February 7th, 2024
Originally, blockchains like Bitcoin and Ethereum were designed as standalone systems. Many of the early blockchains — and even some of today’s — were designed primarily as competitors or Bitcoin or Ethereum “killers”.
However, blockchains have become increasingly interconnected over time. Cross-chain bridges make it possible for users to move tokens from one chain to another. Layer 0 projects enable the creation of multiple, interconnected blockchains.
As blockchains become more interconnected, they provide various benefits to one another. One advantage of the increased interconnectivity of blockchains is the concept of shared security, which allows a smaller, less secure blockchain to borrow security from a more established one.
Blockchain technology is built around the concept of decentralization. No single authority is responsible for managing and securing the blockchain’s digital ledger. Instead, each node in the network maintains its own copy of the ledger and updates it as new, valid blocks are created.
Blockchains use consensus algorithms to help protect against fraud and cheating by unethical participants in the network. Consensus algorithms like Proof of Work (PoW) or Proof of Stake (PoS) make it difficult and expensive for someone to perform a 51% attack and rewrite the history of the blockchain to enable a double-spend attack.
However, the security of these consensus algorithms depends on the network having a large number of active participants in the consensus algorithm. Otherwise, an attacker may manage to gain control of the majority of the computational power, staked tokens, or other scarce asset used to protect against attacks. This is why smaller blockchains such as Ethereum Classic have suffered numerous 51% attacks.
This need for a large pool of miners/validators poses difficulties for new blockchains. When a new blockchain is just starting out, it might lack the large community necessary for security. As a result, these smaller chains are more vulnerable to attack and can struggle to gain the trust required to become a major player in the space.
Often, different blockchains have different advantages. For example, Bitcoin is well known for its security since it has a large network of miners, making a 51% attack very expensive. However, Bitcoin has limited capacity and little support for smart contracts, features that other, less mature platforms can offer.
Shared security is designed to overcome this challenge. With shared security, a smaller, less secure blockchain will use a larger, more established blockchain for its security. For example, by including a summary of the smaller blockchain’s state at a given block in a transaction on the larger chain, a blockchain forces the attacker to perform a 51% attack on the larger chain and rewrite its history to carry out a successful 51% attack against the smaller chain.
The core concept of shared security is that a smaller blockchain can borrow security resources from a larger one. However, this can be accomplished in various ways.
Rollups are an example of a Layer 2 blockchain protocol that implements the shared security model. Rollups are generally designed to improve the scalability and transaction speed of Layer 1 protocols by moving transactions off-chain into the rollup’s environment. Rollups will batch these off-chain transactions into a bundle and record a state update on the Layer 1 chain that summarizes all of the state changes made by executing the transactions in the batch. This ensures that these off-chain transactions enjoy a similar level of security as if they were performed on-chain.
Layer 0 platforms provide a standardized environment and toolset for developing blockchains. Projects such as Cosmos and Polkadot provide building blocks and libraries for blockchain development and various protocols to enhance interoperability. Shared security can be implemented at Layer 0 if validators and consensus algorithms are provided or shared at Layer 0. If this is the case, then Layer 1 blockchains built on the protocol can abstract away security details or layer their own consensus algorithms and validators on top of the provided ones.
Cosmos is an example of a blockchain project designed to implement interconnected blockchains. Cosmos Hub is the first Cosmos blockchain and has its own set of validators.
In an interchain model like Cosmos’ Interchain Security, other blockchains within the Cosmos ecosystem can lease access to the Cosmos Hub validator set. In addition to validating Cosmos Hub, validators will also validate transactions on these chains in exchange for staking rewards. Misbehavior by a validator on a consumer chain will result in slashing of a validator’s stake on Cosmos Hub, providing an incentive for validators to behave on every chain that they validate.
Shared security has garnered a great deal of interest and excitement. One of the reasons for this is that it provides various benefits, including:
Security for Smaller Chains: Smaller, less established blockchains can be very vulnerable to 51% attacks that undermine the integrity and immutability of their digital ledgers. Shared security makes these attacks more difficult by making these chains’ security reliant on that of other, more established chains.
Increased Scalability: Often, more secure blockchains such as Bitcoin and Ethereum have limited scalability, leading to transaction delays and high fees. Shared security helps to enhance scalability by enabling transactions to be moved off of these chains while still taking advantage of their improved security.
Expanded Feature Sets: Often, new blockchains are deployed to offer new features or application-specific optimizations. Shared security makes these more specialized blockchains possible and secure by tying their security to other chains.
Shared security is intended to allow new or smaller blockchains to enjoy the same level of security as their more established peers. This is accomplished by recording the smaller chain’s state on the larger or borrowing its validator set.
However, the level of security provided by shared security might depend on the protocol’s design and implementation. For example, Optimistic Rollups are generally less secure than ZK-Rollups due to their reliance on challenges rather than zero-knowledge proofs for security.