A Comprehensive Guide to Modular Blockchains

Over the past few years, blockchain has come out as the fastest-growing and most talked-about tech-primitive across the world. The popularity of Bitcoin and other cryptocurrencies has put blockchain at the forefront of the digital world.

Blockchain was first unveiled by Satoshi Nakamoto with the introduction of Bitcoin in 2009. Since then, a number of blockchains have been developed and released for a wide range of applications, including cryptocurrencies, enterprises, and industrial use cases.

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However, despite being just a decade-old technology, the blockchain landscape has seen major advancements in recent times. The launch of layer 2 networks, rollups, and other alternative 3rd generation blockchains have brought a turnabout in the industry. One more recent innovation being pushed in the current period is Modular Blockchains.

What is Modular Blockchain?

Modular Blockchain is a type of blockchain architecture that focuses on distributing its core functionalities across various layers. This design strategy allows modular blockchains to handle specific functionalities efficiently while interfacing with other blockchains for additional duties.

It may operate primarily as an execution layer, consensus layer, data availability layer, or settlement layer. The core concept behind modular blockchains is to enhance efficiency and tackle scalability issues by segmenting the blockchain infrastructure.

Essentially, a modular blockchain serves as an “execution-specific” parent blockchain, facilitating the creation of “application-specific” child blockchains on top of it.

To fully understand modular blockchains, it is essential to understand their counterpart: Monolithic Blockchains.

What is Monolithic Blockchain?

Monolithic blockchains can be described as networks that generalize their capabilities, handling all specific duties independently. This approach results in a more generalized performance suitable for a variety of applications. Prime examples of monolithic blockchains include Bitcoin, Ethereum, and Solana.

However, a significant limitation of monolithic blockchains is their scalability. For instance, while Bitcoin is highly secure and decentralized, it struggles with scalability. Similarly, Ethereum faces the blockchain trilemma, needing to balance between scalability, security, and decentralization.

The advent of modular blockchains addresses these limitations. A modular blockchain can be visualized as an entity specializing in a particular task while leveraging the capabilities of other networks.

It can also be seen as a launchpad for other application-specific blockchain protocols, known as rollups. In this way, modular blockchains offer a solution to the scalability issues inherent in monolithic blockchains, presenting a more adaptable and efficient approach to blockchain architecture.

Isn’t this a head-scratcher concept? Don’t worry, let’s try to break down this complexity into easy-to-understand.

In this example, we will think of Modular and Monolithic blockchains as two different cities.

Modular City (Modular Blockchain)

The Modular City represents a modular blockchain, where each district is specialized for a specific function, like manufacturing, residential, or commercial activities. This specialization allows for efficient operation and easy scalability within each district, without affecting the others.

Monolithic City (Monolithic Blockchain)

In contrast, the Monolithic City is a place where every area performs all functions. This generalist approach, while functional, leads to inefficiencies and scalability issues. If the city needs to expand a function like manufacturing, it must do so uniformly across all areas, leading to potential congestion and over-development.

In a nutshell, one can think of a Monolithic blockchain as an entire sphere and Modular blockchains as small particles within it.

The Architecture of Modular Blockchain

As a modular blockchain focuses on separate duties, its architecture is custom-built in accordance with specified functionality. The blockchain can be fundamentally divided into phases depending on the execution sequence. While aiming to achieve output for one of these phases, the modular architecture excludes the processing of other outputs.

A blockchain’s core functionality can be commonly divided into four layers:

Consensus Layer: By which the transactions are processed and verified. This layer ensures that all the data blocks are true and in order before being broadcasted to the blockchain network.

Execution Layer: This layer accounts for executing transactions while moving the network into another state during the “state transition” process.

Data Availability Layer: This layer ensures data availability as the blockchain is essentially a distributed database, and it is constantly updated.

Settlement Layer: Where the transactions are validated and block finality is approved to make the data immutable.

A Modular blockchain only focuses on either of these core functionalities of blockchain networks. This modular framework enables simultaneous executions between all these interconnected tasks to attain a desirable outcome. However, it shares similarities with monolithic chains, which essentially combine all layers mentioned above together in one infrastructure.

The modular blockchain architecture utilizes modest development while broadening the execution environment. Its workability is solely based on the assigned task.

Benefits of Modular Blockchains

The adoption of modularity in blockchain makes it more efficient and achieves higher potential. While extending the ability to achieve high throughput, modularity brings several advantages in the realm of the blockchain industry:

The following are the benefits of Modular Blockchains:

Scalability: As the leading and popular blockchains – including Bitcoin and Ethereum – face the issue of scalability; modular blockchains solve this problem by offloading the pressure on a single unit.

Improving Efficiency and Capabilities: Modular blockchains improve efficiency in a blockchain ecosystem by providing and outsourcing additional functionalities. This way, it also unlocks newer capabilities for blockchain-based applications.

Room For Application Specific Blockchains: While modular blockchains enable a developer-friendly environment, they provide a ground for other decentralized applications that can leverage one another’s functionalities.

Some Popular Modular Blockchains

Here are a few famous Modular Blockchains that currently exist in the blockchain space.

1. Celestia

Celestia is a modular blockchain that enables a data availability layer for other blockchain networks that mainly focuses on the execution layer. While offering data availability, Celestia primarily focuses on ordering and storing transactions derived from other interconnected applications.

2. Polygon Avail

Yet another novel development of the Polygon ecosystem, Polygon Avail, also aims to foster data availability for other applications.

3. Cosmos

Cosmos is one of the early players in this space, which offers a modular blockchain framework. Developers can use it to build and launch their own app chains.

4. Ethereum

Despite being developed as a monolithic blockchain, Ethereum is gradually turning into a modular blockchain as developers are continuously developing a wide range of solutions to address its scalability issues.

Also Read: Can Ethereum Outpace Bitcoin in 2024?

Conclusion:

The non-exhausting and ever-changing blockchain industry is continually introducing newer technical innovations. With the introduction of Modular blockchains, the crypto community is presented with a new primitive that can potentially become a new era in parallel. Let’s see where this freshly unveiled development leads in the coming time.

FAQs

Q1: What is Modular Blockchain? Why Does it Matter?

Ans: Modular blockchain separates core functionalities of a blockchain network and focuses on performing a specific duty such as data availability or transaction execution. Modular blockchains make it possible to address a specific application instead of generalizing performance for all applications.

Q2: Is Ethereum a Modular or Monolithic Blockchain?

Ans: Ethereum was originally designed as a Monolithic Blockchain but it is gradually becoming a Modular Blockchain as the network is going through major changes to address the issue of scalability.

Q3: What is the Difference Between Modular and Monolithic Blockchains?

Ans: Monolithic blockchains perform all network duties by themselves including consensus, execution, settlement, and data availability whereas Modular blockchains perform either of these to achieve efficiency.