Introduction
The blockchain space is rapidly evolving, with developers continuously seeking ways to enhance scalability, security, and decentralization. The traditional monolithic approach, where a single chain handles all tasks, often leads to scalability and upgrade implementation issues and requires costly hardware for validator nodes. A promising alternative has emerged to address these challenges — the concept of modular blockchains.
What are Modular Blockchains
Modular blockchains signify a shift from the monolithic blockchain model to a multilayered architecture that delegates core chain tasks to specialized functions. These functions are then assigned to different layers. This arrangement forms a more scalable and customizable system without compromising decentralization and security.
How Modular Blockchains Work
Modular blockchains typically specialize in four main functions: execution, computation, consensus, and data availability. Execution involves processing transactions, computation handles crediting of funds, consensus validates the authenticity of operations, and data availability pertains to the storage of transaction data. This modular structure enhances system flexibility and efficiency, offering a promising solution to the blockchain scalability trilemma.
More About Modular Networks
There are various ways to implement modular blockchains, each with unique features. Methods include rollups, Validium, and sovereign rollups.
- Rollups serve as an execution layer for processing transactions and publishing data to the first-layer network.
- Validium is a type of rollup that processes transactions off-chain before sending data to the first-layer network. It utilizes a network of validators with a Proof of Stake mechanism.
- Sovereign rollups function as both execution and computation layers, with data blocks being published directly on the rollup. They do not require first-layer smart contracts for validation.
Pros and Cons of Modular Blockchains
The modular architecture of blockchains offers significant advantages not available in monolithic structures, such as increased scalability, flexibility, and compatibility. However, developing projects based on modular blockchains is more complex and requires a higher level of expertise from users and developers.
Advantages
- Enhanced Scalability: Modular blockchains improve scalability by offloading resource-intensive tasks to separate layers. This allows for increased overall throughput without sacrificing decentralization.
- Flexibility and Compatibility: Modular base layers are designed to ensure flexibility and compatibility between multiple first and second-layer chains. This allows developers to use the Ethereum Virtual Machine (EVM) or other virtual machines.
- Universal Application Development: The modularity of blockchains supports the development of universal applications for users within the blockchain ecosystem. This structure enables the creation of secure and efficient decentralized applications (DApps).
- Customizable Technology Stacks: Developers can choose the virtual machine that best suits their needs and work with a customizable technology stack. These benefits create a more adaptable and user-friendly development environment.
Disadvantages
- Development Complexity: Building on modular blockchains can be more complex than working with monolithic counterparts. This creates barriers for users and developers as it requires a higher level of skills and can potentially slow down implementation and development.
- Limited Testing: Modular networks have not been as thoroughly tested as monolithic counterparts like Ethereum or Bitcoin. Established chains have undergone extensive testing and validation, whereas modular solutions are yet to prove themselves under real-world high-load conditions.
- Early Development Stage: Development on modular blockchains is still in its early stages. Although the market has shown great enthusiasm for modular blockchains, these networks still need to undergo extensive testing and prove their effectiveness under real conditions. It is too early to judge the long-term stability and efficiency of modular blockchains.
Examples of Modular Blockchains
Celestia. Celestia is a modular network that enables secure blockchain scaling without compromising security. Rollups and second-layer networks can use Celestia for fast and efficient data access. The network offers various features, such as data availability sampling and sovereign rollups. Data availability sampling allows Celestia to increase the block size as more nodes join the network.
Dymension. Dymension is a network of easily deployable and fast modular blockchains called RollApps. Dymension functions similarly to a traditional full-stack web application. The RollApps network acts as the user-facing interface, while Dymension operates internally, coordinating the ecosystem. Additionally, data availability networks function like databases, providing information as needed.
Conclusion
The versatility and compatibility of modular blockchains help shape a more efficient and secure decentralized ecosystem. Over time, modular networks will support a broader range of DApps and offer more use cases, fostering the development of DeFi. As development teams address the scalability trilemma, modular networks are expected to become more prevalent in the crypto space.