The evolution of blockchain technology over the past decade has shifted from single, isolated networks to a complex and interconnected multi-chain ecosystem. In that context, shared security has emerged as an important platform, allowing emerging networks to overcome capital and infrastructure barriers to achieve a level of security equivalent to "giants" such as Ethereum or Bitcoin. This report, compiled and analyzed by a team of experts at Tan Phat Digital, will delve into the nature, operating mechanism, popular models such as Restaking, as well as realistically evaluate whether this solution is truly an impenetrable "shield" for small chains or not.
The nature of Blockchain and the birth of the concept of shared security
To clearly understand shared security, it is first necessary clarify the fundamental concepts of blockchain. Blockchain, at its core, is a decentralized ledger maintained by a network of nodes through consensus algorithms. This technology is believed to have been created by Satoshi Nakamoto in 2008 through the publication of the Bitcoin white paper, marking the birth of a monetary system that does not require trust in third parties.
In the structure of blockchain, "chain" (chain) represents the connection of data blocks through cryptographic hash functions. Each block contains a list of transactions and a reference to the previous block, forming an immutable record. Public chains such as Bitcoin or Ethereum allow anyone to participate, validate and read data, creating maximum transparency and decentralization. However, maintaining a public chain requires a strong security mechanism. The security of a blockchain is often measured by the cost of attacking the network, also known as 51% attack resistance.
The security of a blockchain comes from a combination of encryption and economic incentives. Users secure access to their assets through a seed phrase – a sequence of random words used to generate private keys. If the seed phrase is lost, control of the assets on the chain is lost forever, because the blockchain has no central authority to recover passwords. At the network level, on-chain indicators such as hash rate in Proof-of-Work (PoW) or total value locked (TVL) in Proof-of-Stake (PoS) are direct measures of the security strength of the system.
For small projects, building a large enough community of node operators and attracting enough staking capital to protect themselves is extremely challenging. big. This is when the Shared Security model appears as a lifesaver solution, allowing child chains to "rent" or "inherit" security from a parent chain (Provider Chain) with greater reputation and economic potential.
Comparing Blockchain and Supply Chain structures
During the research process, Tan Phat Digital noticed a common confusion between The term "chain" in technology and management. Here are the core differences between a blockchain structure and a traditional supply chain structure:
In Nature:
Blockchain: Is a decentralized digital data network.
Supply Chain: Is a system that moves products and services from manufacturers to consumers use.
About Structure:
Blockchain: Consists of data blocks tightly linked by encryption algorithm.
Supply Chain: Consists of independent business units (Manufacturers, Logistics, Agents).
About Section Objectives:
Blockchain: Ensure data integrity, transparency and immutability.
Supply Chain: Optimize the flow of goods, minimize costs and time.
About Logistics Role:
Blockchain: Do not apply directly physical transportation concept.
Supply Chain: Is the core component to handle transportation, warehousing and distribution.
About Security:
Blockchain: Based on consensus algorithm and Shared Security models.
Supply Chain: Based on third-party risk management, legal contracts, and process control.
Logistics and supply chain management, while related, differ in scope: logistics focuses on moving goods, while supply chain includes planning, production, and partnership management. Salaries in the supply chain industry can range widely depending on location, reflecting the importance of optimizing operational efficiency in the global economy.
Why is Shared Security effective for small chains?
The shared security model operates on the principle of resource pooling. Instead of each chain having to find validators and deposits individually, shared security allows a huge group of validators from the parent chain to protect multiple child chains simultaneously.
Resisting 51% attacks at low cost
Small blockchains are often low-capitalized, making the cost of taking control (the cost of participating in staking or renting hash rate) very cheap. Shared Security forces the attacker to face the security barrier of the parent chain. For example, to attack a child chain on Polkadot, an attacker would actually have to bypass the security layer of the Relay Chain – which holds billions of dollars in staked DOT value. This turns an attack costing a few thousand dollars into an impossible task worth billions of dollars.
Economics and capital efficiency
Building a separate validator is an expensive and time-consuming process. The project must not only pay rewards in inflationary tokens but also ensure a strong infrastructure. Shared Security allows small chains to "rent" available validators. These validators already have the infrastructure, experience and stable staking capital. According to analysis by Tan Phat Digital, this significantly reduces initial operating costs for blockchain startups.
State reference and transaction finality
Some modern models such as those of Hemi or Babylon allow small chains to record state "snapshots" on Bitcoin or Ethereum. In this way, the data of the small chain is tightly tied to the immutability of the parent chain. If any fraud occurs on the child chain, the evidence will be compared with the snapshot on the parent chain, helping to restore data and ensure correctness for users.
Typical Shared Security models in the Blockchain ecosystem
Currently, the three leading ecosystems in implementing shared security are Polkadot, Cosmos and Ethereum (through EigenLayer).
Polkadot: Relay Chain Model and Parachain
Polkadot uses a sharding architecture, where the Relay Chain acts as the main chain providing security and consensus for all Parachains attached to it. All validators are on the Relay Chain and are randomly allocated to validate blocks from different Parachains. However, the barrier to entry is quite high through slot auctions, requiring projects to lock up large amounts of DOT.
Cosmos: Interchain Security (ICS) and Mesh Security
Cosmos introduces Interchain Security to support new projects. In the Replicated Security model, all validators of Cosmos Hub will participate in validating the child chain. Recently, the Partial Set Security (PSS) model was introduced to increase flexibility, allowing only a small group of validators to participate, reducing infrastructure load.
See more: What is Proof of Stake
Ethereum and EigenLayer: The Restaking Revolution
Ethereum opens the Restaking era through the EigenLayer protocol, allowing users to use Staked ETH to further secure additional authentication services (AVS). As of early 2026, EigenLayer remains the leading staking project with a TVL ranging from 10-15 billion USD, providing a huge source of security for bridges, oracles and emerging L2s.
Special details of the leading Shared Security models
Polkadot:
Parent chain: Relay Chain (Uses DOT token).
Level of integration: Very high through direct state sharing.
Sovereignty: Low (Parachains closely depend on Relay Chain).
Cost: High due to Coretime auction or buying mechanism.
- IBC.
- (Restaking): supply and demand market.
Security TVL: Reach 10.77 billion USD to 15 billion USD depending on the time in 2025-2026.
Babylon (Bitcoin Staking):
Parent chain: Bitcoin (Used) BTC).
Level of integration: Very high through Timestamping mechanism.
Sovereignty: Very high (No bridging or token wrapping required).
Cost: Low thanks to using Taproot and Covenant mechanism.
Security TVL: Reached about 4 billion USD in early 2026.
Bitcoin Shared Security: The Case of Babylon and Hemi
Bitcoin is the most secure network thanks to PoW, but does not support smart contracts. Babylon uses the Extractable One Time Signature (EOTS) technique to allow BTC to be staked directly on the Bitcoin chain to secure other PoS chains without moving assets. If the validator violates (double-signing), the private key will be revealed and the BTC will be slashed directly on Bitcoin. Hemi uses Proof of Proof (PoP) to anchor snapshots of L2 chains to Bitcoin, turning Bitcoin into the "ultimate data bank".
Risk analysis: Is Shared Security really absolutely safe?
Despite its outstanding advantages, Shared Security still has potential systemic vulnerabilities that Tan Phat Digital wants to note:
The depends on the parent chain:If the parent chain crashes or suffers a 51% attack, all child chains that lease security will collapse in a domino effect.
Smart contract errors: Restaking protocols are extremely complex. A logical flaw in the source code can cause billions of dollars to be stolen regardless of how secure the underlying chain is.
Risk Slashing Mechanism: If the punishment mechanism is not transparent or suffers from technical errors (such as network configuration errors), honest validators can unjustly lose assets, causing damage to delegators.
Centralization: If a few large staking entities control the majority of retake capital, it will create a central weakness, going against the philosophy of decentralization.
See more: Blockchain has Is it safe
In-depth analysis: 10 typical Case Studies on Security strategy
Choosing a security model is not only a technical issue but also an economic strategy of the project. Below are 10 practical case studies updated to 2026:
1. Neutron: From Shared Security to Full Sovereignty
Neutron is the first project to deploy on the Replicated Security (RS) mechanism of Cosmos Hub. However, in April 2025, the project performed the Mercury upgrade to switch to a sovereign Proof-of-Stake (PoS) network.
Reason: The old RS model put a lot of pressure on validators and slowed down the upgrade progress.
Result: After independence, Neutron achieved 11 times higher throughput and expected time create blocks 18 times faster by the end of 2025.
2. Stride: Joins AEZ for Economic Synchronization
Unlike Neutron, Stride (Cosmos' leading Liquid Staking protocol) has chosen to join Interchain Security (ICS) to become part of the ATOM Economic Zone (AEZ).
Reason: Stride wants to leverage Cosmos Hub's over $2 billion in economic security to protect its vast amount of assets under management, while sharing 15% of inflation rewards and transaction fees with Hub in exchange for trust.
3. MakerDAO: "Endgame" Project and NewChain
In the "Endgame" roadmap, founder Rune Christensen proposed building NewChain - a private blockchain for MakerDAO based on Solana's source code instead of EVM.
Reason: Solana has an optimal technical structure for operating high-performance backend systems, giving MakerDAO complete autonomy in terms of administration and management. tokenomics without relying on Ethereum's layer 1.
4. Astar Network: The Migration from Polkadot to Ethereum L2
Astar was already a leading parachain on Polkadot, but took the bold step of launching Astar zkEVM on Ethereum.
Reason: Leverage Ethereum's massive liquidity and user ecosystem while maintaining connectivity to Polkadot. This demonstrates the "Modular Security" trend where projects choose the appropriate security layer for their growth goals.
5. EigenDA: Pioneer in shared data security
EigenDA is the first additional authentication service (AVS) on EigenLayer, providing a data availability layer.
Reason: Instead of building the validator network itself, EigenDA "borrows" security from ETH restakers.
Result: This model helps reduce data storage costs for Rollups many times compared to storing directly on Ethereum L1.
6. DIN (Decentralized Infrastructure Network): Security for RPC
DIN is a network that provides decentralized RPC and API infrastructure running as an AVS on EigenLayer.
Reason: Solve the centralization problem of current RPC providers (accounting for 70-80% of traffic).
Results: DIN achieves a >99% success rate for RPC operations and processes over 7 billion requests per month thanks to the security of restaking authentication nodes.
7. EigenZero: Economic Security for Cross-Chain Messaging
Based on the LayerZero platform, EigenZero uses restaking to add a layer of economic security to cross-chain transactions.
Reason: Technical solutions (like ZK proofs) are subject to logic errors. EigenZero adds an economic deterrent mechanism: if the message is wrong, 5 million USD worth of staked ZRO tokens will be slashed immediately to compensate users.
8. Babylon & BSNs (Bitcoin-Secured Networks)
Babylon allows small PoS chains to inherit Bitcoin's security without the need for bridges.
Reason: Bitcoin is the most secure asset in the world but is "resting".
Fact: As of early 2026, more than 58,500 BTC have been staked through Babylon to secure networks like Sui and Cosmos chains, delivering 5-7% returns to Bitcoin holders.
9. Hemi Network: Proof-of-Proof (PoP) model
Hemi creates a network where state snapshots are written directly into Bitcoin's blocks.
Reason: Make Bitcoin the "ultimate data bank". Even if Hemi's entire validator is hacked, data can still be accurately recovered from Bitcoin.
10. dYdX (Expansion): Results after 2 years of leaving Ethereum
After switching to dYdX Chain (Cosmos SDK) in October 2023, the project has proven the correctness of its search for sovereignty.
Results: As of January 2026, dYdX reached a cumulative trading volume of 1.55 trillion USD. Operating the validator itself helps dYdX reduce operating costs from 35,000 USD to 6,000 USD per month, while increasing transaction speed to 2,000 TPS.
On-chain Index and Systemic Risk Analysis
Shared Security brings great benefits but also creates systemic risks. Tan Phat Digital emphasizes the indicators to monitor:
- service, easily leading to chain collapse.
Frequently Asked Questions (FAQs) about Shared Security and Blockchain 2026
Below is a summary of the most common questions answered by Tan Phat Digital based on the latest research data:
How is restaking different from regular staking? Regular staking locks assets to protect a single network. Restaking (like EigenLayer) allows the same staked assets to be used to simultaneously protect many other services (AVS), helping to optimize capital efficiency.
How many AVS projects are currently active on EigenLayer? As of early 2026, about 40 AVS projects have gone into official operation and more than 70 other projects are in development.
Why did EigenLayer's TVL decline sharply in mid-2025? After activating the Slashing mechanism In April 2025, the market went through a "purification" period. TVL dropped from a peak of $15 billion to around $7-10 billion as short-term profit hunters left to avoid the risk of asset penalties.
What is Babylon's Bitcoin co-staking mechanism? This is a model that encourages users to stake both BTC and BABY tokens. Every 20,000 BABY staked will make 1 BTC eligible for additional rewards from the co-staking pool (approximately 2.35% inflation).
How many Finality Providers does Babylon have? There are currently 59 active entities out of a total of 127 entities registered on the Babylon Genesis network.
Why do some chains like Neutron want to leave the Replicated Security (RS) model? The RS model requires 100% validators of the parent chain to participate, causing costly infrastructure for small and inflexible validators. Neutron has moved to a Partial Set Security (PSS) model for more autonomy.
Is Cosmos Partial Set Security (PSS) ready now? Yes, PSS (aka ICS 2.0) has been approved through proposal ADR-015 and is becoming the new standard allowing child chains to choose a small group of validators instead of the entire Cosmos network Hub.
- Which? Extractable One-Time Signature (EOTS) is a cryptographic technique that forces the validator to sign exactly once for each block. If signed twice (fraud), that signature will automatically reveal the validator's private key for the network to execute the BTC Slashing command.
What is "Leveraged Security" risk? This is the risk when a validator uses the same amount of capital to protect too many AVS at the same time. If the total profit from cheating across all AVSs is greater than the value of the assets being Slashed, the attacker will have an economic incentive to commit bad behavior.
Can users who stake BTC via Babylon lose all their money? Yes, if the validator that the user authorized performs equivocation (signs two conflicting messages), that amount of BTC can be permanently slashed thanks to the EOTS mechanism.
What does Hemi's "Proof of Proof" model mean? Hemi periodically takes snapshots of the network state and writes them directly to Bitcoin. This turns Bitcoin into an immutable reference layer, making data recovery possible even if the Hemi system crashes.
How does EigenLayer's Nakamoto Ratio compare to Cosmos ICS today? As of 2026, EigenLayer has a fairly low Nakamoto Ratio (3 entities controlling 33% of the capital), while Cosmos Hub is slightly more decentralized with 6 entities controlling 33% of the voting rights.
How long does it take to withdraw funds (unbonding) from EigenLayer? Currently, EigenLayer applies a 14-day withdrawal queue (up from 7 days previously) to ensure enough time to check for violations before returning assets.
What are the most common smart contract errors in restaking? Logic errors account for the majority highest rate, followed by the risk of race conditions and arithmetic errors (like dividing by zero) in reward allocation.
Future trends are Multi-layered Security and Mesh Security. Small chains will combine security from multiple sources (Ethereum for payments, Celestia for data, Bitcoin for timestamping) to minimize single dependency risk.
At Tan Phat Digital, we believe that Shared Security is the inevitable path but requires caution. This is a solid launch pad to bring small blockchain applications to the world stage, as long as the project chooses a reputable partner, controls smart contract risks well and always has a backup plan for worst-case scenarios from the parent chain.
Answers to common terms
What is Blockchain?A distributed database that links blocks using encryption.
Public chain is What? Public network, anyone can participate in authentication.
What is Supply chain structure? Physical supply chain structure, completely different from blockchain data structure.
How is Logistics different from Supply Chain? Logistics is a part of action (transportation, warehousing) within the broader picture of Supply Chain.
What is logistics management? Is the planning and control of the flow of goods to meet customers in the most effective way.
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