Celestia: Riding the $TIA Wave with the First Modular Blockchain

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30 Dec 2023

Celestia is a minimalist blockchain that solely orders and publishes transactions without executing them. It separates the consensus and execution layers, modularizing the blockchain technology stack.
Celestia ensures (transaction) data availability, addressing the question of whether transaction data has been published. Transaction data is crucial for anyone validating transaction legitimacy.
With DAS (Data Availability Service), the scalable technology provided by Celestia for data availability, nodes seeking to verify a specific transaction no longer need to download the entire blockchain.
Celestia doesn't oversee the blockchain's state. The state differs from transaction data; it represents a current snapshot of the network.
The Celestia Data Availability layer comprises a Proof-of-Stake (PoS) blockchain. Celestia refers to this blockchain as celestia-app, an application supplying transactions to facilitate the Data Availability layer, built using Cosmos SDK.
Developers can utilize the $TIA token to cover gas fees and store their data on Celestia by executing a transaction named "PayForBlobs."
Compared to Ethereum, Celestia's blockchain offers a significantly larger block space, making data storage on Celestia more cost-effective than on Ethereum.

1. Introduction
In order to provide an overview of Celestia, I engaged in a brief Q&A session with their CelestiaGPT bot. The following are the bot's responses, presented with some minor omissions for conciseness.
👨🏻‍💻: What problem does Celestia aim to solve?
🤖: Celestia aims to address scalability and data availability issues within the blockchain ecosystem. Traditional blockchains often grapple with these challenges, impacting their performance and usability.
Celestia's design enables it to offer a scalable data availability layer for other blockchains, known as "rollups." By separating consensus and execution into distinct layers, Celestia allows these rollups to independently execute transactions while ensuring the availability and validation of transaction data by anyone.
Moreover, Celestia's modular approach empowers developers to create custom rollups tailored to their specific requirements.
👨🏻‍💻: Can you provide an example of scalability and data availability issues in the blockchain ecosystem?
🤖: Certainly. Let's consider a traditional blockchain like Bitcoin. In Bitcoin, every transaction must be processed by every node in the network. As the number of transactions increases, each node's data processing load also rises, leading to scalability challenges as the blockchain can only handle a limited number of transactions per second.
Now, imagine a scenario where a user wants to verify a specific transaction. In a traditional blockchain, the user would need to download the entire blockchain, potentially hundreds of gigabytes, just to validate a single transaction. This exemplifies the data availability problem.
Celestia addresses these issues by separating the data layer (data availability) from the computation layer (transaction execution). In Celestia, transaction data is stored in a single blockchain, downloadable and verifiable by anyone. However, the execution of these transactions occurs independently through different "rollups," which only need to download the data they require. This design allows Celestia to efficiently process numerous transactions while ensuring the availability and verification of transaction data by anyone.
👨🏻‍💻: Alright, please provide an example of how Celestia can be utilized in other blockchains like Ethereum or L2.
🤖: Let's consider a developer building a decentralized application (dApp) on Ethereum. As the dApp gains popularity and processes a significant number of transactions, high gas fees and slow transaction times become issues due to Ethereum's scalability limitations.
To address this, the developer opts for a Layer 2 solution, processing transactions off the main Ethereum chain and posting results back to it. This significantly reduces gas fees and accelerates transaction speed. However, the developer remains concerned about data availability — ensuring that the data from these off-chain transactions is accessible and verifiable.
Enter Celestia. The developer can use Celestia as a data availability layer for their Layer 2 solution. The Layer 2 solution executes transactions as usual but posts results to the Celestia chain instead of the Ethereum chain. Celestia, designed to efficiently store large amounts of data, ensures the availability and validation of transaction data by anyone. This allows the dApp to benefit from Layer 2 scalability while ensuring data availability.

2. Monolithic vs. Modular Blockchains
A blockchain system necessitates four functions:

Execution: executing transactions
Settlement: providing an environment for execution layers to verify proofs, resolve fraud disputes, and bridge between other execution layers.
Consensus: agreeing on transaction order.
Data Availability (DA): making transaction data available. Note that execution, settlement, and consensus require DA.

In traditional blockchain architecture, these four functions are integrated into a single layer, termed "monolithic blockchains."
Modular blockchains decouple these functions among multiple specialized layers as part of a modular stack. Thus, there is a separation of the four functions into three specialized layers.
The base layer comprises DA and consensus and is referred to as the Consensus and DA layer, while settlement and execution are moved to their own layers above.

Role of $TIA
Paying for Blob Space: Celestia's native asset, $TIA, plays a crucial role in the development of the first modular blockchain network. To leverage Celestia for data availability, rollup developers submit PayForBlobs transactions on the network, incurring a fee denominated in $TIA.
Bootstrapping New Rollups: In the modular era, developers no longer need to issue a token to launch their blockchain. Similar to $ETH on Ethereum-based rollups, developers can expedite the launch of their chain using $TIA as a gas token and currency, while also covering data availability costs.
Proof-of-Stake: As a permissionless network constructed with Cosmos SDK, Celestia employs proof-of-stake to secure its consensus. Users can contribute to securing the network by delegating their $TIA to a Celestia validator.
Ecosystem
Apps and services built on Celestia can be explored at Celestia Ecosystem. Additionally, information about Celestia's $55 million funding raise is available in the announcement.
Personal Opinion and Conclusion
Celestia is dedicated to L2 scaling solutions, specifically focusing on Zero Knowledge (ZK)-based approaches. ZK-based solutions, known for their technological advantages, outshine optimistic approaches in the long run. The two primary implementations of ZK-powered L2 are rollups and validiums.

ZK-Rollups: These publish both transaction data and ZK proofs on the Ethereum settlement layer, ensuring secure transactions accessible to everyone.
Validiums: They do not publish transaction data on Ethereum, relying on external storage. Celestia's architecture, with separate DA and Settlement layers, requires a bridge for inter-chain communication, introducing some level of trust and potential security concerns.

Vitalik Buterin's tweet from January 2022 aligns with this concern, highlighting potential vulnerabilities in cross-chain architectures reliant on bridges. He emphasizes the security superiority of solutions like ZK Rollups, which eliminate the need for bridges.
Celestia's COO Nick White acknowledges this challenge, indicating awareness and pre-existing discussions about it. Despite the acknowledged challenges, my personal perspective recognizes ZK rollups and validiums as technologically advanced scaling solutions, with ZK Rollups standing out as the most secure option.
While Ethereum remains indispensable as the consensus layer of web3, the Celestia Data Availability layer is anticipated to carve its niche. The extent of its adoption will unfold in the future, driven not only by substantial funding and a robust ecosystem but also by the notable technology employed, such as Data Availability Sampling (DAS).