Decentralized Concentration Economy

The Modular Economy and the Risks of Polarization

As Ethereum has matured, the rise of the Modular Economy has transformed the ecosystem. While this has been a positive step for scaling Ethereum and aggregating diverse participants, it has also led to the fragmentation of incentives and resources across multiple layers. To address this resource fragmentation, solutions like shared security mechanisms and aggregation layers have emerged.

Shared security enhances capital efficiency by distributing security across networks and leveraging underlying assets, while aggregation layers establish common frameworks for services benefiting from shared security. However, shared security implementations face challenges, including the lack of standardization, inconsistent traction in security value capture, and variations in slashing logic.

Alternative approaches, such as Polygon’s aggregation layer, offer ecosystem-specific solutions by sharing security across their networks. However, these solutions are typically confined to their own ecosystems, limiting their applicability to broader use cases.

Nektar's Value Proposition: The Rise of DCE

The primary challenge with most aggregation solutions lies in their inability to accommodate the varied liquidity, security, and infrastructure requirements of different use cases. Forcing all projects into a single aggregation layer risks stifling growth and discouraging participation. Additionally, many projects prefer to launch and promote their own tokens, particularly when security is not their primary focus.

To address these challenges, Nektar proposes a Decentralized Concentration Economy. This model allows diverse participants to converge at a common trading point without sacrificing their unique implementations or tokens, while still benefiting from increased network effects.