💰What's in it for Rollups?

Rollups bring their own set of challenges

As of Jun ’24, 4.2 M ETH (3.4% 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 Ethereum’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 upto USD 80k 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 provides a plug-and-play staking infrastructure through which rollups can stake the ETH locked in their bridges and earn stable and sustainable staking returns.

What does this unlock?

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

• 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

• Free rollups - Running a rollup is expensive with the cost of running a sequencer, nodes, etc. Working with Nexus Network generates enough returns for its customers to cover all the infrastructure costs. This allows rollups to massively subsidize the cost of transactions on the rollup, especially in the bootstrapping phase for the rollup

• 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