SUAVE Economic Security Models

Hi @Jon, thanks a lot for the post! It took me a while to chew through my reading list, but I enjoyed it.

I think many of your thoughts are valid. Below I will respond to the most significant points made:

If you use unencumbered ETH as a staking token, you compete with ETH staking (and other yields)
I agree! If you do that, you get much less economic security (or whatever you’re buying) for the same cost. If you wanted to pull meaningful ETH from Ethereum, you’d have to outbid staking fees, which we neither want nor can afford. Hence, if we use some form of ETH staking, I think it will realistically use a form of staked ETH or ETH restaking, so it becomes value-additive (not parasitic) to the ecosystem.

SUAVE should strongly consider a rollup
I think over the longer term (thinking 4+ years out) this option makes total sense. There are at least three factors to consider with rollups (there might be more as our understanding improves):

The pros and cons of rollups
So, rollups guarantee safety + liveness through the L1 (you can’t make invalid state transitions + you can always force a state transition).

First, SUAVE doesn’t benefit from these benefits as much as one would think. SUAVE isn’t interested in users bridging a lot of funds and storing them there. Rather, we are investigating techniques to minimize the need to bridge funds to SUAVE as a user. In a perfect world, only major searchers/builders will have to maintain a balance and only enough for working capital. That could still come out to a meaningful amount, but it’s not comparable to L2s like Optimism/Arbitrum/StarkNet, etc. who all compete on attracting & locking up as many funds as possible. Likewise, the ability to get a state transition mined through L1 is not relevant/useful to searchers.

Second, the high security of an L2 comes also at a high (DA) cost today.

Third, SUAVE needs to report state transitions from other domains back to the home chain, so that the conditional payments from bids can be unlocked to executors. As far as I understand today, rollups have the nice property that SUAVE can trustlessly read the state from Ethereum L1 and other rollups building on Ethereum.

Initially, I don’t think the economics come out rollup favored, because the security benefits from rollups don’t mean much to SUAVE and hence cannot justify the high cost. All of these three factors can change (and probably will over time) to tilt that balance in favor. For example, if DA costs go down enough, it doesn’t matter how little security you derive, it will probably be worth it.

Closing words
The main reason why there aren’t a ton of details on how the chain will be secured is that it’s simply not a priority right now.

All of the value creation from SUAVE will come from its innovative transaction types and programmable privacy framework. So we are focusing on getting these right because 1) that’s what will determine much of our future success, and 2) that’s what we’re uniquely good at.

What I particularly liked about your analysis is that, while they all have some pros&cons, there are many viable options for security. Personally, I consider it a solved problem and one where the available options get better every year. So we’re happy to “outsource” that thinking and push it to the future.