Modular Architecture and its Impact on the Development of the Web3 Industry in the context of Solana and Ethereum’s response
With the continuous development of blockchain technology, two different design philosophies, namely single architecture and modular architecture, have demonstrated their respective advantages and application scenarios. Solana’s single architecture provides a fast and low-cost transaction experience, but its high hardware requirements may lead to centralization. On the other hand, modular designs like Celestia and Ethereum’s latest trends reduce costs, improve security and flexibility, and support a wider range of applications and innovations by separating the data availability layer.
These developments reflect the nature of the constant evolution of blockchain technology and the ongoing exploration of the balance between security, decentralization, and scalability by the community. With further development of modular architectures, we may witness a more diverse and rich blockchain ecosystem, providing users and developers with more choices and possibilities. Despite different perspectives and approaches, these advancements collectively drive the progress of blockchain technology, marking its evolution towards a more mature and flexible architecture.
Solana has gained significant popularity recently, and there are valid reasons for it. It has emerged from the dark times of the Alameda crisis and has shown strong momentum, handling the busiest airdrop claims in history while maintaining extremely low fees. From the perspective of attracting new users, Solana is a good choice, as Ethereum’s Layer 2 still charges transaction fees as high as $1 (we don’t think starting from BSC or Tron is a good idea).
Another advantage of Solana is its single global state, which allows it to respond instantly to all market signals without arbitrage and bridging between rollups or shards. It’s like trading seamlessly across all global exchanges, with events reflecting instantly in price changes across all exchanges, regardless of geographical location or time zone. These are the benefits of a single chain in its optimal state, but this design choice still has drawbacks. Most notably, due to its high hardware requirements, Solana validators tend to become centralized. This is because Solana handles all three layers of blockchain in a single manner: execution, consensus, and data availability.
On the other end of the design spectrum, modular architecture, especially outsourcing the data availability layer, is gaining popularity. This approach reduces transaction costs while maintaining low hardware requirements (although it is threatened by MEV). Modular designs also allow for more specialized chains and hardware for specific applications, with dYdX being the best example.
At the forefront of the modular movement is Celestia, a chain that optimizes rollup data efficiency. On the other hand, Ethereum has achieved modularity in a more incremental way, building and flying the plane at the same time. We believe rollups are the key to scalability and reducing transaction costs, and now the battle for the data availability layer (and the rest of the modular stack) has begun.
The data availability issue was identified early on in the race for blockchain scalability. The focus at the time was on minimizing the amount of stored data to maximize the number of nodes in the network. This dynamic was the basis of the Bitcoin block size war. Data availability refers to the ability of a blockchain to make its data accessible to all network participants. The key breakthrough in solving this problem was the introduction of Data Availability Sampling (DAS), as explained by Bridget Harris:
“Through DAS, light nodes can confirm the availability of data by participating in randomly sampled rounds of block data, without having to download every full block. Once multiple rounds of sampling are completed and a certain confidence threshold is reached, the confirmation of data availability is secure, and the rest of the transaction process can proceed safely. In this way, a chain can increase its block size while maintaining verifiability of data availability. It also achieves significant cost savings: these emerging layers can reduce DA costs by up to 99%.”
Celestia, Avail, NearDA, and EigenDA are the most significant DA projects. They do not require transaction validation but only check if each block has been added through consensus and if the new block is available to the network. They rely on third-party sequencers to execute and validate transactions. Celestia launched in October 2023, Avail and EigenDA will launch their mainnets in the coming months, and Near recently announced its DA solution. Let’s review the unique features of each project:
1. Celestia chose the fastest path to market and adopted fraud proofs (also used by Optimism rollups). The trade-off is that Celestia will not be able to support ZK rollups under the current configuration. The Celestia team claims that approximately 70% of all new Arbitrum Orbit chains are using Celestia for data availability.
2. Avail (formerly Polygon Avail) as a standalone chain provides a fast and secure data and consensus layer, giving developers what they need to launch rollups (whether ZK or Optimistic).
3. EigenDA is perhaps the most Ethereum-compatible as it is a DA module rather than a blockchain. Additionally, ETH staked in the EigenLayer will be available to secure rollups using EigenDA. Its weakness is that it does not use data sampling or data availability proofs.
4. NearDA helps rollups save data availability costs by storing data on the Near sharded blockchain. NearDA leverages an important part of Near’s consensus mechanism, which parallelizes the network into multiple shards.
Now let’s talk about rollups themselves. There are many tools available in rollups built on top of these data availability (DA) providers that make launching rollups easier:
1. Manta Pacific provides significantly reduced costs compared to monolithic L2 solutions by utilizing modular data availability from Celestia and has already saved $1 million in Ethereum gas fees. Manta also uses custom opcodes to verify ZK technology, making privacy protection and native randomness in the protocol very affordable.
2. Mantle Network, built on a modular architecture, combines Optimistic rollup protocols with EigenDA’s data availability solution. This integration allows Mantle Network to inherit Ethereum’s security while providing more economical and accessible data availability.
3. Kinto is a KYC-required chain where every user and developer on the network must complete a passport KYC process before transacting. It uses Celestia to reduce costs.
In a truly modular way, modules from each layer are chosen based on specific needs. The diversity of possible combinations can be seen here:
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Projects like Eclipse, a “Rollup As A Service” (RaaS) project, make launching rollups even easier, allowing developers to choose which technologies to use for each module.
Similarly, Conduit allows users to deploy a rollup within 15 minutes, supporting Optimism, Arbitrum Orbit, and Celestia. Users pay monthly fees for the hosting infrastructure to Conduit and separately pay for data availability to the provider.
The richness of possible combinations created by modularity is undoubtedly a significant advancement. Is this similar to the difference between the difficulty of building a website in the past compared to the convenience and customization offered by platforms like Squarespace today?
This statement means that modular technology greatly simplifies the complexity of technology implementation by providing a variety of combination possibilities. It is a significant advancement in technological development. This progress can be compared to the difference between the complex process of building a website in the past and the convenience and customization offered by platforms like Squarespace today. Platforms like Squarespace enable even non-technical individuals to easily build and manage websites, and modular technology provides similar convenience and flexibility in the implementation of blockchain and rollup.
While there is skepticism towards outsourcing data availability (DA), Ethereum places great importance on modular architecture. The initial vision of scalability through sharding has been abandoned in favor of supporting modularity.
To achieve this vision, three major updates are needed: rollups (as discussed earlier), proposer-builder separation (“block proposers no longer generate blocks to maximize their own profits but delegate the task to external participants in the market, the builders”), and data sampling. The latter is a way to allow light nodes to verify if a block has been released by downloading a randomly selected small amount of data. Technically, this is more challenging than the other two and will take two to three years to implement.
A significant step towards improving Ethereum’s data availability layer before data sampling goes live is EIP-4844. As previously discussed, improving Ethereum is like fixing a plane while it’s flying. Once the Ethereum Foundation recognized the need for rollups (as when Vitalik presented the famous rollup-centric future), the team chose to expand the block package by adding blobs (a space specifically tailored for rollup data). Blobs are expected to reduce rollup transaction costs by a factor of ten. EIP-4844 is planned to go live in the Dencun upgrade in March/April. While it is a temporary solution to keep Ethereum competitive within the next two to three years, the long-term solution will be supporting validity proofs on the mainnet itself, which will reduce rollup costs by several orders of magnitude.
While Solana may strongly defend its monolithic architectural philosophy (and they may be right for many use cases), the industry seems to be moving towards modularity. As for Ethereum, only a modular architecture can achieve the future:
1. Transaction costs are low for millions of users due to rollups (scalability).
2. Network protection against threats like censorship and 51% attacks (security).
3. The ability for an ordinary PC or even a mobile phone to run a node to verify transactions (decentralization).
One might ask if Ethereum’s modular architecture solves the so-called “trilemma” of blockchain, which was previously considered unsolvable. Technically, it does not because Ethereum is no longer a monolithic network. However, as a modular network, it does achieve it.
Among these three, we believe that solving decentralization is the most important part of the trilemma. Innovation will ultimately reduce transaction costs, and prioritizing decentralization (especially geographical distribution) is the only way to ensure long-term security of the network. Ethereum is at the forefront of decentralization, with the most decentralized set of validators, surpassing 800,000 validators. At the same time, through the modular approach, it can adapt to new design innovations by launching custom rollups on top. Celestia and others certainly share this vision. The remaining question is whether Ethereum can move fast enough in the modular direction to keep up with competitors building from scratch, rather than fixing the plane while flying.
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Related Reports:
– Single-chain vs modular blockchain: the competition landscape of Ethereum, Solana, and Celestia What’s next?
– Explaining the Core and Economic Model of Celestia: the outbreak of modular blockchain narrative?
– Celestia is live! Token TIA breaks 2 USDT, two steps to “Update Keplr Wallet” to claim airdrops.