Everything is modularized, Ethereum modularizes itself, Bitcoin is modularized
The narrative ends after the Rollup token is issued, and narrative economics moves to the DA layer/chain
Legitimacy and universality are the main concerns, but fees and coin issuance are the key
With the StarkNet airdrop, the competition for Ethereum Rollup has come to an end. Next, let’s talk about DA. In my opinion, the term data availability (DA) is an incomplete expression. It lacks a clear subject and predicate, and only describes the importance of transmitting transaction data beyond the execution layer. Secondly, the DA mechanism involves the basic operating principles of the blockchain, which I have elaborated on in the Rune article using Bitcoin as an example.
Ethereum’s narrative is weak, DA takes over
Modularity is the premise of DA. Ethereum's horizontal modularity is sharding, and its vertical modularity is layering. Rollup is responsible for transactions, and the main network is responsible for DA and consensus. The popularity of DA means that the concept of layering has become a consensus. Secondly, the Rollup war has ended, and the rest is just patchwork.
The mainnet upgrade plan has become a daily and annual update, which has limited impact on boosting overall market confidence. In this context, the narrative rhythm cannot be unfolded from the top-level Rollup and the bottom-level mainnet, so DA that can link the two becomes the best choice.
Let's first complete the statement of DA. Data availability, in a narrow sense, refers to the problem of how light nodes, such as wallets, can efficiently verify full node data. There are two prerequisites here.
Premise 1: Light nodes do not download or cannot download complete full node data, especially when user experience is prioritized;
Premise 2: Full node data may be falsified, and there is no access mechanism. Malicious nodes may exist in both PoS and PoW.
DA comes from actual needs
This is not a problem on single chains such as Bitcoin, because the block header already stores a wealth of verifiable information, and the PoW mechanism ensures that a 51% computing power attack is only a theoretical possibility. However, when switching to a modular chain, the problem becomes complicated, as transaction execution, settlement, consensus, and DA are not on different layers, and may not even be on the same blockchain.
It should be noted here that, according to Vitalik, data availability ≠ data retrieval ≠ data storage, but it is equivalent to publishing data without being tampered with. As for the storage and retrieval after the release, it is not the focus of DA. The difference between the two is:
Data release: Light nodes on Ethereum can directly prove the validity of transactions without having access to all data.
Data recovery: For Ethereum, there is no need to worry about security when using Ethereum as a DA, so the word "release" can cover it, but Celestia has to prove that the data I have is equivalent to being stored in Ethereum, so there will be a retrieval or recovery mechanism.
From Vitalik’s perspective, once the data is published on the Ethereum mainnet, the entire process has been completed, and there is no need to worry too much about subsequent storage and retrieval. This actually makes sense. As the second largest cryptocurrency after Bitcoin, the security of Ethereum does not require technical terms to prove.
However! There are exceptions to everything. If transaction data and consensus data are not completely circulated within the Ethereum system, the release, retrieval and even recovery of data need to be carefully considered. This is also the key point that Celestia and Near DA need to prove themselves.
DA Special Relativity: Everything is modular
Modularity is the direct driving force behind the rise of the DA narrative. Ethereum has actively chosen to transform itself into a modular public chain. It is currently in a hybrid architecture state in the transition stage. Bitcoin can be used as a modular layer. The early OmniLayer practice and the current BTC L2 both have this meaning.
The concept of modularity here is my own definition, that is, outsourcing or being outsourced the functions of a single chain is considered a kind of modularity, which is not equivalent to Ethereum's discourse system.
Any public chain can be modularized
Or understand it this way: previous blockchains also had problems with light nodes, partial nodes, and user-verified full nodes, but this was not a large-scale market demand. Only on modular chains, the state synchronization and data storage, release, and recovery caused by the separation of each layer become a huge problem. After all, no one wants to see a second rollback after The DAO.
First, let’s understand modularity. The earliest practice should be the Lightning Network. Modularity similar to DePIN is another proof of “practice precedes theory”. By outsourcing some functions or modules of the blockchain, the Lightning Network can be understood as a delayed settlement accounting system.
For example, the earliest USDT was issued on Bitcoin's OmniLayer, and its data was eventually published on Bitcoin, which also shows that the blockchain of the UTXO model can also be modularized.
Blockchains with account models, such as Ethereum, are more modular, and Near DA and Celestia follow the same idea. Since everything can be decoupled and the Ethereum mainnet does not have the extreme sanctity of Bitcoin, it is reasonable to use Bitcoin as the object of data publication or to "help" Ethereum process data.
Without modularity, the concept of DA would also be popular, but it would definitely not receive so much attention.
Ethereum Rollup Wars End, BTC L2 Is on the Ascendant
With modularization, there will be someone who can carry the weight. Before the concept of DA, the Rollup route won the expansion war and even had a trend of spreading to BTC L2. From a crazier perspective, modularization is the ultimate solution for expansion. No matter which aspect of security, scalability, and decentralization is needed, it can be extracted from the main network, built separately, and then connected to the main network.
But this also brings up a very interesting question. In the situation where Bitcoin has almost no large-scale expansion plan, a number of BTC L2 projects have also begun to explode in full swing. For example, B² Network uses fraud proof to transmit data back to the Bitcoin main network, which is also an idea of using it as a DA layer. Secondly, Alt L1 has entered the DA market with greater strength. Why does Ethereum's DA dominate the world? Are there any kings, princes, generals, and ministers? Orthodoxy must be overthrown and then stepped on by ten thousand feet. Near DA said so and is ready to do so.
In a sense, Ethereum is an improvement on Bitcoin, with four major differences: PoW-->PoS, UTXO-->account model, monomer-->modularization, and script-->smart contract. The interaction point between the two happens to be modularization, that is, the convergent evolution of the expansion route. The difference is that Bitcoin is passively modularized, and more and more L2s regard Bitcoin as a DA and settlement or consensus layer.
Therefore, we must admit that "modular Ethereum came first, which created the market demand for Rollup for DA, which in turn led to the popularity of the DA layer." The implicit premise here is that Rollup is no longer the protagonist, at least this is the case for Rollup on Ethereum.
We can make a slight distinction, at least into Ethereum-based DA solutions, such as Ethereum, EigenLayer, Celestia and Near DA, and Bitcoin's Lightning Network, OmniLayer and B² Network that use BTC as the de facto DA.
The difference here is that for Ethereum, Ethereum itself and EigenLayer's solutions are still centered on ETH and the Ethereum network, and ultimately it is ETH that is empowered. This is rooted in the economic design of Rollup, that is, Rollup needs to pay a "toll" to the main network to use the main network's security based on the ETH PoS network. The toll here is mainly the DA cost, which is the cost of publishing Rollup transaction data to Ethereum for final processing.
DA Economics
It is much simpler for Bitcoin. Bitcoin has no smart contracts and no node review. You can write anything you like into the transaction data as long as you pay the miner fee. But you must be aware that there is no regret medicine once you write it in. You cannot roll back the data or slash any node. BTC L2 has to solve the problem of transaction conflicts by itself.
They talk about ideology but they think about business
Vitalik initiated a debate on the definition and classification of L2 and Rollup, distinguishing the differences between Rollup, Validium and Sovereign Rollups. The main dimension lies in the choice of DA solution. Several centuries after the end of the Middle Ages, the familiar "excommunication" operation can still be seen.
Visa’s summary of the differences between Rollups
We just need to remember that the data availability issue is not a pure dispute over technical solutions and definitions. The core lies in the revenue and cost of ETH in the PoS era. This is a question of real money. The technical dispute is only superficial, so only a brief introduction will be given.
In a narrow sense, data availability is "how a light client verifies full node data". It can basically be deduced along the following logic, which comes from the paper by Vitalik and the founder of Celestia:
There is a possibility of fraud in the full node, that is, the data provided is problematic;
Among all the nodes, at least one node is an honest node, which stores complete or real data;
Light nodes must have the ability to "separate the true from the false" and be able to correct false data in a timely manner. For example, multiple light nodes can cross-verify different data with each other. This is a sampling mechanism.
The core here is the proof mechanism. Taking Celestia as an example, fraud proof is the core of DA operation. Fraud proof is used to correct errors in a timely manner. At the same time, verifying fraud proof is faster than generating fraud proof. Light clients can complete verification quickly without affecting user use.
We will have an in-depth discussion on fraud proofs. For fraud proofs, all you need to remember is that this is very close to the optimistic verification process of OP Rollup, which is to assume it is true first and then deal with the problematic ones.
The reasoning logic of fraud proof:
There is at least one honest node among all the nodes;
The broadcast mechanism works fine, with latency below the upper limit of network effectiveness;
There are a certain number of light nodes that can be combined to recover complete data, or equivalent data proof;
Under this logic, it can be concluded that the security and effectiveness of light nodes are equivalent to full nodes.
Since there is OP, there will naturally be imitations of the ZK route. In fact, Ethereum and EigenLayer are both "validity proof" routes, that is, proof of validity is generated in advance and distributed, but the generation itself requires a lot of computing power resources.
In summary, Celestia and Near DA form an off-chain + fraud proof (OP-like) + cheap + native token DA solution, while Ethereum and EigenLayer form an on-chain + validity proof (ZK-like) + more expensive + ETH DA solution lineup.
Comparison of DA solutions
Two things need to be said: developing a DA solution based entirely on EigenLayer may not be as expensive as using Ethereum directly, and EigenLayer may not necessarily stop issuing coins, but the central position of ETH will not change.
Second, the DA fees calculated by Near at the end of last year cannot represent real-time and fixed prices, and Ethereum will also increase speed and reduce fees during continuous upgrades, but the overall comparison pattern will not change.
From the perspective of Rollup's interests, opening up new sources and reducing costs are two ways to make money. Transaction fees and coin issuance are their own profit sources and they must never let go. The only way to increase profits is to reduce costs. If they continue to use Ethereum, it is safe enough, but the cost is too high. This is where Celestia and others have an opportunity.
EigenLayer is centered on ETH, and Celestia is centered on TIA. From Vitalik’s perspective, this is tantamount to a vampire attack, using Ethereum’s existing ecosystem but ultimately empowering its own tokens.
Legitimacy and universality, both Bitcoin and Ethereum
Personally, I think that Broken Ethereum has no legitimacy, but the DA layer within the chain still has the highest security, which is true for both Bitcoin and Ethereum. Legitimacy can also be understood as the adaptability to Ethereum and the degree of dependence of the expansion plan on the Bitcoin mainnet.
In terms of universality, the design ideas of each DA also need to be deeply considered. Some DA solutions are dedicated L2 or L1, and even BTC L2 and L1 EVM chains such as Near, as well as EigenLayer, all regard EVM compatibility as an important development direction, so EVM compatibility is a synonym for compatibility.
The case of Celestia is rather special here. It introduces an off-chain computing mechanism, so in theory it is actually compatible with any virtual machine (VM), naturally including EVM. In addition, Celestia is actively expanding its ecosystem, and cross-chain dApp calls are also in its plans.
Of course, the modularity and DA ideas of Bitcoin and Ethereum are inconsistent, and this is done just for fun.
DA Solution Comparison
Bitcoin DA
To be precise, Bitcoin is forcibly treated as a DA layer. Whether it is inscriptions, runes or BTC L2, they all emphasize the importance of storing data in Bitcoin.
At this level, the Lightning Network and B² Network are two extremes. The Lightning Network relies entirely on the Bitcoin mainnet for settlement and does not issue its own tokens. It requires BTC for collateral in daily operations. However, as I introduced in the BTC L2 article, the Lightning Network is just a simple payment channel and lacks the ability to support smart contracts. It is a historical product with extremely high orthodoxy and poor EVM compatibility/versatility.
By comparison, the DA legitimacy of ETH, EIP-4844 ETH and EigenLayer is similar. The only difference is that the latter three have native smart contract functions. This also indirectly proves that ETH-centeredness is not only an economic consideration, but also a responsibility for the long-term development of the ecosystem. Once ETH loses its ability to capture value, the entire EVM ecosystem is in danger of collapse.
In contrast, OmniLayer has made more progress and uses the Bitcoin mainnet as a data publishing solution. Although it still requires nodes to download complete data, it lacks an efficient proof mechanism and does not support complex operations. This is also the main reason why USDT abandoned OmniLayer and prepared to switch to RGB. It can hardly be said that Bitcoin is used as a DA solution. However, considering that this is already an "ancient" product, it is placed here purely for the convenience of comparison and does not have strict requirements for the elderly.
By the way, RGB++ and CKB are trying to explore new ways to build BTC L2. I will write another article at the right time to systematically sort out the new progress of BTC L2. I will dig a hole first and fill it in later.
Next, we will take B² Network as an example to illustrate how the "new era" BTC L2s use Bitcoin as the DA layer. Different from the unconscious use of Lightning Network and OmniLayer, B² Network plans to combine the data feedback of the Rollup layer with the fraud proof mechanism. The overall idea is highly similar to Celestia.
B² Network Technical Architecture
In terms of design, B² Network partially separates the DA role of Bitcoin. The Bitcoin main network plays more of a settlement layer role. The data storage of the B² Network DA layer requires B² nodes to provide additional incentive mechanisms to cover the cost of decentralized storage.
There is no need to over-examine the EVM compatibility of B² Network, but it is highly likely that it will issue its own tokens, and how to reduce the interaction cost of the Bitcoin mainnet also needs to be taken into consideration. After all, the cost of using Bitcoin is very high.
Overall, Bitcoin DA is still in its infancy. It requires the large-scale practical application of inscriptions, runes and BTC L2 on it to generate real demand. However, it will basically not deviate from the path of Ethereum practice. There will only be differences in the implementation path, and the dual limitations of scripting language and storage costs need to be considered.
Ethereum DA: Containing Celestia
DA is now well-known and has a lot to do with Celestia. It was Vitalik who co-authored a paper titled "Fraud and Data Availability Proofs: Maximising Light Client Security and Scaling Blockchains with Dishonest Majorities" with Celestia founder Mustafa in 2018, from which the mechanism and implementation principle of DA were derived.
Celestia’s fraud proof mechanism, light client, and minimization of the number of honest full nodes were all demonstrated in it. Subsequently, Mustafa built the predecessor of Celestia under the name LazyLedger.
However, no one expected that after Celestia was actually launched on the market, it would be boycotted by Vitalik. Economic disputes were the core reason, which has been analyzed in the previous article and will not be repeated here.
Celestia naturally does not have much legitimacy and belongs to the DA layer outside of Ethereum. Rollup, which chooses Celestia as the DA layer, has also been stripped of its name, but under the law of attraction of cheapness, more and more projects of various types are joining in.
The operating mechanism of Celestia is not complicated. The core is that light nodes use the DAS (data availability sampling) mechanism to efficiently verify full node data.
Celestia's low cost comes from transferring computing to the off-chain, which not only allows the DA layer to run at high speed, but also effectively makes it compatible with any programming language and VM (virtual machine). The friendliness of developing dApps is also a great way to quickly develop the ecosystem.
Currently, various Rollup solutions, RaaS, Rollup development architecture, settlement layer, cross-chain bridges, wallets and other applications can be developed one-stop through Celestia.
Celestia Ecosystem
Facing the attack from outsiders, Ethereum emphasized that it could also undertake the DA layer, and the cost would become lower and lower with continuous upgrades. However, due to the limitations of the existing architecture, it was obviously not wise to engage in a price war with Celestia and Near. EigenLayer was pushed to the front line of resistance.
Unlike Celestia, EigenLayer is essentially a collection of smart contracts on Ethereum. From this perspective, EigenLayer is Ethereum itself, but it can also be regarded as an abstract virtual chain. This duality allows it to take into account the central role of ETH while also extending its functions in different dimensions. For example, DA, sorters, cross-chain bridges, and L2 bridges can all be built using EigenLayer, as is the case with Eigen DA.
In layman's terms, EigenLayer's so-called Liquid Restaking is a nesting version of Lido. If ETH can be pledged to earn income and can be exchanged for stETH as a token, then stETH can continue to use it as a nesting version. The tokens generated by restaking are not only income certificates, but also complete token functions for daily use.
After Ethereum switched to the PoS mechanism, the amount of ETH staked is directly related to the health and security of the network. Currently, there are about 30 million ETH in the staked network, worth about $100 billion, and the cost of an attack is second only to Bitcoin.
Since staking ensures the security of Ethereum, LSD/LRT can theoretically be used indefinitely to continuously magnify the returns of staked tokens. Based on the base price of 100 billion, a tenfold magnification would only be 1 trillion U.S. dollars, which is sufficient to support the value of Ethereum.
The architecture of Eigen DA is not important. The key is whether the economic model of EigenLayer can be sustained. Even if EigenLayer fails, there is no problem at all using the Ethereum mainnet.
Due to space limitations, we will not go into depth on EigenLayer/ETH/EIP-4844 ETH, Near DA and Avail. Just remember that they are all dealing with the problem of providing proof of validity without full node data.
Conclusion: DA is a long-term competition
The Ethereum DA market will still have to compete for a while
The Ethereum DA market has already started, and Celestia has taken the lead in issuing the token TIA. Although EigenLayer is centered on ETH, it is rare to see a project that does not issue tokens these days. Let's wait and see what happens.
Although new DA solutions will emerge, the DA business on Ethereum has basically completed its expansion and there will be no more new ideas.
Bitcoin DA is still in the incremental competition, and we need to wait for BTC L2 to decide the winner
In my opinion, the possibility of Bitcoin being used as a DA similar to Ethereum is not very high. The lack of smart contracts is secondary. The main reason is that the cost is too high. Compressing data hundreds or thousands of times is still too expensive. After all, Ethereum is not suitable for data storage, let alone Bitcoin.
references:
Mustafa Al-Bassam: “LazyLedger: A Distributed Data Availability Ledger With Client-Side Smart Contracts”, 2019; arXiv:1905.09274.
Mustafa Al-Bassam, Alberto Sonnino, Vitalik Buterin: “Fraud and Data Availability Proofs: Maximising Light Client Security and Scaling Blockchains with Dishonest Majorities”, 2018; arXiv:1809.09044.
Suwito, M.H., Ueshige, Y., & Sakurai, K. (2021). Evolution of Bulletin Board & its application to E-Voting - A Survey. IACR Cryptol. ePrint Arch., 2021, 47.
EigenLayer: The Restaking Collective
Modular Blockchains: A Deep Dive
Monolithic vs. modular blockchain
The Ethereum Off-Chain Data Availability Landscape
On data availability layers
NEAR Foundation Launches NEAR DA to Offer Secure
Why NEAR Data Availability?
https://docs.eigenlayer.xyz/eigenda/overview/
A comparison between DA layers
