A New Outlook for Crypto in 2023: A Closer Look at the Modular Narrative Led by Celestia and Fuel

Source: Thor Hartvigsen

Compilation: Leo, BlockBeats

Scalability has always been the focus of the industry, and it just so happens that blockchains are currently facing the problem of “scalability triple dilemma”, and the modular blockchain that started with Celestia is proposing solutions around its scalability, high level of security, and decentralization, and modular blockchain is becoming a mainstream narrative, crypto KOLThor Hartvigsen wrote an article on “Modular Blockchain and Its Intrinsic Value”, compiled by BlockBeats as follows:

PART 1: Start with the basic concepts

Issues that need to be improved today:

• Trustless cross-chain communication

• Rollup scalability when the number of transactions grows large enough

• Maintain a high level of security and decentralization while aiming to increase throughput (blockchain triple dilemma)

First of all, in order to ensure that these concepts are thoroughly understood, we need to establish some terminology, as shown below:

blocks

A block is an integral part of a blockchain, and a single block consists of two components: the block headre block body, the header contains the hash of the previous block, timestamp and other data, and the body contains all the transactions in the block.

One of the most popular scaling strategies in the market is to have larger blocks (Solana).

Larger blocks = increased throughput, but there are some issues at the decentralization level.

Larger chunks = larger data required by nodes, and few people can afford more expensive hardware that can carry huge amounts of data.

node

A full node needs to store the entire blockchain and all transactions that have been made since the first block, and in order to transact on the blockchain, consensus needs to be ensured, data is available, and blocks are valid.

Light Node (Light Client)

Light nodes are used for rollups and outsource most of the work to full nodes, they don’t validate transactions, but check if each block has consensus and if the block data is available to the network, most light nodes rely on the “majority honest assumption” that the majority of participants (like validators) are honest, light nodes require less hardware, more nodes, but overall weaker security (sometimes).

Rollup (on Ethereum)

Rollup/L 2 is a chain built on top of the ETH, using the ETH mainnet as the settlement layer, and the Rollup can be thought of as a separate execution layer and returns the transaction package to the mainnet for validation.

There are currently two types of rollups: Optimistic Rollup and ZK Rollup.

Blockchain Layer:

Blockchains can be divided into 4 layers: - the execution layer, which provides the environment for Dapps and processes transactions within them;

• Data availability layer: Nodes receive blocks from the block generator and check if the data (transactions) are publicly available

• Consensus layer: determines the order of transactions

• Settlement Layer: Determines the actual state of the blockchain (final)

Monolithic vs. modular

Monolithic blockchains are chains made up of all of the above 4 layers, so monolithic needs to handle all of the above, which is the case with ETH and most other blockchains that you know.

A modular blockchain is a chain that outsources one or more of these 4 layers to an external chain, which can reach new levels of scalability due to the fact that modular blockchains can focus on specific elements.

Some of the basic concepts are explained above and summarized as follows:

Currently ETH rollups (e.g., Arbitrum, Optimism) act as the execution layer, and implement the data availability layer, consensus layer, and settlement layer through the ETH mainnet, and these rollups will use “on-chain data availability” to publish data to the designated L1 (ETH).

Conversely: a rollup with “off-chain data availability” publishes its data to a location other than the specified L1, and the rollup can still use the ETH as the settlement layer, but Celestia will act as the data availability layer by publishing data in this way (off-chain data availability).

Here are the different types of rollup structures on ETH Square:

-Monolith = ETH mainnet

-Rollup=e.g. Arbitrum, Optimism (acts as an execution layer and uses ETH for others)

-validium=“Rollup of off-chain data availability”, e.g. Celestia

PART 2: Learn more about Celestia

Celestia is a modular blockchain network, and the blockchain and all VM rollups (not just EVMs) can use Celestia as a data availability layer and consensus layer, as shown in the figure below, Celestia provides different solutions for modular scaling, such as “Sovereign rollups, Celestium, etc.”

First of all, you need to understand the “data availability layer”

Data availability: As a node, it is possible to receive a block from the block generator and needs to verify that the data is public (published) in order to add it as the next link in the blockchain.

Data availability issues: Occur when data is retained.

Specifically, the block generator does not reveal the data of a new block (in the case of a data hiding attack), and the node is suddenly unable to approve the block because it cannot read the data, which is a common problem in rollups.

Introduction to Data Availability Sampling (DAS):

The light client (which I covered earlier) can verify data availability without having to download all the data, and the light client runs a small sample of the data and gets 50% certainty that the data is actually published every time.

In many cases, light nodes only need to download less than 1% of the data to ensure that 99% of the data is published, which is a big improvement!

Learn more

Going back to light clients, as I said earlier, light nodes are much less expensive in terms of hardware requirements, but because they rely on “majority honest assumptions”, they are less secure.

So, what about the light client of the “few honest assumptions”?

For example, Celestia’s light nodes use data availability sampling by downloading a small portion of the data, and they rely on the “few honesty assumptions” (assuming that a small number of blockchain traders are honest and follow the rules of the protocol), which greatly improves security.

The following figure shows the comparison of different nodes and clients

Now let’s take a look at Celestia’s different solutions:

-Sovereign Rollup

• Sovereign Rollup natively handles both the execution layer and the settlement layer, rather than using ETH as the settlement layer like Arbitrum and Optimism does.

Benefits of Sovereign Rollup:

• Greater freedom over the execution environment

• Do not share computing resources

• It’s possible to do a hard fork after something goes wrong

Sovereign Rollups are more similar to L 1 and can be bridged to other Sovereign Rollups and settlement layers.

Cluster

A blockchain cluster is a set of blockchains and rollups that can communicate with each other in a “trust-minimized manner”, a trust-minimized bridge between two chains that does not require a middleman or majority honest assumption to ensure the safety of funds.

An example of a cluster is ETH Workshop and its Rollup (L2) or different chains in the Cosmos ecosystem that are capable of intra-cluster communication (trust-minimized bridges rather than trusted bridges).

Here’s everything combined with Celestia:

Trust-minimized communication (intra-cluster communication) requires a “few honest assumptions”, which is exactly what Celestia takes advantage of, and light nodes can use data availability sampling. Trust-minimized bridges are much more secure, forming a “cluster” of the chain and “intra-cluster communication”, so Celestia provides a key part of the rollup to form a cluster and communicate in a trustless manner.

Celestia Quantum Gravity Bridge and Celestium

The Celestia Quantum Gravity Bridge is a data availability bridge between ETH and Celestia that allows ETH L2 “off-chain data availability” (ETH rollups using Celestia as the data availability layer).

Celestium is an L2 rollup built on top of ETH, using Celestia instead of ETH as the data availability layer, and still using the ETH mainnet for settlement and consensus, and other L2s can follow suit to improve their scalability.

Summary:

Celestia, as a standalone data availability layer, and in some cases a consensus layer, can use Celestia to improve scalability due to the inherent techniques of data availability sampling and “honest few” light nodes.

PART 3: Stop at Fuel Labs

Let’s wrap up the conversation by talking about Fuel Labs, which is building an execution layer that can be implemented with ETH and Celestia, maintaining a high level of security and decentralization to scale throughput.

Learn more about Fuel Labs:

One of Fuel Labs’ products is their Optimistic Rollup, which they built to expand ETH workshops. Including:

• Trust-minimized bridge between Fuel and Ethereum

• FuelVM - Parallel verification by running smart contracts using “UTXO” (unconsumed transaction outputs).

Sway programming language

In a nutshell, FuelVMs can run multiple processes at the same time (parallel validation) because Celestia works with all VMs, and Fuel can also use Celestia as a data availability layer and/or consensus layer to start rollups.