What is Modular Blockchain?

A modular blockchain is an architecture that divides the core functions of a blockchain into separate specialized layers or chains, allowing each component to be optimized for its specific purpose. Each layer is dedicated to a specific function, which contrasts with the typical design of most existing blockchains where all processes (consensus, security, data storage, execution) occur on a single chain. This traditional setup often leads to bottlenecks and reduced efficiency, particularly as the network scales.

Key Components of a Modular Blockchain

Consensus Layer: This layer is responsible for reaching agreement on the network's state. It ensures that all transactions and blocks are valid and agreed upon by all participants according to the rules of the protocol.

Data Availability Layer: This layer focuses on ensuring that all necessary data for the network's operation is readily available and can be accessed by participants. It is crucial for maintaining the integrity and security of the blockchain, as it prevents situations where data necessary for validating transactions is unavailable.

Execution Layer: Also known as the computation layer, this is where transactions are processed and smart contracts are executed. By separating this from the consensus layer, modular blockchains can achieve higher efficiency and throughput.

Settlement Layer: This layer finalizes transactions and guarantees security and finality. It can be seen as the judicial system of the blockchain, making final decisions on the state of the blockchain ledger.

Advantages of Modular Blockchains

The key advantage of modular blockchains is their ability to scale more efficiently compared to monolithic blockchains. By separating core functions like execution, settlement, consensus, and data availability into specialized layers or modules, each component can be optimized independently without being constrained by the limitations of a single monolithic chain.

Scalability: By decoupling key processes, modular blockchains can handle more transactions per second compared to traditional blockchains. This separation allows each layer to optimize its processes without being bottlenecked by the others.

Specialization: Each layer can be optimized independently to excel at its specific function, potentially leading to better overall performance and more advanced technological developments.

Flexibility: Users and developers can choose different combinations of modules based on their specific needs. For example, one might choose a particular consensus mechanism that suits their security and speed requirements while opting for a different execution layer tailored for complex computations.

Interoperability: Modular design can facilitate better interoperability between different blockchain systems. Since each layer can interface with analogous layers on other networks, it simplifies interactions across blockchains.

Upgradeability: Updating a modular blockchain can be more straightforward because changes can be made to one module without disrupting others. This can lead to faster innovation cycles and easier maintenance.

Potential Drawbacks of Modular Blockchains

Security Concerns: Unlike monolithic chains that can enforce their own security, modular chains rely on a separate security layer (handling consensus and data availability) to ensure validity. If this security layer is ineffective, the entire modular chain is at risk of failure.

Increased Complexity: Implementing modular designs introduces new complexities compared to monolithic chains. Mechanisms like data availability sampling, fraud proofs, and validity proofs are required to allow the security layer to verify off-chain computations. This added complexity increases the risk of vulnerabilities and makes development more difficult.

Examples of Modular Blockchains

Celestia

Celestia is a dedicated data availability layer for modular blockchains. It enables Ethereum rollups and Layer 2 solutions to publish and make their transaction data available for anyone to download. Celestia utilizes data availability sampling (DAS) to ensure data availability, which can be verified by light nodes. It aims to create an ecosystem of interconnected modular chains and supports various Layer 2s like Arbitrum Orbit, OP Stack, and Polygon CDK.

EigenLayer DA (EigenDA)

EigenDA is another data availability layer for modular blockchains built on top of Ethereum using EigenLayer restaking. It provides an actively validated service where restakers can delegate stakes to node operators, while rollup solutions can post transaction data at affordable costs. EigenDA has a dedicated KZG data availability committee that verifies data and returns signatures to ensure data integrity and accessibility.

Rollups (Optimistic and ZK)

Rollup designs like Optimistic rollups and Zero-Knowledge rollups adopt a modular approach. They act as execution layers, processing transactions and smart contracts using OVMs or zkEVMs. But they rely on Ethereum for data availability (publishing calldata), consensus, and settlement by finalizing transactions on the Ethereum mainnet.