRV to receive $veCRV based on the lock duration and the amount locked. $veCRV then allows LPs to boost their $CRV rewards and collect a portion of the fees from swaps and loans that occur on Curve.
Convex was developed with the goal of optimising yield for Curve users by aggregating $CRV. Instead of having to lock up $CRV tokens for extra rewards, Curve LPs can deposit their LP tokens into Convex and earn the same boosted yield. Convex also allows $CRV holders to convert their tokens to $cvxCRV which is then staked on Convex to earn token rewards. Users can also opt to lock $CVX to earn a share of platform fees and Curve emissions weight votes. $vlCVX holders can redirect these external incentives to specific liquidity pools via the Votium bribes platform.
Interoperability as the key for the evolution of composability
By leveraging composability, Curve and Convex shot to fame. Convex was dubbed as the “Kingmaker of DeFi”, and rightfully so. Today, Curve is deployed on more than 10 different chains, embracing interoperability and its benefits. However, Convex, its partner in crime, has chosen to reside solely on Ethereum mainnet, presumably due to the concentration of liquidity and demand there. The Curve-Convex integration is a great application of composability. However, due to the nascency of cross-chain liquidity solutions at present, this particular “DeFi Lego” has yet to take off on other chains.
Interoperability creates a unified environment where dApps can interact across multiple chains. While composability is not fully dependent on interoperability, it is highly enhanced by interoperability. Interoperability allows dApps to scale horizontally across chains, while composability allows vertical expansion via the permission integration of other various protocols. Future multichain solutions could enable one to bring “dApp Legos” smoothly across chains, opening up doors for greater innovation and collaboration.
Doing away with interoperability and composability
Current limitations in blockchain technology, such as throughput constraints, network congestion, and high transaction fees, prevent certain applications from being fully supported on-chain. Some dApps require highly specialised blockchain solutions with custom technical requirements. Instead of leveraging interoperability and composability across networks, they opt to develop custom chains tailored to their needs, prioritising control and optimization over seamless integration with the broader ecosystem. Effectively, these applications remain within their own ecosystems, which raises questions about the importance of composability in crypto.
One such example is Hyperliquid’s L1 blockchain. Hyperliquid is a high-performance perp DEX. Unlike other projects that leverage existing Layer 2s or Layer 1s with broad interoperability, Hyperliquid chose to deploy its own L1 to cater to the specific needs of its platform. By developing a custom L1, Hyperliquid can optimise throughput, reduce latency, and avoid the scalability and network congestion issues commonly faced by more generalised blockchains. This way, Hyperliquid maintains full control over their infrastructure, ensuring that the technical specifications align with the demands of high-frequency trading and liquidity provisioning. Ultimately, this approach prioritises performance and security over composability with other networks, enabling Hyperliquid to create a specialised environment tailored for its user base. Since its inception in June 2023, Hyperliquid has seen great success. It currently has a TVL of US$671m, with a cumulative trading volume of more than US$290b.
Is composability oversold?
In view of Hyperliquid’s success, is it fair to say that interoperability and composability are not necessary to build a great product? Although the application-specific approach worked for Hyperliquid, not all types of protocols and products can fit in this same mould.
Is composability oversold? Is interoperability really necessary? There are no easy answers to both of these questions. However, if application-specific chains and infrastructure continue to be popular, this further solidifies the bull case for interoperability solutions. As these solutions continue to improve, perhaps there will come a time when “dApp Legos” can be brought multichain seamlessly.
Given the limitations of the current L1 architecture, which lacks a clear path for scaling at the base layer, the concept of moving execution to an offchain environment was introduced. Since then, we've seen the rise of nearly 100 rollups, all designed to massively scale developer and user experiences by reducing latency and fees. These rollups offer modular components that allow for the creation of either generalized execution environments or specialized ones, tailored to the needs of specific applications. The advent of rollups and Layer 2 solutions has scaled Ethereum but negatively impacted the developer and end-user experience. Developers are forced to choose specific L2 platforms for their projects, while users must navigate a complex landscape of interoperability tools just to interact with decentralized applications. This fragmentation is expected to worsen as more rollups and application-specific chains are introduced.
However, because these networks maintain sovereignty over how they operate, order, and sequence transactions, the largest Rollups have become siloed within their ecosystem and keep gain increasing profitability, particularly through the control of transaction sequencing. The Rollup's control over sequencing introduces a centralized and fragmented liquidity landscape, which does not reflect the original ideology of decentralization, censorship resistance and a unified composability layer as we see on several L1 environments.
Additionally, the notion that rollups inherit the censorship resistance and decentralization of the underlying L1 is misleading, as long as the sequencer remains under the control of the rollup entity itself. This is evident in the significant revenues generated by platforms like Base and Arbitrum through their sequencing operations. Hence, the interoperability among L2s is currently fragmented and almost non-existent, only through clunky 3rd party bridges and routing aggregators. Several teams are actively working on solutions to seamlessly unify liquidity and user experience across existing L2s, fostering collaboration and enabling them to opt into third-party solutions that could maximize Ethereum's network effects.
2. A closer look at the current building blocks aimed at addressing the challenges of interoperability and composability.
a) Shared sequencing
Shared sequencing and the decentralization of the sequencer that comes with it, was among the most promising approaches to achieve the notion of why Rollups have been brought to existence.
Shared sequencers are rollup-agnostic solutions that aim to enable synchronous composability by submitting transactions from multiple rollups to a shared, mempool-like environment. The sequencer then selects and batches these transactions to achieve synchronous atomic transactions across rollups. Current shared sequencer designs vary; some focus solely on aggregating and ordering transactions, while others execute them too.
Case study: Espresso’s shared sequencer
To address the limitations and challenges faced by current Layer 2 (L2) solutions, Espresso introduces a shared sequencing network designed to provide secure, high-throughput, and low-latency transaction ordering and availability for the existing optimistic - and zk Rollup landscape. Espresso focuses on preserving the inherent properties of L2 solutions while leveraging Ethereum's economic security through restaking. By breaking the current sequencing monopolies, their shared sequencing layer aims to enhance user experience and enable atomic cross-rollup transaction execution, while providing feature like preconfirmations.
At its core, Espresso's shared sequencer is built on HotShot, a modified consensus protocol derived from HotStuff BFT, along with its own data availability layer, Tiramisu. This combination allows Espresso to optimize for both high throughput and fast finality for cross Rollup transactions, with similar security guarantees as on the underlying L1.
Sequencer Marketplace
Espresso enables applications to sell their sequencing rights through an open marketplace governed by an auction, where participants acquire execution tickets for the sequencing rights of chains, and if successful, become the sequencer for a given slot on those chains. This coordination layer enables atomic cross-rollup transactions and fast pre-confirmations, boosting the utility of rollups and enhancing the UX. Chains can set a reserve price for their blockspace or designate their own sequencer if the price isn't met. Additionally, the Ethereum L1 proposer has a right of first refusal on sequencing rights sold in the marketplace, allowing participating chains to function as Ethereum rollups and enhancing composability with Ethereum, a derived idea from based sequencing.
b) Cross chain intent bridges
Intents are paving the way for a transformative shift in on-chain trading experience. At their core, intents represent a user’s desired action - such as swapping Asset A for Asset B. These intents allow for flexibility, as they can be fulfilled by any party (referred to fillers and solvers) in various ways, providing a more adaptable and user-centric approach to trading. As the current DeFI landscape is fragmented, liquidity in AMMs is limited causing a bad trading experience for ever participant - from HFT traders to the everyday meme trader.
Intents introduce an elegant alternative, where a user can broadcast it’s intentional trade to a wide array of fillers/solvers. Those third parties have the flexibility to batch a set of transactions, tap into offchian liquidity or match two transactions in a CoW to fulfil the intent in the most optimal execution for the user, while earning a rewarding fee for facilitating this.
Just as money flows almost seamlessly within current monetary frameworks, certain applications and user groups rely on robust and secure cross chain solutions to unlock new levels of sophistication and innovation in product development and user experience.
c) Intents x Interoperability
Many existing cross-chain solutions use various approaches to enable communication between blockchains, with most relying on message passing—often off-chain—to facilitate end-to-end data exchange. These protocols require robust validation, transport, and security mechanisms to ensure reliable communication. Leading protocols such as Axelar, Across, and LayerZero enforce strict rules to relay only fully finalized transactions, ensuring security but introducing latency, especially on blockchains like Ethereum, where finalization can take several minutes. While messaging-based designs have been widely used, they often suffer from slow transfer finalization, high costs, and security trade-offs, highlighting the need for more efficient and secure cross-chain architectures.
Intent-based systems seek to optimize real-time, secure trading experiences by allowing users to define the desired end-state of a transaction. A network of fillers then competes to achieve the user’s outcome as quickly and cost-effectively as possible.
Case Study: Axelar Cross-Chain Intent Communication
Axelar has pioneered the connection of multiple blockchains and Rollups, enabling near-instant cross-chain transactions through an intent-based system. In Axelar's framework, users define their desired actions - such as swapping asset X for asset Y from Chain A to Chain B - by specifying these actions as "intents." Once the intent is submitted, it is broadcast to a decentralized network of "solvers," which are third-party entities or validators that compete to identify the most efficient route and execution path for fulfilling the intent. These solvers then execute the transaction across the appropriate chains, leveraging Axelar's secure and standardized protocol. This approach combines the security of on-chain execution with the flexibility of off-chain processing.
Axelar has also partnered with Uniswap to pioneer ERC-7683, an initiative aim to improve cross-chain interoperability with a new standard
While current intent-based systems fulfil user intents through dedicated networks or relayers, often operated by decentralized validators, they face significant challenges in attracting a broad range of solvers. These challenges stem from complex integration requirements, infrastructure inconsistencies, and other implementation hurdles, which often result in the centralization of execution among the most sophisticated and resourceful solvers.
ERC-7683 addresses these issues by proposing a standardized intent-based architecture. This framework establishes a unified network where any filler or solver can participate seamlessly, fostering global DeFi interoperability and supporting a diverse, decentralized network of solvers worldwide. While intents have proven to be an effective solution for cross-chain interoperability, current systems often operate within isolated networks, leading to potential latency issues, value extraction, and centralization risks due to reliance on a small group of solvers.
At the center of this proposed new standard are the "Cross-chain Order" and "Cross-chain Settler" functions. These functions define the constraints that settlement contracts must adhere to in order to resolve implementation-specific orders and initiate them on-chain. This new standard allows users to submit cross chain intents that remain consistent across platforms, whether directly on Uniswap, Across or any other system. This standardization enables cross-chain applications to share a common set of fillers/solver through a universal network, eliminating siloed systems and reducing the risk of centralized dependencies, improving the UX for dApps, fillers/solvers and end users - all at once.
d) Based rollups
Still in a very nascent stage, rollups are considered "based" or “L1 sequenced” when its sequencing is directly determined by the base layer - L1. Specifically, based rollups are a class of L2’s that leverage the inherent sequencing capabilities of an L1 proposer. In this setup, L1 proposers, along with searchers and builders, can permissionlessly include the next rollup block (n+1) within the subsequent L1 block (n). This design significantly enhances composability among rollups, fostering seamless interactions and interoperability between them.
By relying on the L1 for sequencing, based rollups achieve greater interoperability, allowing cross rollup transactions to be natively finalized on the underlying L1 . Unlike other solutions, which use a third party message passing system or a shared sequencing marketplace, this approach leverages the decentralization, security, and liveness properties of the base layer, ultimately optimizing for scalability and fostering a more interconnected rollup ecosystem.
When multiple rollups are sequenced by the L1, they benefit from asynchronous composability within any L1 slot where the proposer is granted the right to act as the L2 sequencer across multiple rollups. Here, the L1 proposer functions as a shared sequencer among a set of based rollups, facilitating sophisticated cross-rollup transactions and interactions natively at the base layer.
This approach contrasts with most current rollup solutions that rely on third-party interoperability protocols, such as arbitrary messaging protocols, bridges, or bridging routers, which can introduce potential liveness issues and create single points of failure outside the core protocol. By contrast, L1-based sequencing provides an in-protocol solution that directly leverages the inherent liveness and security guarantees of the Ethereum validator set. This not only enhances reliability and reduces dependencies on external solutions but also fosters a more robust and secure cross-rollup ecosystem by building on Ethereum's decentralized foundation.
e) Chain abstraction
As the multichain ecosystem evolves, efforts to scale EVM infrastructure and embrace Ethereum’s rollup-centric future have resulted in over 100 rollups and numerous standalone appchains. While these advancements address scalability and sovereignty, one critical challenge remains unresolved: user experience (UX). Despite progress in scalability - largely empowered by the modular thesis - user frustration continues to stem from fragmentation. Assets are dispersed across multiple wallets, bridging pathways are complex, chain configurations are diverse, and gas tokens vary widely. This added complexity not only increases the learning curve for both developers and users but also raises user acquisition costs and slows broader blockchain adoption. To overcome these challenges and create a seamless, user-friendly environment, the industry must introduce additional layers of abstraction, simplifying interactions for both users and developers.
Introducing and implementing account abstraction was the first step towards enhancing UX, but it doesn't address the coordination of assets in a multichain environment.
The core idea behind Chain abstraction is to solve the coordination problem based on a pretty straightforward assumption; blockchain technology should be invisible to users.
In other words, users should not be aware that they are using a blockchain, nor should they know which blockchain they are using. Users should be able to execute logic from one point of execution, eliminating the need for them to switch networks, sign transactions on different chains, or manage independent balances across networks. For the first time, users can seamlessly interact with a dApp from any supported chain, using any token, all without ever leaving your UI.
3. Particle Network is leading the charge in chain abstraction innovation
We wanted to use Particle Network as a case study on chain abstraction. Particle is an emerging Layer 1 blockchain with a single goal: providing a superior user experience that many others in the space aspire to achieve. Particle Network brings a solution to the industry's challenges through its implementation of an L1 that unifies all chains through Universal Accounts, simplifying the blockchain experience with Chain Abstraction. This approach addresses issues such as fragmented liquidity, cumbersome and expensive cross-chain transactions, and suboptimal user experiences across different blockchains. By leveraging its modular core components, Particle Network creates a seamless interaction experience, making it almost indistinguishable from using a single chain. In essence, Particle Network provides users with one account and one balance usable across the entire ecosystem.
a) To achieve the notion of a fully blockchain abstracted future, Particle network is build upon 3 critical components:
i. Universal liquidity
Particle Network’s Universal Liquidity architecture combines a modular node setup with a Decentralized Messaging Network to enable automatic, cross-chain operations. This system streamlines interactions by unifying balances across Universal Accounts and automating fund movement between chains, drawing liquidity directly from the user’s balances when necessary. By eliminating the need for manual bridging, it allows transactions with any token, all coordinated and settled through Particle Network. Users can interact across chains as though they were on a single network. When a user joins an app powered by Particle Network’s Universal SDK, their EOA (e.g., MetaMask, Keplr) signs into a Universal Account, enabling seamless funding and usage across multiple chains without the need for bridging, all backed by Universal Liquidity.
ii. Universal accounts
Universal Accounts are a core feature that enables Particle Network to achieve chain abstraction. These accounts provide users with a single address, balance, and point of interaction across the entire multi-chain ecosystem. With a Universal Account, users maintain one unified balance and address across all chains. Leveraging Universal Liquidity, users can execute cross-chain transactions automatically, delivering a seamless, cohesive experience without the complexity of managing multiple wallets or addresses.
iii. Universal Gas
This feature allows users to pay gas fees on any blockchain using any token, eliminating the need to hold multiple tokens like SOL or ETH. Regardless of the token used for payment, all gas fees are ultimately settled in $PARTI, the network’s native token, even if the user doesn't hold it.
b) Protocol Architecture
To create a universal coordination layer, Particle Network introduces a streamlined infrastructure that outsources data availability (DA) and employs an innovative consensus mechanism built around three core modules:
i. Master Keystore Hub (MKH)
The MKH serves as the central coordinator for smart contract deployments and state management across all networks. It automatically synchronizes configurations across all Universal Accounts (UAs), ensuring consistent state updates throughout the network. Acting as the authoritative source of truth, it securely stores account settings to maintain uniformity across all connected chains.
ii. Decentralized Messaging Network
Particle’s Decentralized Messaging Network leverages relayer nodes to create a communication hub, enabling seamless cross-chain coordination. These relayer nodes monitor and update the execution status of operations across external chains and efficiently manage state changes within Universal Accounts, ensuring consistent and reliable cross-chain interactions.
iii. Transaction Bundler
Unlike the centralized bundlers commonly seen with ERC-4337 (Account Abstraction), Particle implements a decentralized approach for its bundler. In this system, transactions from the public UserOps mempool are gathered and processed by node operators within the bundler network before being relayed and executed on external chains as needed.
iv. Aggregated Data Availability
Designed with modularity in mind, Particle adopts a unique approach to data availability (DA), integrating multiple DA solutions like Celestia and Avail rather than depending on a single provider. By leveraging a diverse array of DA layers, Particle enhances the robustness, redundancy, and security of its data availability infrastructure.
v. Dual Staking Model with Babylon
The Particle-Babylon mechanism introduces a dual staking model featuring two distinct groups of node operators:
• $PARTI Staking Nodes — Nodes that stake Particle's native token, $PARTI, to secure the network directly.
• $BTC Staking Nodes — Nodes that stake $BTC to provide cryptoeconomic security through Babylon.
Both groups of validators are incentivized to independently validate blocks, fostering balanced participation in the consensus process. This model broadens the network’s security framework and enhances incentives for node operators, promoting higher participation and greater network stability.
4. Building a unified liquidity Layer on Ethereum
Ethereum and its rollup ecosystem face considerable challenges in establishing a unified liquidity layer, a problem less pronounced in more integrated networks like Solana. Rollups such as Arbitrum, Optimism, and zkSync boost Ethereum’s scalability, yet each operates as a distinct entity with separate liquidity pools, resulting in fragmented markets and limited asset flow across networks. Unlike the seamless composability Ethereum originally offered, rollups increasingly behave as appchains, prioritizing their own liquidity and user retention. This shift reflects their evolving role as standalone entities with business models that may be impacted by liquidity sharing with competitors. For instance, Optimism's OpStack enables atomic composability across rollups built within its framework, effectively aiming to retain liquidity and users within its own network rather than Ethereum as a whole.
This fragmentation presents a unique hurdle for Ethereum as it seeks to create a cohesive financial layer amid a decentralized landscape of independently operating rollups. The incentives between Ethereum’s base layer and its rollups have become misaligned. While rollups initially leveraged Ethereum’s liquidity and user base to scale, they are increasingly seen as parasitic to the Layer 1, contributing only little value in return. Instead of enriching the broader Ethereum ecosystem, rollups are now focused on retaining their own liquidity and user base, often isolating themselves from Ethereum’s native network. This dynamic creates a tension where rollups benefit from Ethereum’s established network effects without providing reciprocal value, undermining the long-term symbiotic relationship that was once envisioned between Ethereum and its rollups.
While interoperability is often touted as the future of blockchain, the reality is that many networks are more focused on building 'walled gardens' than truly interconnected ecosystems.
Interoperability across domains VMs may, in some cases, be overstated, as many networks and applications are fundamentally incentivized to retain liquidity and users within their own ecosystems. This dynamic is particularly evident in the growing prevalence of rollups and appchains, which, despite promoting the idea of cross-chain functionality, are often more concerned with consolidating their own liquidity and fostering self-contained environments. These ecosystems are designed to ensure that assets and users remain within their "walled gardens," limiting the flow of value and interaction with external networks. As a result, the promise of seamless cross-chain communication may be hindered by the competitive interests of individual networks, which prefer to protect their liquidity pools and user bases, limiting the broader vision of a fully interconnected blockchain ecosystem.
5. Conclusion - How we see the end game to be
While the vision for a seamless multichain ecosystem is not fully realised yet, there has been substantial progress with the development of new technologies like shared sequencers, arbitrary messaging protocols and chain abstraction. Composability, although one of the hallmarks of DeFi, faces limitations without the full support of interoperability across chains. The Curve-Convex integration illustrates the potential of composability, though limited by the inability to bring this “DeFi Lego” across chains.
Ultimately, the future of the multichain endgame is still unfolding, and it remains to be seen whether interoperability and composability will be universally adopted. What is clear, however, is that these principles will continue to shape innovation in the space, allowing for more sophisticated, scalable, and user-friendly applications in the years to come. The path forward may be diverse, but with ongoing advancements in multichain solutions, the possibilities for a truly interconnected blockchain world seem closer than ever.
*Disclosure: Particle Network is Signum Capital’s portfolio company and the information provided on this newsletter is for general informational purposes only and does not constitute professional nor investment advice.
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