As demand grows for more scalable networks and blockchains struggle to keep up, a fundamental reshaping of Web3 infrastructure may be needed. The blockchain modularity thesis seems to be offering a promising solution.
But what makes a blockchain modular? Are we entering the new era of blockchain? Let’s explore.
Shift toward modular blockchain architecture: Highlights
Celestia’s big launch in 2023 sparked the interest in modularity as a powerful solution to scale Web3. Here’s the scope:
- Traditional Layer-1 blockchains operate under a classic monolithic design, where all the functions of decentralized networks (execution, consensus, settlement, data availability) happen within one protocol.
- The modular blockchain concept suggests a composable design, where each of these functions, or a set of them, becomes the responsibility of a separate layer/module.
- Where monolithic blockchains need to do everything, which reduces efficiency, modular blockchains can focus on just one or a few of these core tasks and optimize them to their best abilities.
While big players like Ethereum are already building toward modularizing, projects like Celestia, Avail, and EigenLayer are exploring the idea even further.
Monolithic vs modular blockchains
To explain modular blockchains, we first need to revisit some blockchain basics.
Every cryptocurrency network has four components, or layers, that essentially define what a blockchain is. These are:
- Execution layer: also called a virtual machine, it processes transactions and executes smart contract code – the starting point of a user's interaction with the blockchain;
- Consensus layer: ensures transactions are confirmed and validated on-chain by nodes and manages block production;
- Settlement layer: where transactions reach finality and cannot be changed or reversed;
- Data availability: after transactions are processed, their outcomes are posted and stored here in a way that everyone can access and verify.
When a single chain performs all of these functions on its own, meaning all the nodes in the protocol have to perform these functions, it’s called monolithic. The better term is integrated blockchain since it combines all operations within one architectural stack.
Most traditional Layer-1 (L1) blockchains including Bitcoin, Solana, and Ethereum fall under this category, with Ethereum trying to break the pattern.
Modular blockchains, by contrast, separate these functions and outsource them across different chains or protocols.
Here's a quick summary of each architecture's approach, benefits, and trade-offs:
| Feature | Monolithic blockchain | Modular blockchain |
|---|---|---|
| Architecture | All core functions (execution, consensus, settlement, data availability) handled in a single layer | Core functions separated into layers (modules) |
| Scaling Approach | Increasing node hardware requirements | Separating functions into layers that can scale independently |
| Benefits | Out-of-the-box solution; seamless developer and user experience | Layers are created easily without building a full blockchain stack; innovate independently |
| Trade-offs | Limited scalability, centralization risk, slower innovation | Higher complexity |
| Examples | Bitcoin, Solana, Ethereum | Celestia, Avail, EigenDA |
What is a modular blockchain?
Modular blockchains split up the processes traditionally all handled on L1 blockchains and run one or two of these core tasks in a separate protocol or a module.
These protocols are designed to be interoperable and can be stacked together to have the full functionality of a blockchain.
What problem modularity solves
In an integrated blockchain, everything happens within a single layer, which can lead to significant limitations as the network scales.
To handle more transactions, monolithic blockchains have to make some optimizations, meaning the computation resources continue to grow. Solana is one such example: its focus on ultra-high performance makes SOL node maintenance particularly challenging.
Another side effect of this is the network becomes inevitably more centralized.
This led to the idea of additional high-throughput execution layers on top of the base blockchain. Think of Bitcoin’s Lightning Network and Ethereum’s Layer-2 protocols and rollups (Polygon, Arbitrum, Optimism, Scroll, etc.), where only summaries or proofs of transactions are recorded on the main chain for final settlement.
Scaling through layers and rollups can effectively be called the first major step toward modularity.
Modular blockchain thesis
The modular blockchain thesis takes the idea of layers even further by suggesting the complete separation of one or two core functions into distinct blockchains.
The difference is:
Layered scaling uses L2 solutions to assist with execution when the main chain still maintains all core functions (execution, consensus, data availability, and settlement) on a single blockchain;
In a modular system, you might have one blockchain for consensus and data availability, another for execution, and another for settlement.
So, imagine Ethereum would only be responsible for settlement while other protocols take on the remaining functions.
Ethereum’s shift towards modular architecture
The Ethereum blockchain stands in a unique position with its modular vs monolithic approach.
Ethereum as a monolithic chain
On one hand, it‘s generally thought of as an integrated chain – all Ethereum nodes participate in consensus, settlement, compute execution, and provide data availability.
The core developer team is in constant effort to scale L1 capabilities: the upcoming Pectra upgrade and the next Fusaka hard fork introduce improvements for all the layers, showing that Ethereum is not yet giving up its monolithic design.
Building a modular Ethereum with rollups
Simultaneously, it is trending towards modularity by supporting Optimistic and ZK rollups that work as additional execution layers for Ethereum.
They utilize the main chain for consensus, settlement, and data availability.
N.B.: Check out our dedicated blog post for an in-depth look at how ZK-based rollups work.
Some rollups take a step further by using an external data availability layer. One example is Mantle which relies on EigenDA instead of posting data to Ethereum and making users pay Ethereum fees.
Rollup-as-a-Service: OP Stack, Arbitrum Orbit, Polygon CDK
Many Layer-2 networks provide frameworks that allow developers to create and deploy their own rollups without building from scratch.
Some examples are:
- Polygon CDK,
- OP Stack by Optimism,
- Arbitrum Orbit,
- ZK Stack created by ZKsync.
These frameworks also offer autonomy over execution (choosing transaction logic, performance optimizations, fee structures, etc). Developers are no longer constrained by the limitations of a base chain while still inheriting its security – a promising foundation for more innovation in the space.
Additionally, it enables smaller rollups, or appchains, dedicated to a single application. This ensures that if the app experiences high usage, it won’t congest the rest of the network or compete with other applications for a block space.
Future path
For Ethereum, modularizing is currently the main strategy to make the blockchain more scalable without compromising the core values of decentralization and security.
Moreover, Vitalik Buterin floated the idea of Ethereum evolving to specialize as a settlement layer where rollups handle most execution and scaling. So, Ethereum's shift toward full modularity remains a viable possibility.
Modular blockchain examples
In this section, we review other protocols with monolithic legacy introducing some level of modularity aside from Ethereum and projects that build fundamentally new infrastructure to fit into the new modular framework.
Cosmos
Cosmos is one of the early adopters of a modular approach to blockchain architecture. It provides Cosmos SDK, a framework for building application-specific blockchains that rely on Cosmos’ consensus engine Tendermint Core.
Developers, thus, can leverage Cosmos nodes, the network’s validator set, and security without needing to build a consensus mechanism from scratch.
Its Cosmos Hub connects other chains in the Cosmos ecosystem using the Inter-Blockchain Communication (IBC) protocol that allows each application layer in the network to operate independently but still communicate.
Avalanche
Avalanche introduces some level of modularity through its Subnets, which are independent networks that handle their own consensus and execution.
Avalanche nodes on the main network serve as a shared security and settlement layer. This setup allows Subnets to scale independently.
Each Subnet can be tailored to specific use cases, improving efficiency without clogging the main chain.
Celestia
Celestia was the first to formalize the modular blockchain thesis and implement it, launching the first in-production modular blockchain in October 2023.
It specializes as a consensus and data availability (DA) layer, meaning different execution environments (e.g. rollups or appchains) can run on top of it and benefit from the data availability it provides.
Manta, a ZK EVM rollup built on Polygon CDK, is one of the Layer-2 networks that use Celestia as a storage layer for its data:
- Finality, or the ultimate confirmation of a transaction, happens on Ethereum;
- Celestia only organizes and stores the transaction records;
- It can then provide proofs that these actions happened on request.
Celestia’s native cryptocurrency, TIA, is used by rollup developers to pay for DA on the network.
Source: Manta Network
While storing call data on Ethereum is expensive, Celestia uses Data Availability Sampling (DAS) to offer the benefit of much more scalable and cost-effective data storage.
Avail is another alternative DA solution working on a similar goal.
EigenDA
EigenDA, part of EigenLayer, is a system that lets ETH validators use their staked Ether to secure different modules (or layers) added on top of Ethereum, rather than each needing to create a new, separate set of validators.
In simpler terms, it’s building on Ethereum’s established security network instead of starting from scratch.
If Ethereum becomes a settlement layer, EigenLayer could extend its security to other modules and play a key part in building a secure modular ecosystem.
Conclusion: Heading to a modular future?
The modularity thesis suggests a whole shift in how we think about blockchains and how they can be scaled. It ultimately is about collaboration with different layers working together in a multi-chain ecosystem rather than having an endless cycle of competing blockchains.
As the idea gains traction, we're probably going to see a lot more app chains, rollups, and DA layers that might shape a new Web3 landscape.
However, a key challenge to be solved is composability. How will these modular components seamlessly connect to provide a smooth, unified user experience?
This is part of the reason monolithic blockchains are leading the industry so far. Their architecture simplifies development and makes it easier for users to interact with the network.
At GetBlock, we recognize that simplicity is key to developer productivity. As a trusted RPC node provider, we handle node management for a wide range of blockchains, so you can focus on what really matters: delivering an optimized experience to users. Get started with GetBlock node services and try our "plug-and-play" experience.
