Bank for International Settlements working paper links validator incentives to blockchain congestion and monetary fragmentation

The Bank for International Settlements published a working paper, Tokenomics and blockchain fragmentation, arguing that the incentive mechanics of public permissionless blockchains make congestion and the proliferation of competing chains a structural outcome that weakens the network effects that underpin money’s coordination role. The paper concludes that stablecoins inherit this fragmentation because they sit on non-interoperable ledgers, with implications for the future monetary system and the role of a trust anchor. Using a global-games model of validator coordination, the analysis derives that the minimum validator reward needed to sustain consensus rises with the supermajority threshold and equals c/(1−λ̂), implying that more decentralised and secure designs require higher rents extracted from users. With heterogeneous willingness to pay, capacity constraints are endogenously set to generate those rents, so fee spikes and user migration to lower-threshold chains are an expected feature; the paper points to outflows from congested Ethereum to chains such as Solana, Tron and BNB Chain and notes that, by late 2025, annualised fee revenue on Ethereum, Solana and Tron was each around USD 500–600 million. Stablecoin activity is described as scattered across multiple chains, with the same stablecoin existing in chain-specific, non-fungible forms and cross-chain transfer relying on bridges that add cost, delay and security risks, including cumulative bridge hack losses estimated at over USD 2.5 billion during 2021–2024; as of late 2025, Ethereum held roughly 55% of aggregate stablecoin supply while Tron hosted around USD 79 billion and Solana over USD 16 billion. The paper also argues that layer 2 scaling can replicate fragmentation across additional platforms and contrasts this with institutional arrangements where central bank settlement supports par convertibility, referencing the unified ledger concept as a potential architecture to combine programmability with the singleness of money.