Compass Investments

– Rollups, especially optimistic and ZK-based rollups, introduce withdrawal delays of up to a week and offer scarce liquidity in cross-rollups. The result is a fragmented system where adoption is slowed and capital is used inefficiently.

Developers face a choice. They can focus on one rollup, limiting their audience, or they can divide liquidity among several, tolerating inefficiency. Neither option is in the long-term interests of the ecosystem. Therefore, significant opportunities lie ahead for protocols that will address these limitations. They will attract more capital, be more efficient and provide a better experience.

The movement of capital must be abstracted from the user. Bridges and withdrawal queues should become protocol-level issues, not user-side issues. Liquidity placed on one swap can meet demand on another, and background rebalancing will ensure solvency and efficiency. What seems complex today can be made invisible.

This shift from reactive bridging to intent-based liquidity coordination will restore composability and preserve decentralization. Moreover, it will support Ethereum’s fundamental principles of creating open systems without central gatekeepers. Otherwise, users will rely on centralized exchanges to circumvent friction, risking self-sufficiency for the sake of convenience. This is not just a technical problem – it’s a philosophical issue.

Designing for capital efficiency is becoming a competitive advantage. Tomorrow’s DeFi protocols won’t just compete on commissions or profitability. They will compete on the ability to efficiently access liquidity in a fragmented landscape. The winners will be those that can fulfill a user’s request wherever they are without requiring them to manually move funds. The result will be a better user experience, more productive capital, and greater network resilience.

Some underlying technologies are already beginning to address this problem.

Ethereum-native rollups planned after the hard fork in 2026 promise tighter integration, and foundation rollups, though not yet ready for deployment, offer closer alignment with Ethereum by sharing sequencing and improving computation while sacrificing some independence.

Meanwhile, optimistic rollups are rushing to implement zero-disclosure proofs to speed up exit. These innovations reduce friction, but are insufficient on their own. Scaling will be enabled by applications designed with these constraints in mind, not just the base layers.

Zk-rollups are particularly good for this. Their cryptographic structure allows messages to be exchanged between chains with low latency and minimal trust.

This makes them ideal for applications like payments, decentralized trading, and real-time financial products – all of which require speed and confidence. If Ethereum can make such cross-chain flows seamless, it won’t just scale. It will become the foundation of a more efficient financial system.

Such an outcome is not guaranteed. Rollup tariffing may serve short-term purposes, but in the long run, it will weaken the very network that Ethereum seeks to strengthen. Solana, for example, already offers composability within a single domain. While Ethereum’s modular approach is arguably more robust, it cannot afford to ignore the usability cost of fragmentation.

Ethereum’s strength is its neutrality. This should include the ability to freely move capital within the ecosystem. The future will not be built through taxes. It will be built by allowing it to function as a single economic engine.