Discover the Future of Blockchain Scalability and the Key Players in the Modular Scaling Economy

High Rollers:

Today, we’re diving into the world of modular blockchains and the data availability layer (DA layer).

Gone are the days when modular chains were just a theoretical concept. Recent breakthroughs have shown that they have the power to outperform monolithic chains. By specializing and focusing on specific roles, modular blockchains create a well-diversified ecosystem that can unlock new possibilities.

Join us as we explore the modular scaling economy and gain a deeper understanding of how modular blockchains are revolutionizing the crypto landscape.

Cheers,

The Rollup

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𝗔𝗳𝘁𝗲𝗿 𝘁𝗵𝗲 𝗖𝗲𝗹𝗲𝘀𝘁𝗶𝗮 𝗺𝗮𝗶𝗻𝗻𝗲𝘁 𝗹𝗮𝘂𝗻𝗰𝗵 𝗮𝗻𝗱 𝗺𝘂𝗰𝗵 𝗮𝗻𝘁𝗶𝗰𝗶𝗽𝗮𝘁𝗲𝗱 𝗮𝗶𝗿𝗱𝗿𝗼𝗽, 𝘄𝗲 𝗮𝗿𝗲 𝗰𝗹𝗼𝘀𝗲𝗿 𝘁𝗵𝗮𝗻 𝗲𝘃𝗲𝗿 𝘁𝗼 𝘁𝗵𝗲 𝗺𝗼𝗱𝘂𝗹𝗮𝗿 𝗳𝘂𝘁𝘂𝗿𝗲 𝗮𝗻𝗱 𝗿𝗲𝗮𝗰𝗵𝗶𝗻𝗴 𝗺𝗮𝘅𝗶𝗺𝘂𝗺 𝘀𝗰𝗮𝗹𝗲 𝗮𝗻𝗱 𝗱𝗲𝗰𝗲𝗻𝘁𝗿𝗮𝗹𝗶𝘇𝗮𝘁𝗶𝗼𝗻…

The saying “modularism, not maximalism” is really hitting stride recently and for good reason.

Modular designs have the potential to reshape how blockchains operate at the core level, potentially solving the infamous trilemma of speed, security, and decentralization.

In todays post, you’ll learn about the data availability layer, the different types of DA layers, and where the biggest players are placing their bets for the future of the modular scaling economy 👇

A world where modular blockchains exist and thrive was once a far-fetched dream of those who had their sights set on scaling our crypto economy.

Just recently, there have been breakthroughs in the “stack” as we like to call it, where its no longer just a theory that modular chains will oust monolithic ones.

You see, the issue with monolithic chains is in one chain trying to be a ‘utility’ player, as I like to call it.

In all sports, players have specialized roles based on their skillsets, physical capabilities, and in-game IQ.

If you had a team of all strikers in soccer, you’d win some games but you’d never be a champ. Similarly, if. you had only defensemen, you’d win, but not against a well diversified team of players which make a properly fitting puzzle.

This is the issue (not exactly, but you get the point) that monolithic chains face when looking at the modular ecosystem.

As explained above, when monolithic blockchains continue to grow in size and complexity, scalability becomes a pressing challenge. To tackle this issue, modular blockchain designs have emerged, offering a more efficient and scalable approach.

For the sake of today’s post, we’ll focus on the consensus and data availability layer.

If you want to read other posts on the execution or settlement layer, gib follow
@ayyyeandy and check out some of my recent highlights on my account.

So, what is the data availability layer?

𝗧𝗵𝗲 𝗱𝗮𝘁𝗮 𝗮𝘃𝗮𝗶𝗹𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗹𝗮𝘆𝗲𝗿 𝗶𝗻 𝗮 𝗺𝗼𝗱𝘂𝗹𝗮𝗿 𝗯𝗹𝗼𝗰𝗸𝗰𝗵𝗮𝗶𝗻 𝘀𝘁𝗮𝗰𝗸 𝗶𝘀 𝗿𝗲𝘀𝗽𝗼𝗻𝘀𝗶𝗯𝗹𝗲 𝗳𝗼𝗿 𝘀𝘁𝗼𝗿𝗶𝗻𝗴 𝘁𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻 𝗱𝗮𝘁𝗮 𝗮𝗻𝗱 𝗺𝗮𝘆 𝗮𝗹𝘀𝗼 𝗽𝗿𝗼𝘃𝗶𝗱𝗲 𝗰𝗼𝗻𝘀𝗲𝗻𝘀𝘂𝘀 𝗼𝗻 𝘁𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻 𝗼𝗿𝗱𝗲𝗿𝗶𝗻𝗴.

In technical terms, its the ability of nodes to download the data contained within all propagated blocks.

The DA layer plays a crucial role in ensuring data availability (aka storage) and reducing costs of storing and processing this data.

You see, when modular chains use Ethereum as the DA layer its really quite expensive. Ethereum blockspace is very valuable and its a significant cost to obtain and store data.

When you use something like @CelestiaOrg – you lower the costs significantly, and can also socialize or share these costs amongst others using the DA layer.

With these DA layers, like everything, come tradeoffs….here’s what I mean:

𝗧𝗵𝗲𝗿𝗲 𝗮𝗿𝗲 𝘁𝘄𝗼 𝘁𝘆𝗽𝗲𝘀 𝗼𝗳 𝗱𝗮𝘁𝗮 𝗮𝘃𝗮𝗶𝗹𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗹𝗮𝘆𝗲𝗿𝘀: 𝗼𝗻-𝗰𝗵𝗮𝗶𝗻 𝗮𝗻𝗱 𝗼𝗳𝗳-𝗰𝗵𝗮𝗶𝗻.

‣ On-chain data availability layers ensure high data availability but limit decentralization and scalability.

‣ Off-chain data availability layers store transaction data outside the original blockchain network, alleviating the burden on nodes.

As seen in the chart below, the Y axis is security/decentralization and X axis is gas (or costs).

Rollups which use on-chain DA being the epitome of both, but ‘Celestium’ which uses off-chain DA comes in at a happy place.

For execution-focused modular blockchains, off-chain data availability layers store data behind state updates. This lowers the costs, but also the theoretical security of said chain.

Separate data availability layers also offer benefits for developers, including faster development cycles and cheaper user fees…and lets be honest:

𝘈𝘭𝘭 𝘥𝘦𝘷𝘦𝘭𝘰𝘱𝘦𝘳𝘴 𝘸𝘢𝘯𝘵 𝘵𝘰 𝘣𝘶𝘪𝘭𝘥 𝘢𝘱𝘱𝘴 𝘵𝘩𝘢𝘵 𝘢𝘳𝘦 𝘨𝘰𝘪𝘯𝘨 𝘵𝘰 𝘣𝘦 𝘶𝘴𝘦𝘥.

Finding the right tradeoffs often require specialized understanding of the usecase, goals, and ethos of the team/project behind the chain.

𝗕𝗮𝘀𝗶𝗰𝗮𝗹𝗹𝘆, 𝘁𝗵𝗲 𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻𝘀 𝗶𝗻𝘃𝗼𝗹𝘃𝗲 𝗺𝗼𝗱𝗶𝗳𝘆𝗶𝗻𝗴 𝗼𝗻-𝗰𝗵𝗮𝗶𝗻 𝗱𝗮𝘁𝗮 𝘀𝘁𝗼𝗿𝗮𝗴𝗲 𝗼𝗿 𝘀𝘁𝗼𝗿𝗶𝗻𝗴 𝗱𝗮𝘁𝗮 𝗼𝗳𝗳-𝗰𝗵𝗮𝗶𝗻.

Let’s have a look at the main players today:

@CelestiaOrg is a data availability (DA) layer that provides a scalable solution to the data availability problem. It utilizes data availability sampling (DAS) and Namespaced Merkle trees (NMTs) to enable light nodes to verify data availability without downloading entire blocks. This cuts costs significantly and also lowers the barrier of entry for people looking to boot up their own chain (or rollup using @alt_layer or @gelatonetwork)

Celestia’s DA layer consists of a PoS blockchain built using Cosmos SDK, and they have just launched their token.

@eigenlayer enhances the data processing layer in modular blockchain designs by leveraging parallel processing and distributed computing. By leveraging restaking, they are able to sit ‘in between’ the DA buyer (in this example a rollup sequencer) and the settlement layer, while offering users yields for restaking ETH.

@AvailProject (stems from @0xPolygon) is a data availability network that allows anyone to become a data availability manager through a PoS system.

As you can see, data from an L2 rollup/validium or an L3 validium is passed to avail first, then through the attestation bridge before reaching the final settlement layer, Ethereum.

Users can participate in the network and contribute to data availability without storing the entire blockchain on their hard drive, reducing hardware requirements and encouraging more decentralization of node operators.

𝗭𝗞𝗣𝗼𝗿𝘁𝗲𝗿 combines privacy and scalability in data processing using zero-knowledge proofs. By integrating ZKPorter into the data processing layer, modular blockchain designs can achieve both privacy and scalability, opening up new possibilities for various applications within the
@zksync
ecosystem.

@KYVENetwork
is a bit of a lesser known, yet powerful DA & storage layer. The team has been building strong in the IBC ecosystem and I’m excited to see what comes of it.

@arbitrum
nova is also a player in the space which is pushing the boundaries for gaming and social apps using its DA committee for for call data storage. This enables up to 150x savings on gas when compared to Ethereum L1 + sub 1 second transactions.

𝗧𝗼 𝗯𝗿𝗶𝗻𝗴 𝘁𝗵𝗶𝘀 𝗳𝘂𝗹𝗹 𝗰𝗶𝗿𝗰𝗹𝗲…

The data processing layer is a vital part of the modular stack, enabling scalability, efficiency, and cost reduction.

With Celestia launching mainnet, and the modular design community really stepping up to the plate, I expect rapid progression in this space sooner than later.

I truly believe that embracing modular designs and leveraging advancements in the DA layer, amongst the others, will unlock the full potential of scaling our ecosystem to its fullest potential.

𝗧𝗵𝗲 𝗼𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝘆 𝗶𝘀 𝗵𝗮𝗽𝗽𝗲𝗻𝗶𝗻𝗴 𝗿𝗶𝗴𝗵𝘁 𝗵𝗲𝗿𝗲 𝗮𝘁 𝗼𝘂𝗿 𝗳𝗶𝗻𝗴𝗲𝗿𝘁𝗶𝗽𝘀. 𝗔𝗹𝗹 𝘆𝗼𝘂 𝗵𝗮𝘃𝗲 𝘁𝗼 𝗱𝗼 𝗶𝘀 𝗽𝗮𝘆 𝗮𝘁𝘁𝗲𝗻𝘁𝗶𝗼𝗻, 𝗮𝗻𝗱 𝘀𝗲𝗶𝘇𝗲 𝗶𝘁. 𝗚𝗼𝗼𝗱 𝗹𝘂𝗰𝗸, 𝗮𝗻𝗱 𝗜’𝗺 𝗵𝗲𝗿𝗲 𝘁𝗼 𝗵𝗲𝗹𝗽 𝗴𝘂𝗶𝗱𝗲 𝘆𝗼𝘂 𝘁𝗵𝗿𝗼𝘂𝗴𝗵 𝗶𝘁 𝗲𝘃𝗲𝗿𝘆 𝘀𝗶𝗻𝗴𝗹𝗲 𝗱𝗮𝘆.