The Evolving Landscape: Will Modular Chains Dominate?

The world of blockchains has seen a lot of innovations lately, but most of it has just been small tweaks to existing ideas. These tweaks haven't really fixed the big problem: Scalability. All we want is for our blockchains to handle lots of transactions without slowing down or costing too much. But maybe we have finally found our solution? Modular blockchains introduce a whole new way of doing things that could totally shake up how we use dapps!

Monolithic Blockchains: The Current Standard

Imagine a busy highway with only one lane. That's kind of how most blockchains work today. Everything (transactions, security checks, data storage) happens in that single lane, causing slowdowns and high fees. This is called a monolithic design.

Think of it like this: Every time you want to use the highway (or in reality, the blockchain), you have to:

1. Wait in line: This is the transaction throughput issue. Blockchains like Bitcoin can only handle a few transactions per second, leading to long queues.
2. Pay a hefty toll: This is the high transaction fee. As more people use the highway (network congestion), the toll (transaction fees) goes up, making it expensive for everyday transactions.
3. Choose between speed and security: Scaling solutions like adding more lanes (sharding) might compromise security, making it less safe to use the highway.

This situation has some experts scratching their heads. We're constantly bombarded with news of "revolutionary" new blockchains, but are they truly innovative? Mustafa Al-Bassam, co-founder of Celestia, identified the Monolithic L1 Loop. It's like we're stuck on a hamster wheel, creating new blockchains with the same basic design and limited improvements. This loop perpetuates a lack of true innovation in the layer-1 blockchain space.

Modular Blockchains: A Paradigm Shift

Is there a way out of this loop? Absolutely! This is where modular blockchains come in. Imagine a multi-lane highway with dedicated lanes for different tasks. One lane can handle transactions, another focuses on security checks, and another stores data. This allows for faster transactions, lower fees, and better security – all at the same time! This allows for a more efficient and scalable network architecture, potentially overcoming the blockchain trilemma of decentralization, security, and scalability.

‍Components of Modular Blockchains

Modular blockchains consist of several specialised layers. So, it’s like every lane in our highway has a specific task! 

• Consensus: This lane ensures everyone agrees on the network's history, like traffic wardens keeping things fair. Examples include Proof-of-Work (PoW) and Proof-of-Stake (PoS) consensus mechanisms.
• Execution: Here, transactions are processed and user interactions happen. Think of it as the fast lane for efficient transaction handling.
• Settlement: This lane acts as a secure judge, resolving disputes and guaranteeing transaction validity. It's the high-security lane for finalising transactions.
• Data Availability (DA): This lane stores all transaction data, accessible to other lanes for verification. Think of it as an information booth, ensuring everyone has the details they need.

Modular Blockchains: A Natural Progression

Modularity isn't unique to blockchains. Modular design allows for efficient functioning in various systems. Similarly, modular blockchains enable specialisation for enhanced efficiency and scalability. There are a multitude of benefits reaped from the modular blockchains : 

• Faster Speeds (Scalability): By distributing tasks, modular blockchains handle more traffic (transactions) without congestion, leading to faster and smoother operation.
• Flexibility (Customizable Solutions): Developers can choose the best lanes (layers) for their applications, like selecting express lanes for high-priority transactions or regular lanes for everyday use.
• Improved Efficiency: Each lane focuses on a specific task, optimising performance and reducing overall costs (lower fees).
  

The curious case of Data Availability

“Data availability” refers to the assurance that the data behind a newly proposed block, which is necessary to verify the block’s correctness, is accessible to other participants on the blockchain network.

To understand this, imagine you're part of a massive online community with shared cloud storage. Every time someone wants to upload a new file, a record (block) of it goes into a giant shared document (blockchain) everyone can access. This document is constantly being updated, but there's a catch: to ensure the new addition is legitimate, everyone with access needs to verify it themselves. In essence, ‘data availability’ means that everyone on the storage network can access the document.

The data availability problem 

This verification process for our shared document is like being a digital detective. You get a notification about the new file (block) and have to check if it all adds up. But here's the problem: the shared document can get massive, and downloading the whole thing every time can be a hassle. This is the crux of the data availability problem affecting modular blockchains.

Modular blockchains are designed with different layers for various functions, such as execution, settlement, consensus, and data availability. This separation makes the data availability problem more pronounced because:

• Layered Verification: Each layer relies on data from the other layers to function correctly. If data is unavailable at any layer, the entire system's integrity can be compromised.
• Increased Complexity: The modular approach adds complexity to ensuring data is accessible across all layers, making efficient data availability solutions critical.

Now, there are two types of detectives in our online community: free plan users and premium plan users.

• Free Plan Users (Light Nodes): These are the casual detectives who trust the system. They only download a summary of the update (block header) and trust the premium users to have done their job verifying the new file. This is faster but relies on the premium users being honest.
• Premium Plan Users (Full Nodes): These are the power users who download the entire new file (block) every time. They meticulously go through each document (transaction) within the file, making sure everything is in order. This is secure but can be slow, especially as the shared document grows.

Introducing rollups 

The data availability problem is particularly challenging in modular blockchains, where large amounts of data must be verified across different layers. Rollups offer a solution by creating a separate layer for processing transactions (Layer 2 or L2). Think of these rollups as our private folders within the main shared document. They allow faster processing of edits (transactions) relevant to a specific project or group.

However, the security of these private folders relies on the main document (Layer 1 or L1). The key question becomes: how can we prove the edits happening in the private folders (rollups) are accurate, without everyone in the main document needing to download the entire folder content?

There are two main approaches roll ups use to solve the data availability problem in modular blockchains:

• Optimistic Rollups:These rely on trust, submitting only a summary of the edits to the main document (L1), with L1 validators using cryptographic proofs to verify validity. If someone cheats, honest validators can download the entire folder content (if accessible) to prove the edits wrong.
  
  
• Zero-Knowledge Rollups: These use complex mathematical proofs submitted to L1 to confirm edits' validity without revealing the actual edits. Even if data is hidden, L1 validators can verify legitimacy based on these proofs.

Innovative Implementations and Their Impact

Where We Are Now 

Understanding the why of modular blockchains but to gain better insights, let’s see how it is being used to solve real world problems.

1. Celestia

Backtracking to the highways for blockchains analogy For years, blockchains have been like single-lane roads, congested and slow. But Celestia (earlier known as LazyLedger), a pioneer in Modular blockchains, is the first high-speed, multi-lane highway, designed to overcome these limitations. Now developers would not have to bootstrap a new consensus network, saving a lot of time and effort!

It is quite similar to a pluggable consensus and data availability layer that allows anyone to deploy a decentralized blockchain quickly. Nick White of Celestia, explains in this interview that Celestia is a sort of cloud computing for Web 3. 

So what's the big deal? Well, let's zoom in on one of the biggest headaches in blockchain: scalability. Celestia is tackling this issue by cleverly decoupling the consensus and execution layers of the blockchain. Hence, allowing developers to focus on building applications without having to worry about the underlying infrastructure.

That’s not all! Celestia also offers a dedicated lane for rollup data, with its own robust security and data storage mechanisms, this enables data availability. By ensuring data is always available, Celestia keeps rollups running smoothly and securely, contributing to the overall goal of making blockchains more scalable.

2. EigenLayer

EigenLayer is a unique protocol designed to operate on top of Ethereum's base layer. It is the ultimate security and scalability solution for Ethereum.  Normally, your staked ETH sits in your digital wallet, diligently securing the Ethereum network. But EigenLayer throws open the doors with its "restaking" feature. Two core concepts are involved to make restaking a reality. Let’s get back to our busy highway (that represents Ethereum network) but it can get congested, and security isn't always top-notch (like the regular lanes).

EigenLayer is like a brand new, high-speed lane built alongside the old one. Here's how it works with our two core concepts:

• Pooled Security: in this new lane, cars (your ETH) team up to create a super safe zone, like a convoy protecting each other. To use this lane, your car needs to pass extra safety checks.
• Free-Market Governance: This is like a marketplace built next to the new lane. Instead of selling vegetables, businesses (crypto projects) can buy security services from the high-security lane. The drivers (validators) get to choose which businesses they want to work with (like picking which projects to protect). It's a win-win because:
  
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  • Cars (ETH): get the best security on the new lane if they qualify.
  • Businesses (Crypto Projects): can buy extra security for their projects.
  • Drivers (Validators): get paid for providing security services.

EigenLayer, with its pooled security and free-market approach, creates a more efficient and secure "highway" for the entire Ethereum network.

3. Project Avail 

Avail made headlines by developing a three-pronged solution marketed as the "Trinity." Avail's ecosystem aims to focus on scalability, compatibility, and security. It's structured into three main layers:

• Data Availability Layer: This is like the base layer of a highway, specifically built for making data available. Avail DA uses proofs to ensure that developers can check for themselves if their data is really available, without having to just trust Avail.
• Nexus Layer: Nexus is like a special lane on the highway built on top of Avail DA. It uses a central verifier (like a highway authority) to check everything quickly.
• Fusion Security Layer: This layer is all about boosting security by bringing together different tokens, including well-known ones like ETH and newer ones. Fusion also helps to bring in more money from other blockchains into the Avail ecosystem, making it stronger. It's like having extra security guards patrolling the highway.

By using these layers, Avail wants to make the crypto world less scattered, giving everyone a single platform to work on, no matter where they're coming from.

Roadblocks to Modular Blockchain Implementation

With such a wide range of projects focussing on modular blockchains, modular blockchains are definitely the next big revolution in Web3, promising a future of interconnected and super-scalable applications. But before you jump in and start building, there are some roadblocks to watch out for!

1. Interoperability Hurdles

The web3 ecosystem thrives on connectivity, but achieving seamless interoperability among modular blockchains is challenging due to different designs. Standardized protocols like IBC by Cosmos act as universal translators, while Polkadot's Substrate Framework is like a Lego set for custom blockchains. Ethereum 2.0 joins in with sharding to separate transaction validation from data storage for efficiency.

2. Scaling the chain: Addressing Bottlenecks

As transactions flood the blockchain, scalability becomes crucial. Sharding adds more lanes to the road, splitting the network to handle transactions faster. Layer 2 protocols like rollups act as express lanes, batching transactions off-chain to reduce congestion. Advancements in consensus mechanisms optimize traffic flow for smoother operation.

2. Security: Fortifying the Modular Fortress

Security is paramount in blockchain, especially with modular architectures. Robust practices like code audits, mathematical verification, and multi-factor authentication are essential. Think of these as guard towers and security cameras protecting your data. Exploring Data Availability solutions like Celestia and Avail helps efficiently store transaction data while ensuring stability.

Even the most secure castle can have vulnerabilities. Let's explore some specific security concerns within modular blockchains:

• Integration Risks: Combining different modular components, like adding new floors to your castle, can introduce weak points. We need to carefully assess the architecture for security gaps, just like checking for hidden passageways or faulty drawbridges.
  
  
• Knowledge Gaps: Imagine building your castle with borrowed bricks, but not knowing the blueprints. That's the risk when projects use rollup frameworks without deep expertise in the core codebase. This can lead to missed updates and compatibility issues, potentially putting the entire ecosystem at risk.
  
  
• Codebase Divergence: Think of a castle built from a single set of blueprints, but each room ends up looking completely different. That's what's happening in the Cosmos ecosystem, where individual blockchains are straying from the original design. While this might not be a problem within a single system, it highlights the importance of careful coordination in modular blockchains to prevent fragmentation and maintain a secure ecosystem.

The Future of Modular Blockchains

The future of blockchain technology seems increasingly modular. But what more can we expect to come our way ? 

• Rise of Scalable dApps: As modular networks evolve, a new generation of decentralized applications (dApps) will exploit their high scalability. This could lead to advanced DeFi apps, real-time blockchain gaming, and everyday applications that seamlessly integrate blockchain technology.
• Increased Innovation: with all these different lanes to play on, developers can get super creative. Pretty similar to having more tools in the toolbox, sparking competition and speeding up progress.
• Security Concerns & Interoperability Challenges: Fragmented Layer-2 landscapes might present security vulnerabilities and hinder interoperability. We'll need to make sure all these different blockchains can talk to each other safely and securely.

Conclusion

The current limitations of monolithic blockchains are clear: slow speeds, high fees, and the inability to handle increasing traffic. The future of blockchains seems modular, however, the future is still unfolding, but the signs are promising. With modular designs, we can expect a wave of scalable dapps and endless innovations!

Of course, there are challenges. Navigating a multi-lane blockchain world might feel complex at first, and security across these fragmented systems needs careful consideration. But fear not! We'll be here every step of the way, keeping you updated on the latest developments in this exciting and ever-evolving landscape. So buckle up and get ready for the modular blockchain revolution!

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