Economic Security of Multiple Shared Security Protocols

Paper: arXiv 2505.03843

Authors: Abhimanyu Nag, Dhruv Bodani, Abhishek Kumar

Abstract

As restaking protocols gain adoption across blockchain ecosystems, there is a need for Actively Validated Services (AVSs) to span multiple Shared Security Providers (SSPs). This leads to stake fragmentation which introduces new complications where an adversary may compromise an AVS by targeting its weakest SSP. In this paper, we formalize the Multiple SSP Problem and analyze two architectures : an isolated fragmented model called Model $\mathbb{M}$ and a shared unified model called Model $\mathbb{S}$, through a convex optimization and game-theoretic lens. We derive utility bounds, attack cost conditions, and market equilibrium that describes protocol security for both models. Our results show that while Model $\mathbb{M}$ offers deployment flexibility, it inherits lowest-cost attack vulnerabilities, whereas Model $\mathbb{S}$ achieves tighter security guarantees through single validator sets and aggregated slashing logic. We conclude with future directions of work including an incentive-compatible stake rebalancing allocation in restaking ecosystems.

Complexity vs Empirical Score

• Math Complexity: 6.5/10
• Empirical Rigor: 3.0/10
• Quadrant: Lab Rats — theoretically deep, empirically untested

Why this score: The paper provides a strong theoretical and mathematical framework using game theory and convex optimization to formalize the economic security of fragmented vs. unified restaking protocols. However, it lacks empirical backtesting or real-world data validation, relying primarily on stylized Monte Carlo simulations.

Research Flowchart

  flowchart TD
    A["Research Goal: Analyze Security of AVSs Spanning Multiple Shared Security Providers (SSPs)"] --> B["Define Architectural Models & Market Inputs"]
    B --> C["Inputs: Validator Sets, Stake Distribution, Slashing Mechanics, Cost of Attack"]
    C --> D["Mathematical & Game-Theoretic Framework<br>(Convex Optimization & Game Theory)"]
    D --> E["Analyze Security Architectures:<br>Model M (Isolated/Fragmented) vs. Model S (Shared/Unified)"]
    E --> F["Key Findings & Outcomes"]
    F --> G["Model M: Flexible, but vulnerable to lowest-cost SSP attacks"]
    F --> H["Model S: Tighter security via aggregated slashing & unified validator sets"]

Cited References (31)

1. Eigenlayer: The restaking collective (2024)
2. Symbiotic: Permissionless Restaking Protocol (2025)
3. Babylon Labs Documentation (2025)
4. Jito Labs Documentation (2025)
5. Ethereum white paper (2013)
6. Solana: A new architecture for a high performance blockchain v0. 8.13 (2018)
7. Bitcoin whitepaper (2008)
8. Rehypothecation (2011)

1 of 31 cited works are in the corpus; resolved via arXiv source bundles, Semantic Scholar and OpenAlex. Corpus-wide: 2518 linked papers.