The Future is Modular: Monolithic VS Modular Blockchains, feat. The Blockchain Trilemma

Before we get deep into the discussion about modular blockchain, first its important to cover the basic architecture of a monolithic blockchain. A monolithic blockchain bundles consensus, transaction execution, settlement, and data availability all together to achieve a comprehensive blockchain architecture.

• Consensus: ordering and confirming of transactions by nodes.
• Transaction Execution: Process & execute transactions.
• Settlement: Dispute resolution, bridge* (optional).
• Data availability: Publish all data from new blocks, and make the data available to provide the chain’s current state.

So long as all these key functionalities are maintained on the same blockchain, that blockchain is considered monolithic. Monolithic blockchain architecture has by and large been the standard way to devise and deploy a blockchain in the past. Bitcoin, Ethereum, Solana, and the vast majority of other layer1 blockchains all use this structure.

The Blockchain Trilemma

When blockchains approach their architecture design, they come up against the Blockchain Trilemma, initially posed by Vitalik Buterin, the Founder of Ethereum. The Blockchain Trilemma is a theoretically solvable dilemma in the crypto space, which revolves around three tenets: Decentralization, Speed, and Security. Solving for one portion of the equation leads to costs in the others and vice versa.

Decentralization: A blockchain is decentralized when it doesn’t rely on any centralized component, eg ICANN within our traditional internet, or a small collection of centralized nodes for block validation.

Speed: When a traditional monolithic blockchain like Ethereum scales and the network is flooded with users, transaction speeds slow and gas fees rise accordingly as users compete for block space.

Security: A secure blockchain is one protected from 51% and other common malware or DDoS attacks, is not plagued by bugs caused by faulty code, or extended periods of downtime.

Ethereum is a monolithic blockchain with its core emphasis placed on decentralization. Rather than prioritizing transaction throughput, or as the components of a monolithic blockchain reference, transaction execution, Ethereum prioritizes consensus and data availability. This has a marked impact on the speed and throughput of the blockchain, where small block size and network congestion causes a surge in gas prices on-chain. For an opposing example, we can look at Solana, where there is a higher element of centralization in its design, but greater speed is achieved via comparatively faster transaction execution (2,000 TPS) with negligible average gas costs. However great this may seem in comparison to Ethereum’s TPS (29.33 at time of writing), Solana’s concessions around decentralization leads to frequent downtime for the entire blockchain.

So long as we are stuck in the framework of the monolithic blockchain (consensus, transaction execution, settlement, and data availability bundled all-together), we butt up against the Blockchain Trilemma and the tradeoffs associated. Assuming say Ethereum wanted to increase its speed and throughput, they could increase block size, however this would result in greater stress on their validator network. It is only fairly recently that development in the space has led to the notion that the basic building blocks of the standard blockchain can be modularized, allowing for the creation of specialized modular blockchains that solve for specific criteria, (Example, Celestia: Consensus and Data Availability), and modular blockchains: blockchains that fully outsource at least one of the four components that comprise a monolithic blockchain.

A modular blockchain is a type of blockchain architecture that separates the different functionalities of a blockchain system into distinct modules, allowing for greater flexibility and scalability. As we have established above, the traditional blockchain architecture typically combines all the functionalities of consensus, execution, data availability, and settlement in a single layer, which can limit the system’s capacity and overall throughput. The modular blockchain architecture, on the other hand, separates the different functions into independent modules that can be developed separately. This allows for more efficient processing of transactions and reduces the chances of network congestion, which can slow down transaction processing times and increase transaction fees.

In a modular blockchain, the execution layer is separated from the bottom consensus and data availability layers. This means that nodes can execute transactions independently, rather than having to perform all transactions to test their validity within a limited space or block. As a result, the system can process a higher volume of transactions and achieve greater scalability. Modular blockchains can also facilitate greater flexibility in terms of network governance and protocol upgrades. Because different modules can be developed independently, updates and changes can be made to specific modules without affecting the overall network. This allows for a more agile development process and faster adoption of new features and upgrades.

“Blockchains are moving away from a monolithic design, where consensus, data availability, and execution are tightly coupled. The future is modular, where execution is separated from data availability and consensus (e.g. tomorrow’s Eth2, or Celestia). This separation allows for specialization at the base layer, delivering a significant increase in bandwidth capacity. At Fuel we are building the fastest execution layer for the modular blockchain stack.”

Fuel for instance is a modular execution layer for the modular blockchain stack which specializes in transaction execution, that is, ensuring they have the fastest possible throughput and speed on their execution layer. A modular execution layer can be designed to support high-bandwidth modular blockchains and capitalize on shared data availability. The separation of resources inherent in this sort of design provides for greater scalability than the traditional monolithic blockchain. Fuel is a high-performance execution layer that can process transactions in parallel, thanks to its use of strict state access lists in the form of a UTXO model, enabling it to achieve unmatched processing capacity. Through its innovative design, Fuel delivers significantly more compute, state accesses, and transactional throughput, making it a highly efficient and scalable solution for modular blockchains.

Celestia is a modular consensus and data network, built to enable anyone to easily deploy their own blockchain with minimal overhead. It’s a novel modular blockchain architecture that offers high throughput scalability by leveraging data availability sampling. Unlike traditional blockchains, Celestia does not bottleneck transaction processing through state execution, allowing for scalability that scales with the number of users. Developers can define their own execution environments on Celestia, which supports a variety of rollup types, including EVM and Cosmos SDK. Additionally, blockchains built on Celestia do not require honest majority assumptions for state validity, making them highly interoperable and secure. By providing consensus and security on-demand, Celestia eliminates the need for the overhead of bootstrapping a new consensus network. This allows anyone to deploy a blockchain with ease and efficiency, making it a promising technology for the future of blockchain development in the modular space.

Overall, modular solutions in blockchain offer a promising approach to improving the scalability, flexibility, and efficiency of blockchain systems, and I believe will play a key role in shaping the future of blockchain technology moving towards solving the Blockchain Trilemma. Projects like Fuel and Celestia are designed to be used by an increasingly large subset of modular blockchains developing in the space, generally in the form of layer2 rollups. Modular blockchains can pick and choose which parts of the development stack to produce in-house, or whether they will integrate projects like Fuel to ramp up the speed of transaction execution and throughput, or Celestia to host the consensus and data availability layer.

Rooch Network is the first multi-chain capable Move modular layer2 launching on Ethereum. In approaching the design architecture of the entire layer2 blockchain, Rooch carefully considered which components of the modular stack to fully outsource. Fuel calls itself the fastest execution layer due to parallel transaction execution, which is a feature Rooch also plans to achieve and deploy. Without concerns for throughput and transaction execution on Rooch’s L2, the question remains: which aspect of the monolithic framework will Rooch export to achieve modularization?

Modular DA

Rooch plans to fully move the state tree off-chain and minimize gas costs via modularization of the DA (Data Availability) layer, candidates for which include: Celestia, EigenLayer, PolygonAvail, and Arweave.

After splitting the DA layer, we achieve the architecture shown in the figure below:

In the depicted architecture, the data availability (DA) saves the Canonical Transaction Chain, while Layer 1 features an L1ToL2 Transaction Queue to enable communication between Layer 1 and Layer 2. Users can directly write transactions to the queue, ensuring a permissionless Layer 2 while preventing auditing of users or transactions by the Sequencer. Rooch will also introduce sequence proofs as part of its modularization of the DA to ensure its Layer2 solution is more secure. Rooch’s iteration of the modular DA is equivalent to an app-specific DA.

Migrating the data availability (DA) function to an independent solution can significantly reduce transaction gas fees in Layer 2 by at least one order of magnitude. While the decentralization of the DA chain may be weaker than Ethereum, the main security guarantee comes from transactions during the challenge period. Afterward, the DA facilitates data synchronization and does not provide security guarantees, allowing for a reduction in decentralization requirements. A dedicated DA chain can offer higher storage bandwidth and lower costs, making it ideal for multiple applications to share the DA. This approach is the foundation of current DA chains like Celestia and Polygon Avail, providing a scalable solution for blockchain applications.

So we have a modular Layer2 with low gas fees, high TPS, and greater security, this is Rooch.

Rooch Network will also enable projects to launch on top of Rooch with varied architecture to fit disparate needs. DApps can launch on Rooch on its layer2 or on top of its layer3, or as a sovereign rollup! Rooch is also working to implement a P2P network, providing even greater flexibility.

Modularization Scenarios (not an exhaustive list):

Layer2 = Rooch + Ethereum (Arbitration + Settlement) + DA

Layer3 DApp = Rooch + Rooch Layer2 + DA

Sovereign Rollup = Rooch + DA

Rooch’s modular design allows for flexibility in adapting to various types and stages of applications. Developers can test their ideas by deploying contracts on Rooch Ethereum Layer2 and then migrate the application to an independent App-Specific Rollup as it grows. Alternatively, developers can start the application through the Sovereign Rollup method, which has lower security requirements and does not need to interoperate with assets on other chains. As the application grows and the need for asset interoperability and security increases, Settlement and Arbitration modularity can be enabled.

Summary

This article discusses the concept of modular blockchains as an alternative to monolithic blockchains. Monolithic blockchains bundle consensus, transaction execution, settlement, and data availability together, leading to the Blockchain Trilemma of decentralization, speed, and security. Modular blockchains separate these functionalities into distinct modules, allowing for greater flexibility and scalability. This separation enables specialization at the base layer, delivering a significant increase in bandwidth capacity. The future of blockchain is modular, and Rooch Network is positioning itself as one of the players iterating in this rapidly developing ecosystem evolving around the modular blockchain.

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