Blockchain modularity - A mental model for the future of decentralized networks and web3.

In this post I'll lay out what blockchain modularity is, 4 properties of a modular stack, and 10 resources to help deepen your understanding of Celestia.

Jun 30, 2022

Let's start by comparing the evolution of blockchain networks to that of traditional application infrastructure.

In the early days of the internet, if you wanted to deploy your own website, you needed to have your own server and hardware.

This imposed a limitation for the average person to be able to participate as a creator in the open web.

This is comparable to early application-specific blockchains like Bitcoin and Litecoin where each chain only served a single purpose.

Next shared hosting enabled developers to utilize a single server to launch websites.

Some advantages of shared hosting were that it was accessible, cheap, and easy to set up.

Some disadvantages were that you had limited resource availability, no root access, were vulnerable to security issues of the environment you were in, and had limitations on what you could install.

You could think of shared hosting like the execution environment given to you by Ethereum and the EVM.

Ethereum was revolutionary in that it allowed application developers to build a unique application, then upload it to and share the same blockchain as everyone else. This allowed developers to experiment and build decentralized applications in ways they could not have in the past, and was a powerful innovation.

But they were still restricted by the limitations of having a shared blockchain, had to use the Ethereum virtual machine, and had to follow along with any hard forks that were happening on Ethereum.

In addition to that, it's become clear that this type of monolithic architecture is inherently not scalable.

Virtual machines and cloud computing were the next big innovation in web infrastructure, and forever changed the way applications were built.

These virtual machines give developers full control over their execution environment, allow them to install anything they want, and offer the same benefits as a physical server with the added benefit of never having to maintain or buy any actual hardware, giving you the best of both worlds.

Web3 and blockchain architectures are evolving in a similar direction, with the idea of application-specific blockchains gaining in popularity.

Like the cloud gives you your own virtual machine, modular blockchains enable you to create your own blockchain in the form of an optimistic or zk rollup.

Instead of deploying your application to the same blockchain as everyone else, you can deploy your own chain while still leveraging the same consensus layer so it can also share block space and security.

This functionality is facilitated by modular architectures.

Blockchain architectures until recently have been monolithic, meaning they were responsible for all core functions of a blockchain.

Modular architectures separate the layers of the blockchain - consensus, data availability, settlement, and execution.

The modular approach not only improves the scalability of the network, it also enables a handful of other properties and benefits. Let’s walk through some of them:

1. Scalability

When we talk about scalability in the traditional tech stack, it typically refers to the ability of an application or infrastructure to function well during a non-trivial increase (and subsequent decrease) in usage.

We might talk about the throughput of an API, or the number of transactions or queries per second a database can handle without affecting performance.

In a decentralized application, you also need to take into consideration the verification of the data.

More specifically, the calculation can be thought of as transactions per second divided by the cost for users to verify that all the transactions in the chain are valid.

This verification is done by users running their own nodes.

A key innovation of Celestia is that it enables light clients to achieve nearly the same security guarantees of full nodes through what’s known as a data availability sampling.

As the number of Celestia light nodes contributing to the data availability of the network increases, the size of each block can also increase without compromising on security or scalability. Larger blocks result in more data throughput and therefore more scaling.

Modularity also allows separation of the consensus and data availability layer. Validators can just focus on ordering transactions, not on verification because verification is left up to the execution environments (rollups).

Because validators don’t have to verify transactions in the block, just order them, it’s much cheaper to increase block size.

2. Experimentation

Rollups on Celestia don’t have to be designed to be interpretable by any specific virtual machine, like the EVM.

This means that there are no constraints around both the execution environments that can be deployed to Celestia as well as the base layer to which they are deployed.

Because of this, a faster pace of innovation is enabled at the VM layer, allowing developers to create and experiment with a wide array of VMs across various aspects of the execution environment.

There is already experimentation happening in this space. For example, Fuel Labs is building an execution layer built specifically to leverage the additional bandwidth enabled by a modular architecture as well as innovations like parallel transaction execution.

https://fuel-labs.ghost.io/introducing-fuel-the-fastest-modular-execution-layer/

You can fork, deploy, or modify and deploy rollups like Starknet or Optimism or the Cosmos SDK. In the modular paradigm you are not restricted to any specific virtual machine, and instead have the freedom to experiment with and then choose the ideal execution environment.

3. Sovereignty

Applications on monolithic L1s are bound by the social consensus of that community and protocol, because their application is running on the same blockchain as everyone else.

For example, a DAO on a monolithic blockchain is not sovereign because it derives its authority from a different community, which might be the social consensus of a network like Ethereum.

Rollups on Celestia are effectively self-sovereign blockchains, enabling every application, community, and DAO to have its own sovereign execution space, while inheriting the security of the underlying consensus and data availability layer.

4. Specialization

Because of the decoupling of functionality, each layer can specialize in one or many of the core functions of a blockchain.

This allows each layer to focus on becoming the most optimal at its use case without the limitations of the requirement of interoperability with other layers.

That’s my overview of Celestia and blockchain modularity, I hope you learned something!

If you’d like to read more, here are 10 of my favorite resources:

1. DISRUPTORS: Modular Blockchains for Sovereign Communities With Hacktivist Mustafa Al-Bassam

https://members.delphidigital.io/media/disruptors-modular-blockchains-for-sovereign-communities-with-hacktivist-mustafa-al-bassam

2. Pay Attention To Celestia via @Delphi_Digital

https://members.delphidigital.io/reports/pay-attention-to-celestia/

3. Learn Modular

https://celestia.org/learn/

4. Modularity Creates Adaptation: The Celestia Thesis

https://medium.com/@nickgardner0651/modularity-creates-adaptation-the-celestia-thesis-b00903e59ea8

5. Celestia 101 - The Minimalist King