At the time when L1s were launched, they revolutionized the Web2 space, brought the first users to crypto — and deserve our appreciation. However, nowadays we often hear that the new generation of blockchains, modular blockchains, will eventually take their place, and L1s will change their initial structure. Is that true? What are the advantages and disadvantages of those two approaches if we would compare them? Let’s find out together.

Scalability = Speed of TRS / Cost of TRS

In modular blockchains, functions are divided among different chains. This leads to a better scalability. Why? Imagine a modular chain which specialises in data availability, this means it can focus all of its resources on giving more information about transactions to the execution layer. The execution layer, in turn, can process them more effectively. This makes the work of the whole modular stack faster.

Remember how the gas fees on Ethereum become really big every time there’s a big mint or launch of something? And that’s where we get to the cost of transactions part — if the chain is less busy, and can process big amount of transactions, they cost cheaper.
Those two elements: faster transactions and lower gas fees make modular blockchain way more scalable than the monolithic ones.

Data Availability → Decentralisation

As we have discussed in our previous article, data availability task for the blockchains stands for ensuring that anyone can check blockchain transactions, all of them should be verifiable. Users can run a node to personally check those transactions and confirm that the blockchain works properly. Nodes that fully check the blockchain (like full nodes) play a crucial role in its safety by ensuring the chain’s rules are followed.

We gauge decentralization by how many users can directly check the chain. More users running nodes means higher decentralization, making the blockchain tougher against attacks. Modular blockchains focus on making it cheaper for users to run nodes and check the network, prioritizing decentralization for better security.

Shared security

Blockchain security heavily relies on validators or miners, especially in Proof of Stake (PoS) systems. These individuals manage transactions and validate them within the chain. To become a validator in a PoS system, nodes must stake tokens as a security deposit. If a validator acts dishonestly, for example, their stake can be burnt as a penalty, a process known as slashing.

Launching a new monolithic blockchain involves forming a secure validator set, which can be quite challenging. Different chains have varying security levels due to their different-sized validator sets. Some chains have strong security thanks to larger sets, while others have weaker security due to smaller sets. As the multi-chain ecosystem grows, ensuring the same level of security of each chain becomes more complex.

Shared security solutions solve this problem. For instance, new blockchains like rollups or execution layers don’t need to create their own validator set. Instead, they can rely on a common security provider, such as data availability and consensus layer, immediately accessing the security it offers without setting up an independent validator set.

Opportunities for Developers

Without having to carry out all the tasks like data availability, settlement, execution, and consensus, modular blockchains have fewer limitations on development of different dapps types than, for example, Solana. Why? Because developers don’t have to keep up with all the tasks and write code for all of them — only for a part that they need to handle.

For instance, Fuel network which is an execution layer, allows for creating more specialised, high-tech applications in the execution field: it’s Account Abstraction with predicates allows for such things as bundle transactions, paying gas fees in any tokens, and etc. For instance, thanks to it, Fuelet Wallet has an opportunity to implement those features plus a Hardware Signer, Social Recovery, and many more what would be impossible or too expensive to consider everything on a L1 blockchain.

Summary

In summary, the ongoing transition from monolithic to modular blockchains represents a pivotal shift in the blockchain landscape and brings the number of advantages both for the blockchain users and developers. Modular blockchains, like Fuel, showcase superior scalability, shared security solutions, enhanced decentralization, community interconnectivity, and expanded opportunities for developers.

Hopefully, now you have a little bit more understanding of how those modular and monolithic blockchain systems work! If you have any questions regarding this article, please feel free to reach out Fuelet team via social networks.

Thanks for the article, Catherine.