๐Ÿ’ฐWhat's in it for Rollups?

Rollups bring their own set of challenges

As of Nov โ€™23, 2 M ETH (1.7% of supply) is locked in rollup bridges across the Ethereum rollups. The growth in the ETH locked with rollup bridges has been exponential over the past year, and we expect the ETH locked to reach 20% in the next 2-3 years, driven by Ethereumโ€™s rollup-centric roadmap. But how is that a problem?

  • Capital inefficiency - ETH locked in bridges is not earning any returns which goes against all the DeFi principles of capital efficiency

  • Rollups - Rollups face a high cost of operations, with many Rollup-as-a-service products charging as high as USD 100k annually as rollup operational cost. This hinders the design space and experimentation with rollups as a technology

Nexus Network: Antidote for rollup experimentation

Nexus Network is building a plug-and-play staking infrastructure through which rollups can stake the ETH locked in their bridges and earn stable and sustainable staking returns. Nexus Network sits in between the rollup bridge and the Ethereum chain and leverages the latest staking infrastructure to build a non-custodial solution for rollups. ETH moves from the rollup bridge to Ethereum for staking, while staking rewards and the unstaked ETH flow directly from Ethereum to the rollup bridge.

What does this unlock?

Integrating with Nexus Network brings a sustainable source of revenue for rollups which can be used for -

  • Free rollups - Running a rollup is expensive. You have to cover sequencer costs, running nodes, etc. Working with Nexus Network generates enough returns for its customers to cover all the infrastructure costs, effectively making the rollup free. This is especially beneficial for rollup stacks trying to differentiate themselves from other stacks in the market. Nexus Network is working with the Polygon CDK team to enable a โ€œfree rollupโ€ solution to allow app developers to experiment with the stack, even at a small stake of USD 5 Mn (at current ETH prices)

  • Public goods funding - Many developer-focused ecosystems have a flourishing grants program that can be funded through the returns earned from the staking revenue. This will help the rollup differentiate itself and increase its long-term potential

  • Ecosystem incentives - Rollups can use the revenue to provide incentives to teams building on the rollup that can create the positive feedback loop where larger incentives lead to more ETH inflow resulting in larger staking returns driving even more user adoption and inflows

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