What Are Modular Blockchains?

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24 Mar 2024

What Are Modular Blockchains?

Modular blockchains break down the traditional blockchain into specialized layers. Think of it like a team: one layer handles transactions, another security, and another stores data. This approach allows for greater scalability and flexibility than older, all-in-one blockchains.

How Modular Blockchains Work?

Modular blockchains work by splitting a traditional blockchain's tasks into separate layers, each optimized for a specific function like transaction execution, security verification, and data storage. This allows for faster processing and easier customization compared to all-in-one blockchains.

Exploring Modular Networks

Let's dive a bit deeper into how they differ and the key advantages each offers:
Rollups

How they work: Process transactions on a separate chain ("off-chain"), then bundle and submit them to a Layer-1 blockchain (like Ethereum) for finality and security.
Advantages: Inherit security from the L1 while significantly boosting transaction throughput. Different types of rollups (Optimistic and ZK-Rollups) offer varying security vs speed tradeoffs.

Validium

How they work: Similar to rollups, but instead of storing all transaction data on-chain, they store proofs of the data's validity. They use a network of Proof-of-Stake validators to secure the off-chain activity.
Advantages: Even greater scalability potential than rollups due to the reduced data footprint on-chain. However, security is not fully derived from the L1.

Sovereign Rollups

How they work: Act as independent blockchains with their own execution and settlement layers. They often rely on separate tokens for security.
Advantages: High degree of customization and flexibility, as they are not constrained by the L1's rules. Reduced fees may be possible due to lack of L1 smart contract interaction.

Pros and Cons of Modular Blockchains

Pros:

Scalability: Breaking down the blockchain into layers allows for handling more transactions without sacrificing speed or security.
Flexibility: Developers can customize their blockchain by choosing specific modules, tailoring it to their project's needs.
Innovation: The modular approach makes it easier to experiment with new technologies and features.
Specialization: Modules can focus on specific tasks (like data availability), leading to improved efficiency.

Cons:

Complexity: Building and managing modular blockchains can be more complex than traditional monolithic ones.
Security Risks: Increased communication between layers can potentially introduce new vulnerabilities.
New Technology: Modular blockchains are a relatively new concept and may not be as battle-tested as monolithic blockchains.

Overall: Modular blockchains address some of the key limitations of traditional blockchains, but they also bring new complexities. As the technology matures, however, they have the potential to revolutionize how we use blockchains.

Examples of Modular Blockchains

Celestia: Celestia is a data availability layer designed to make it easy for anyone to deploy their own blockchain without the overhead of running their own consensus mechanisms. Think of it as the foundation for other blockchains to build and scale upon.
Polygon Avail: Similar to Celestia, Polygon Avail provides data availability services for other blockchains and sidechains. It aims to promote flexibility and scalability within the Polygon ecosystem.
StarkNet: A Layer-2 rollup solution on Ethereum focused on scalability and transaction speed. It utilizes a type of validity proof called STARKs, allowing for greater transaction throughput.

Fuel: Fuel is a modular execution layer designed for the fastest possible throughput. It adopts a unique approach with a focus on developer experience and flexibility.
Cosmos: While not strictly modular in the same sense as the others, Cosmos promotes a vision of interconnected blockchains. Each chain in the Cosmos ecosystem can be considered a module that can communicate and interact with others through IBC (Inter-Blockchain Communication protocol).