A modular blockchain refers to a blockchain that completely outsources at least one of the four components, namely, the execution layer, settlement layer, consensus layer, and data availability layer, to an external chain.
Since it is too complex and limited to provide services to millions or billions of users on a single chain, people proposed sharding and Layer 2 solutions, which later evolved into modular blockchains. The initial solution for modularization was rollups, and later this concept was further expanded into modular blockchains.
Modular blockchains can minimize the cost of running nodes.
Advantages of modular blockchain
Sovereignty: Despite the use of other layers, the new modular blockchain can be sovereign like Layer 1. This allows the blockchain to respond to hacker attacks and push upgrades without any underlying permission. Sovereignty: Have a higher degree of initiative in tokens, protocol functions and upgrades, network and protocol governance, ecosystem construction and infrastructure
Ease of launching new blockchains: Since modular blockchains do not need to handle all functionality, new blockchains can simply use existing modular blockchains for the components they wish to offload. Rollups “SDKs” like Optimint combined with the Cosmos SDK will help facilitate the creation of new blockchains without having to bootstrap a secure validator set.
Improved scalability: Modularity allows for expansion without sacrificing security or decentralization.
Here are 12 modular projects for you to check out. (This article only represents personal opinions and is not intended as investment advice):
1) zkPorter
In zkSync 2.0, L2 status will be divided into 2 aspects: zkRollup with on-chain data availability and zkPorter with off-chain data availability. zkPorter's off-chain DA is maintained by Guardians (zkSync token holders) and has a slashing mechanism. Maintaining DA based on Guardians is a more centralized approach.
Official website: zksync.io
Official Twitter: twitter.com/zksync
2）StarkEx DAC
StarkEx DAC is StarkEx's off-chain DA solution. DA is maintained by the Data Availability Committee (DAC), and the maintenance method of DA is more centralized than zkPorter. StarkEx also has a Volition solution, which means that DA can be placed on-chain or off-chain.
Starkex is an "execution" engine developed for application-specific chains. Starkex can use Ethereum as data accessibility, or it can use committees to use data accessibility. This adds great flexibility to Starkex.
Official website: starkware.co/starkex/
Official Twitter: twitter.com/StarkWareLtd/
3) Anytrust arbitration
Arbitrum's Nova chain is based on Anytrust technology. Anytrust is Arbitrum's off-chain DA solution. Anytrust's off-chain DA is also maintained by the Data Availability Committee (DAC), so it is relatively centralized.
Official website: nova.arbitrum.io
Official Twitter: twitter.com/arbitrum
4）Celestia
Celestia, formerly known as LazyLedger, is a very special Layer 1. The project positions itself as "the first modular blockchain network". Specifically, Celestia will modularize the technology stack of the blockchain network and decouple the consensus layer and the execution layer. As the consensus layer, Celestia will only be responsible for transaction ordering and data availability verification, while the specific transaction execution will be dispersed to other execution layer networks (such as Celo) linked to Celestia.
The roadmap shows that Celestia plans to launch a testnet in 2022, and gradually launch an incentivized testnet and mainnet in 2023. Its development team has also confirmed that tokens for PoS staking will be issued in the future.
Celestia has certain similarities with Polkadot's "relay chain + parallel chain" in terms of architecture, but the latter's multi-chain architecture development route does not seem to be so satisfactory for the time being, so it remains to be seen whether Celestia can achieve expectations when it goes online.
Celestia uses an off-chain approach to implement DA, that is, using Reed-Solomon erasure codes and a specialized Namespaced Merkle Trees structure to ensure data availability, making DA cheaper and more efficient. Celestia follows the philosophy of Cosmos, is open, independent and sovereign, is a modular public chain focused on data availability, and also does consensus (Tendermint) (no execution environment is provided).
In October 2022, it completed a $55 million financing round, led by Bain Capital Crypto and Polychain Capital, with participation from Placeholder, Galaxy, Delphi Digital, Blockchain Capital, NFX, Protocol Labs, Figment, Maven 11, Spartan Group, FTX Ventures, Jump Crypto, A&T Capital, CFG Labs, and angel investors Balaji Srinivasan, Eric Wall, and Jutta Steiner.
Official website: celestia.org
Official Twitter: twitter.com/CelestiaOrg
5）Cevmos
Cevmos is a rollup stack developed by the Cosmos EVM application chain Evmos in cooperation with Celestia, aiming to be the best settlement layer built on Celestia based on EVM rollup. Cevmos is the abbreviation of Celestia, Evmos and Cosmos. Cevmos is an open, modular stack for EVM-based applications that leverage Celestia rollups. The Cevmos stack will optimize the settlement chain around the Evmos-based rollup. This settlement chain (to be named) will be implemented as a Celestia rollup using Optimint (short for Optimistic Tendermint) instead of the Tendermint Core consensus engine used on the existing Cosmos chain.
Related article: medium.com/evmos/introducing-cevmos-an-open-scalable-and-modular-stack-for-evm-based-applications-72930ce6b85c
6）Fuel
Fuel is the first Optimistic Rollup deployed on the Ethereum mainnet, mainly suitable for payment-centric applications. The upcoming Fuel V2 will be based on UTXO's highly parallelizable minimal execution system and enable smart contract support, with Ethereum-style interoperable Turing-complete smart contracts, not just simple transfers.
Progress: Fuel is a modular execution layer. In June, a developer network-based demo app, SwaySwap, was launched as an AMM.
Financing: In September 2021, it received US$1.5 million in financing, led by CoinFund, with participation from Fenbushi Capital and Origin Capital.
Features: Fuel is Ethereum's Optimistic Rollup, which initially expanded Ethereum through technologies such as UTXO (unspent transaction output). 1.0 is mainly suitable for payment applications.
However, after the mainnet was launched, the number of interactions was relatively small, probably due to the lack of use cases and the lack of support for smart contracts. Therefore, Fuel 2.0 began to transform into a modular execution layer. One of the co-founders of the project, John Adler, is also the co-founder of Celestia.
Fuel officially promotes 3 technical implementations:
1) Parallel execution of transactions is achieved through UTXO, thereby improving performance;
2) Launched FuelVM (Fuel virtual machine) to optimize traditional virtual machines and also to solve the compatibility issue of EVM;
3) Launched the programming language Sway and tool chain Forc for developers.
Fuel Labs has more than 60 engineers and provides the Ethereum ecosystem with a blockchain with maximum security and the highest flexible throughput. The founders are Nick Alexander, Samuel Borin and John Adler, who is also the co-founder of the Celestia Labs project. Emily Herbert is a computer scientist and Sway language expert at Fuel Labs.
In September 2022, it completed a financing of US$80 million, led by Blockchain Capital and Stratos Technologies, and participated by Alameda Research, CoinFund, Bain Capital Crypto, TRGC, Maven 11 Capital, Blockwall, Spartan, Dialectic and ZMT.
Official website: www.fuel.network
Official Twitter: twitter.com/fuellabs_
7）Dymension
Dymension is a sovereign Rollup built on Cosmos that aims to make the development of RollApps (RollApps focused on custom applications) easy through the Dymension Chain (settlement layer), RDK (RollApp Development Kit), and IRC (Inter-Rollup Communication).
Official website: dymension.xyz
Official Twitter: twitter.com/dymensionXYZ
8）Eclipse
Eclipse is also a sovereign rollup based on the Cosmos ecosystem, allowing a customizable modular rollup settlement layer to be built using Solana VM on any chain.
In September 2022, it completed a $15 million Pre-Seed and Seed round of financing, of which the $9 million Seed round was co-led by Tribe Capital and Tabiya, and other participants included Infinity Ventures Crypto, Soma Capital, Struck Capital and CoinList. The earlier $6 million Pre-Seed round was led by Polychain Capital, and participants included Tribe Capital, Tabiya, Galileo, Polygon Ventures, The House Fund and Accel.
Official website: www.eclipse.builders
Official Twitter: twitter.com/EclipseFND
9）Polygon Avail
Polygon Avail’s solution is very similar to Celestia’s. In fact, Celestia co-founder Mustafa Al-Bassam once said that Avail plagiarized Celestia. Avail’s introduction almost completely copied Celestia’s introduction written by him in 2019.
Official website: polygon.technology/solutions/polygon-avail/#
Official Twitter: twitter.com/0xPolygon
10) Ownership
EigenDA is the DA solution proposed by EigenLayer. EigenLayer itself is the restaking layer of Ethereum.
Founder Sreeram Kannan put forward the following view: Trust between blockchains and DAPPs is mutually fragmented, and each has to pay high capital costs to maintain trust in the ecosystem. For example, the Ethereum beacon chain now has more than 13 million ETH staked. To maintain this staked volume, Ethereum now provides a 5% APR to stakers.
What EigenLayer does is restaking of funds, allowing staking users to stake funds repeatedly to middleware, oracles, DAPPs, etc. in addition to PoS staking, thereby improving capital efficiency and reducing trust costs.
EigenLayer itself is based on Danksharding and ETH staking. EigenDA is the DA solution proposed by EigenLayer, designed for Optimistic-Rollup and ZK-Rollup. There is not much information about the project.
Official website: www.eigenlayer.xyz
Official Twitter: twitter.com/eigenlayer
11)Assembly
A modular smart contract layer on IOTA. Currently in staking period 3. Staking MIOTA via firefly.iota.org earns stakers 0.000001 Assembly token ASMB every 10 seconds. Wallets must have at least 1 ASMB to receive the airdrop. 20% of the total ASMB supply will be distributed to IOTA stakers. Assembly’s mainnet is expected to launch this year, when the ASMB transfer function will be enabled.
Features: Assembly is based on IOTA. Unlike Ethereum's account model, IOTA is based on the UTXO ledger and supports high concurrency, but UTXO is not as compatible with smart contracts as the account model. In addition, IOTA also uses the DAG (directed acyclic graph) data structure, which is also conducive to high concurrency.
In the combination of IOTA+Assembly, IOTA can achieve high performance due to UTXO and DAG. Because UTXO is not compatible with smart contracts, IOTA is very suitable for L1 that only focuses on DA and settlement (equivalent to no DAPP and execution layer competing for block space on L1). Assembly is a smart contract layer built on IOTA to support Rollup smart contracts.
The security of Rollup to the IOTA main chain (transaction validity/fraud proof) is checked by a smart contract chain specially deployed on Assembly, and the verification of transactions is performed by root chain validators with high reputation rankings.
The structures of IOTA+Assembly, Polkadot+Moonbeam, and Cosmos+Evmos are similar. The modular smart contract layer provides support for smart contracts such as Rollup and parachain.
The total financing amount reached 118 million US dollars. Investors include Huobi, LD Capital, HashKey Capital, Signum Capital, etc.
Official website: assembly.sc
Official Twitter: twitter.com/assembly_net
12)Mantle Network
Mantle is a layer 2 scalability solution built on top of Ethereum. Validator nodes in the Mantle network collect users' transactions and submit them to Ethereum in the form of "compressed blocks". This compression saves users expensive gas fees and increases the total throughput of transactions.
By building on top of Ethereum, Mantle inherits desirable properties such as industry-leading security and universal developer infrastructure.
Mantle offers many improvements over traditional L2 solutions:
1) Modular Data Availability: By using a feature layer, Mantle is able to increase transaction throughput beyond traditional L2. Accessible data availability also means that Mantle can increase throughput without compromising security and reducing node operation overhead. This reduces processing requirements for validators and promotes further decentralization.
2) Multi-party computation (MPC): Mantle uses MPC to minimize the trust risk of secondary execution results. Using the threshold signature scheme (TSS) technology, dedicated nodes facilitate multi-party signatures to improve the correctness of off-chain transaction execution results. This allows us to shorten the challenge period for withdrawals.
3) Decentralized Sequencer: Mantle will decentralize its sequencer to provide secure and trustless block production. By rotating a permissionless set of sequencers, Mantle will reduce the possibility of single points of failure or censorship on the network. Mantle will decentralize its sequencer over time to provide secure and trustless block production.
Official website: www.mantle.xyz/
Official Twitter: twitter.com/0xMantle
The above are 13 modular projects. Overall, modular chains are currently in the early stages of development. Celestia and Fuel have made the most progress in all aspects and have great potential to become leading modular blockchain projects. We will have to wait and see what the future holds.