A modular blockchain is a type of blockchain whose architecture is divided into multiple layers, which allows for increased scalability without compromising decentralization and security. The whole industry seems to be gradually moving towards a modular architecture, including the Ethereum blockchain. So why and how is this possible? What is the difference compared to a classic blockchain? Modular blockchain overview.
The blockchain trilemma, starting point
A modular blockchain it is a type of blockchain that is not based on a single layer like monolithic blockchains, but on a architecture divided into several independent layers.
To better understand what we are going to talk about, it is worth returning to the famous blockchain trilemmaas the evolution of blockchain technology is closely related to it.
This trilemma states that a blockchain cannot achieve both a high level of scalability, decentralization and security. Indeed, when developing a new blockchain, developers have to compromise on one of these three pillars to achieve the other two.
Figure 1 – The blockchain trilemma
There are therefore scalable blockchains, which are on the other hand not very decentralized and secure like the BNB Chain. Others are decentralized and secure, but not very scalable, such as Ethereum.
For more than 10 years, this trilemma has been the biggest obstacle to designing a classic blockchain, also called a blockchain monolithic blockchain.
Let’s focus first on what a monolithic blockchain is and on three basic concepts at the base of the blockchain:
- Consent : the process by which all nodes of a network agree on the validity of the content of a new block and on the new state of the blockchain;
- Data store : transaction data published by block producers in a block, with the guarantee that this data is available to all network participants;
- Trade Execution.
Monolithic blockchains have been around since the creation of Bitcoin in 2009, and so have the vast majority of blockchains created since. These handle consent, information storage, and transaction execution on the same networkin other words, on a single layer.
A blockchain of this kind therefore has nodes that process the three fundamental concepts in a single block, and this involves concessions.
In recent years, however, the goal of many blockchains is to achieve a high level of scalability without compromising decentralization and security.
If you want a monolithic blockchain to be more scalable, the block size needs to be increased to post multiple transactions in one block. If the nodes are unable to follow them by increasing their storage capacity, they are cut off from the network. The consequence is a decrease in the level of decentralization and therefore of security.
Also, too, reduce the number of nodes allows the network to handle higher throughput of transactions. The fewer nodes, the faster the transactions commit as the nodes reach consensus faster, but this lower the level of decentralization and security.
The Solana blockchain, for example, has taken this direction to solve the scalability problem. But as we just explained, this does not resolve the trilemma for there are always concessions to be made.
What is a modular blockchain?
Trying to make the three fundamental concepts work on one level, a monolithic blockchain is limited by the trilemma.
Thereby, modular architecture offers a new way to design blockchain in an attempt to resolve this trilemma.
The key point to note about this type of blockchain is that the core concepts are separated into different layersor blockchain, instead of managing them all at once on a single layer.
For example, a modular blockchain might have an execution layer independent of consent levels and data storage. Concretely, this allows nodes to execute transactions separately, which increases scalability and simplifies blockchain design.
It’s about a fragmentation of tasks. Assigning a single task to each layer increases the scalability of the network.
The second and third layer solutions, respectively named layer 2 and layer 3are perfect examples to illustrate the contribution of a layer separation, as it can be Lightning Network for Bitcoin And Polygon for Ethereum.
Just like levels 2 and 3, side chains they are also used to compensate for the compromises taken by the main blockchain by optimizing and focusing only on executing transactions for example.
Figure 2 – Representation of the structure of a monolithic blockchain and a modular blockchain
Here are some examples of modular blockchains.
Layer 0 Cosmos
The cosmos is one independent blockchain ecosystem and interoperable decentralized applications.
Developers building an application on the Cosmos network can use open source modules to easily create a specific blockchain for their needs.
Thus, the form Cosmo SDK allows for the development of an application-specific blockchain. The module Tender Core it is the level of consensus that allows a layer of decentralization to be integrated into it, and theIBC extension it is an inter-blockchain communication protocol.
Finally, with Interchain securityindependent blockchains (sidechains) of the Cosmos network can, to ensure their security, borrow validators from the main chain of the network, Cosmos Hub.
Celestia’s modular ecosystem
Celestia’s modular ecosystem it is developed on the Cosmos network, which allows its blockchain to get rid of the execution layer.
In fact, Celestia chooses to only develop levels of consent and data storage : Nothing can be run there since there is no run level.
So projects that focus only on the runtime level can plug into Celestia. In this sense, the Celestia blockchain serves as a foundation to those projects that don’t need to worry about consent and data storage levels.
👉 Find our in-depth analysis of the Celestia blockchain
Sharding, or partitioning, is a data management technique that could allow Ethereum to achieve a high level of scalability by separating the data storage tier from the other two tiers.
is split the Ethereum network into multiple fragments, each with its own validators. These can then manage a node for their shard and function as a thin client for other shards on the network.
The data storage is then divided into several blocks, which increases the available data space and provides higher transaction throughput. Sharding will allow for that the Ethereum network to accelerate its transition to a modular blockchain to solve the trilemma.
👉 To go further – What will the future of Ethereum look like after The Merge?
Conclusion on modular blockchains
The modular architecture is the logical evolution of the blockchain to break free from the famous blockchain trilemma first mentioned by Vitalik Buterin.
Second layer solutions combined with rollups are becoming increasingly popular and used. The Ethereum blockchain aims to use sharding in the near future. Other major blockchains like Tezos and NEAR Protocol have similar plans.
Finally, with the evolution proposed by projects like Celestia, the future of blockchain technology is certainly modular.
Monolithic blockchains have had their day and the best developers in the industry are trying solve the blockchain trilemma with a modular architecture.
So it might just be a matter of time, and it would be a real win for the entire industry.
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Sources – Figure 1: Vitalik.ca; Figure 2: Celestia
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