Overview of the Modular Blockchain ecosystem

Network expansion is always a pressing issue that developers focus on. Throughout the long history of blockchain development, there have been many solutions proposed, but it seems that no solution has overcome the legendary impossible trinity: decentralization, scalability and security.
Modular blockchain is a solution that separates the network's work into parts, then uses different blockchains to undertake work according to their own strengths. This solution is experiencing strong development and is expected to be the next generation of blockchain.

In this article we will learn about modular blockchain, its structure, classification and prominent projects in each functional group.

Overview of the Modular Blockchain ecosystem
What is Modular Blockchain?

Modular blockchain is a solution that separates the work of the blockchain network into parts, then uses different blockchains or off-chain entities to undertake work according to their own strengths.

To understand better, let's first learn about blockchain network architecture by work groups.

Architecture of Blockchain

The usual architecture of a blockchain network includes 4 main layers: Execution, Settlement, Consensus and Data Availability. These layers work together to ensure transactions are executed correctly as designed.

Architecture of the blockchain network

Execution
This is the class responsible for calculating transactions and providing results according to pre-established logic. This execution will result in changes to the state of the blockchain network, this new state will then be processed by other layers before they are completed and become an irreversible part of history.

For example, in soccer, each country and region will have different regulations, but when two teams compete, they must comply with certain principles, such as the regulations in the blockchain's smart contract. And the Execution Layer will be the layer that operates that soccer match according to pre-set rules.

Settlement

Settlement is the layer that verifies validity and handles disputes during network operation. It acts as a referee in a soccer match. If a goal is scored against the opponent's net and there is a dispute, the referee will be the one to decide whether the goal is valid or not based on the evidence. prove.

Consensus

The Consensus layer or consensus layer plays the role of unifying a single truth or a single final state of the network. It is operated by different algorithms such as Proof of Work, Proof of Stake or Proof of History... After this consensus process the new state of the network will be updated.

Going back to the soccer match example, let's say it ended 1-0, during the same period there were other soccer matches taking place with different scores. The overall results are put into a list of 1-0, 2-0, 3-0 by the organizing committees for storage, but each organizing committee will put them in a 1-0, 3-0, 2 format. -0 will lead to erroneous information. This will be worse if the transactions are related, it will lead to double spending.

At this point, the class consensus is that the collection of many people who watch football games will confirm a single correct result. This final result is then approved and stored permanently in the notebook. Those who record incorrect results will have to re-synchronize the books so that before entering the new block, all books must have the same content. content.

Data Availability

Data availability refers to the ability of the entire chain to access information. Data must be available so that anyone can access and use it, which is important because data availability affects the decision whether a transaction is correct or incorrect.

Data Availability is like the record of the football match in the example above, this copy is publicly available so anyone can see which team is the winner and what the score is. Without this record, two people arguing about the result of the match will happen and in the end it will be impossible to distinguish who is right and who is wrong.

Talking more about Data Availability, the difficulty in blockchain expansion mainly comes from the data layer. To ensure transactions are authenticated correctly, nodes need to download the entire network data. As time goes by, the growing volume of data requires more and more hardware and bandwidth. increase. First of all, it creates barriers in terms of cost and transaction speed, then there are barriers to joining the Node network. Gradually, small players will be eliminated, leaving only big players with the system. powerful hardware, and the network will likely be less decentralized.
Ethereum has realized this a long time ago and is taking steps to overcome this data bloat. There are two solutions given:


Data availability sampling (DAS): Each node only needs to download small pieces of data and then use algorithms to check the authenticity of the data.

Data availability committees (DACs): Data provided or authenticated by trusted third parties stored off-chain.
Additionally, in The Purge update, transaction history data will also be limited to 1 year for Nodes, only when required will it need to be downloaded in its entirety.

After understanding the layers of blockchain and their functions, you will easily distinguish between Monolithic Blockchain and Modular Blockchain. As for Monolithic Blockchain, it alone will perform all the above work within the network. With Modular Blockchain, tasks are separated and assigned to multiple parties to handle.

The best example to help you understand is the Eclipse project, it uses SVM (Solana Virtual Machine) as the execution layer, the Settlement layer is taken care of by Ethereum and finally uses Celestia for the consensus layer (Consensus). ) and DA.

You may still be unfamiliar with the concept of Modular Blockchain, but the truth is that all Layer 2 Rollups are essentially Modular Blockchain because it has separated the implementation layer from the original network to be processed separately as a module.

Modularization of blockchain creates specialization for layers, thereby increasing transaction speed and scalability, and modularity also makes it easier for developers to deploy new blockchains at a faster speed than ever. run out of. However, dividing tasks and implementing them in many different places will make the network dependent on those parties, and trust in security also needs to be placed in many different places.
Classification of Modular Blockchain

Variants of Modular Blockchain

Based on the level of modularity, Modular Blockchains are divided into the following types:

Regular Rollups
This is the most common type in the past, the execution layer is separated into separate chains, they perform calculations and then send data to the layer 1 blockchain for authentication and storage.

Typical blockchains of this type are Arbitrum, Optimism, zkSync, Starknet.

Sovereign Rollup
Sovereign rollup or autonomous rollup is a blockchain model that uses another blockchain for consensus mechanism and transaction data storage, while itself simultaneously executing and validating transactions.

For this model, the correctness of the transaction depends entirely on the blockchain rollup, because DA Blockchain is only responsible for providing data availability and verification according to the consensus mechanism, not checking whether the transaction is valid or not. valid or not. An example of a project in this group is Sovereign.

Settlement Rollup
Settlement Rollup is a bit different from Sovereign Rollup as it continues to further separate modules. The execution layer is handled by a rollup blockchain, the Settlement layer is handled by one blockchain, and finally the Consensus and DA layers are handled by another blockchain.

Separating the layers will increase flexibility while taking advantage of the unique strengths of each blockchain at each layer, but at the same time the security and decentralization of the entire system will also be dependent, not to mention Combining multiple blockchains together to operate a unified process will face many technological challenges.

The typical project of this group is Eclipse as introduced in the first part, it uses SVM (Solana Virtual Machine) as the execution layer, the Settlement layer is taken care of by Ethereum and finally uses Celestia for the execution layer. Consensus and DA.

Validium
Validium is the next variant of modular blockchain, it is similar to Regular Rollups but the difference is that the DA layer is separated and stored off-chain, not on the original blockchain. This will help minimize costs and increase scalability. But its security completely depends on the storage unit, data can be hidden or changed if the storage unit intentionally commits bad acts.
Modular Blockchain ecosystem and outstanding projects


Execution group
In addition to familiar Layer 2 Rollups such as Arbitrum, Optimism, zkSync, Starknet, Scroll, Linea, Polygon, there are some new names such as Berachain, Taiko, Manta, Fuel, Sovereign.

Berachain
Berachain is a Layer 1 blockchain developed based on the EVM-compatible Cosmos SDK. Berachain uses a new consensus mechanism called Proof of Liquidity, which the project introduces as having the ability to prevent Sybil Attack. The project has successfully raised $42 million from a Series A funding round led by Polychain Capital.

Berachain's operating model

Fuel Network
As a project designed according to a modular model, Fuel can take on the execution layer, Settlement layer or operate as a monolithic blockchain.

Different from other projects, Fuel uses the UTXO (Unspent Transaction Output) model similar to Bitcoin to store transactions, combined with threading and parallel processing capabilities to significantly expand transaction speed. Fuel built its own transaction processing system called FuelVM based on the Sway Language programming language.

Settlement
Dymension
Dymension is designed in a modular model based on the Cosmos SDK toolkit. It allows projects to build multiple applications on top of specific purposes called RollApp.

Eclipse
The project is designed with the purpose of connecting the strengths of many blockchains into each module of Eclipse. Solana is known as a network with high transaction speed and parallel execution, so SVM was chosen by Eclipse as the execution layer. The Settlement layer is powered by Ethereum to leverage security and decentralization like no other network. Finally, the DA layer is used by Celestia to ensure that storage costs are minimal.

Sovereign
With the vision of becoming the Internet of Rollups, Sovereign is designed to help connect multiple rollup chains together. The Internet of Rollups will be capable of performing every function that blockchain can perform, including payments, DeFi, NFTs, and governance, but at greater scale and at significantly lower costs.

Other projects
Ethereum, Solana, Saga, LayerN, Argus, Berachain, Fuel, Neutron.

Consensus & Data Availability Group (Consensus & DA)
Celestia
Celestia is one of the pioneering blockchains in the modular segment. Celestia is designed to serve as the consensus layer and provide data availability to other blockchains. With high integration capabilities and low cost, Celestia helps projects deploy modular blockchain systems with economical costs and high speed.

Avai
Also a project working on Data Availability, Avai provides Consensus infrastructure and DA for modular projects built on it. In addition, Avai is developing Data Attestation Bridge, a solution that connects data from Layer 2 to Layer 1 through an off-chain layer. This bridge is a component of Avail's Layer 2 ecosystem, with plans to host various Rollup solutions, including Validium solutions, to scale Ethereum off-chain.

EigenDA
EigenDA is the first application built in the EigenLayer ecosystem. It is a Data Availability layer for other projects but the difference is that EigenDA is secured indirectly to Ethererum through EigenLayer.

EigenDA operating model. Source: EigenLayer

Other projects
Near DA, zkPorter, Ethereum, Bitcoin
Sequencer group
Sequencers are entities operating at the execution layer with the responsibility of synthesizing and ordering transactions before sending them to create evidence and sending them to the root layer for authentication. Sequencer can be operated by the project team itself or third parties with a decentralized model.

Outstanding projects: Espresso, Astria, Fairblock, Radius, Madara

Proving group

This is a small group within the execution layer that has the function of creating transaction verification evidence.

Outstanding projects in this group include: Risc Zero, Axiom, Marlin, Blockless.

Rollup framework group
This group includes toolkits used for building modular blockchains.

Featured toolkits: OP Stack, Arbitrum Orbit, Polygon SDK, ZK Stack, Starknet Stack, Sovereign, Stackr, Cartesi, Rollkit, Argus.

In addition, we also have a group of tools to help create a rollup layer quickly called Rollup as a Services (RaaS): Eclipse, Dymension, Saga, Caldera, Conduit, Vistara, Snapchain.
Epilogue
In the current context where the number of Web3 users is increasing rapidly, the need for transaction speed and transaction costs is increasingly urgent. Network expansion is a must if we want to move towards a mass-adoption blockchain future.
Modular Blockchain is a highly promoted solution and has many powerful applications. However, in terms of security and operational stability, it will take more time