Original title: Modular architecture and its role in Ethereum’s Endgame Original author: Chris Powers, founder of Does of DeFi Original source: substack Translation: Golden Finance xiaozou
1. Monolithic era?
Solana has been very popular lately, and rightfully so. It has survived the dark days of the Alameda crisis, enjoyed strong price action, no more frequent downtime, and even managed to handle arguably the busiest airdrop claiming campaign of all time, all while keeping fees incredibly low. From the perspective of attracting new users, Solana is a great choice: Ethereum L2 charges a whopping $1 per transaction (we really don’t recommend starting with BSC or Tron).
Another major advantage of Solana is that its single global state can immediately reflect all market signals without the need for arbitrage and bridging between rollups or shards. This is like trading on all global exchanges is 24 hours a day, regardless of geographic location or time zone, and all events are immediately reflected in price changes on all exchanges.
These are the biggest benefits of a monolithic blockchain, but there are still flaws in this design choice. The most notable one is that the hardware requirements are very high, and as a result, Solana's validator set is becoming increasingly centralized. This is because Solana handles all three layers of the blockchain in a unified way: the execution layer, the consensus layer, and the data availability layer.
Modular architectures as a counterpoint to this design choice — specifically outsourcing the data availability layer — are gaining popularity. Modular approaches reduce transaction costs while maintaining low hardware requirements (although MEV poses a threat to this). Modular designs also allow for more targeted chains and hardware for specific applications, dYdX being the best example.
Celestia is at the forefront of the modular movement and is a chain optimized for rollup data efficiency. Ethereum, on the other hand, has been implementing modularity piece by piece, building the plane as it goes. We believe that rollups are key to achieving scaling and lowering transaction costs as competition intensifies for the data availability layer (and the rest of the modular stack).
2. Expansion and data barriers
The data availability problem was first discovered during early blockchain scaling competitions. The focus was on minimizing the amount of data that needed to be stored in order to maximize the number of network nodes. This was also the case with the Bitcoin network’s block size competition. Data availability refers to a blockchain’s ability to make its data accessible to all network participants. The key breakthrough in overcoming this problem was the introduction of Data Availability Sampling (DAS), as described by Bridget Harris:
“With DAS, light nodes can confirm that data is available by participating in random sampling of block data, without having to download every block in full. Once multiple rounds of sampling are complete — and a certain confidence threshold is reached that the data is available — the rest of the transaction process can proceed safely. In this way, blockchains can scale their block sizes while keeping data availability verification simple. And, there are also significant cost savings: these emerging layers can reduce data availability costs by up to 99%.”
Celestia, Avail, NearDA, and EigenDA are the most important DA (data availability) projects. They do not need to verify transactions, but only check whether the blocks are added by consensus and whether the network has new blocks available. They rely on third-party sorters to perform verification transactions. Celestia was launched in October 2023, Avail and EigenDA will be launched on the mainnet in the next few months, and Near recently announced its own DA solution. Let's take a look at what makes each of them unique:
Celestia chose the fastest path to market via fraud proofs (an approach also taken by optimistic rollups). The trade-off is that in its current configuration, Celestia cannot support ZK rollups. The Celestia team claims that approximately 70% of new Arbitrum Orbit chains are using Celestia for data availability.
Avail (formerly Polygon Avail) is a blockchain independent of Polygon with a fast and secure data and consensus layer to help developers launch rollups (either ZK rollups or optimistic rollups).
EigenDA is probably the most aligned with Ethereum, as it is a DA module, not a blockchain. In addition, ETH re-staked in EigenLayer will be available for rollup security via EigenDA. The downside is that no data sampling or proof of data availability is used.
NearDA can save rollup data availability fees by storing data on Near’s shard chain. NearDA takes advantage of an important part of the Near consensus mechanism, which parallelizes the network into multiple shards.
3. Start a massive rollup
Then we come to the rollup itself. In a rollup built on top of these DA providers, there are a number of tools that make launching a rollup easier:
By leveraging Celestia's modular data availability, Manta Pacific costs significantly less than a standalone L2 solution and has already saved $1 million in Ethereum gas fees. Manta also uses custom opcodes to verify ZK (zero-knowledge) technology, which allows them to have protocol privacy and local randomness at a very low cost.
The Mantle network is built on a modular architecture that merges the optimistic rollup protocol with EigenDA's data availability solution. This fusion enables the Mantle network to inherit the security of Ethereum while also providing more affordable and accessible data availability.
Kinto is a KYC chain where every user and developer must complete a passport KYC real-name authentication process before conducting transactions on the network. It uses Celestia to reduce costs.
In a truly modular way, each layer of modules is selected based on specific needs. Here are the various combinations:
RaaS (rollup-as-a-service) projects like Eclipse make it easier to start a rollup, and developers can choose which technology to use for each of the three modules.
Similarly, Conduit lets you deploy a rollup in 15 minutes, powered by Optimism, Arbitrum Orbit, and Celestia. But you need to pay a monthly hosting infrastructure fee to Conduit and a separate data availability fee to the DA provider.
The sheer number of possible combinations that modularity brings is definitely a major step forward. Is this similar to how difficult it was to create a website in the early days, compared to the ease of use and customization of Squarespace today?
4. Weighing the pros and cons
Despite the growth of DA projects, many people have reservations about outsourcing DA. Vitalik made it clear: "Your data layer must be your security layer." Dankrad Feist, another member of the Ethereum Foundation, also agreed: "If you don't use Ethereum to get data availability, then it's not (Ethereum rollup), and it's not Ethereum L2."
We agree with this view. But rollups with outsourced data availability will be less secure than rollups that use the same chain for data and consensus (really should be called "validiums"), although secure enough for some applications. Short-term projects using these rollups will emerge quickly and disappear quickly, and at best will only serve as a nice experimental testing ground. However, for long-term holding of financial assets, L1s like Ethereum or rollups that use the same chain for data and consensus will still be the lowest-risk networks.
5. Ethereum is moving towards modularization
Despite skepticism about outsourcing data availability, Ethereum is moving further and further in the direction of modular architecture. The early vision of sharding expansion was abandoned in favor of a modular path.
The three main updates needed to achieve this vision are rollups, proposer-builder separation (“instead of block proposers producing a ‘revenue-maximizing’ block themselves, the task is delegated to a market of external actors (builders)”), and data sampling. The latter is a way for light nodes to verify that a block has been published by only downloading some randomly selected pieces of data. This is more technically challenging than the other two and will take two to three years to deliver.
Important note: EIP-4844 is the first step in improving Ethereum’s data availability layer before data sampling begins. As mentioned before, enhancing Ethereum performance is like building an airplane while it’s flying; when the Ethereum Foundation recognized the need for rollups, the team chose to extend blocks with blobs, a dedicated space tailored for rollup data. Blobs are expected to reduce rollup transaction costs by 10x. EIP-4844 is scheduled to go live in March or April along with the Dencun upgrade. This is a temporary solution to keep Ethereum competitive for two to three years, while the long-term solution will support proofs of validity on the mainnet itself, which will reduce the cost of rollups by several orders of magnitude.
While Solana may fiercely defend its monolithic architecture philosophy (and may be proven correct in many use cases), the industry as a whole seems to be converging towards modularity. In the case of Ethereum, only a modular architecture can achieve such a future:
* Thanks to rollups, transactions become cheaper for millions of users (scalability);
* The network is protected from threats such as censorship and 51% attacks (security);
* Ordinary PCs and even mobile devices can run nodes to verify transactions (decentralized).
One might ask, does Ethereum’s modular architecture solve the otherwise unsolvable blockchain trilemma? Technically, since Ethereum is no longer a monolithic network, it does not solve the trilemma, but as a modular network, it can be said to provide a solution.
Of the three aspects of the future described above, we believe that decentralization is the most important part of solving the trilemma. Innovation will eventually reduce transaction costs; prioritizing decentralization (especially geographically) is the only way to ensure the long-term security of the network. Ethereum has the largest set of distributed validators, with more than 800,000 validators, making it the leader in decentralization. At the same time, with a modular approach, it can adapt to new design innovations by launching custom rollups. Celestia and other projects certainly believe the same. The question that remains is whether Ethereum can develop quickly in this modular direction and keep up with the competition, whose competitors are built from the ground up, unlike Ethereum, which repairs the plane as it flies.
