Modular blockchains separate the system into several parts that are able to act independently. The solution has emerged as a means of solving the so-called blockchain trilemma.
Blockchain developers have long been struggling to create an optimal system that would be decentralized, scalable, and secure at the same time.
Alas, none of their attempts has proved to be successful so far. All these solutions were either too complex for end-users or unable to scale and thus meet the requirements of the ever-growing user base.
Yet, technologies evolve. The introduction of sharding and layer 2 blockchains has marked a new stage of technology development and resulted in a new concept of modular blockchains. This concept implies splitting the blockchain network into different layers to distribute the processes instead of trying to cover all the features within a single system.
In this article, we are going to review modular blockchains and how they solve the problems inherent to the crypto industry as a whole.
Bitcoin along with many other blockchains has always faced scalability issues. The term “scalability trilemma” implies that the given blockchain can only meet two of the following three requirements:
The blockchain trilemma is typically applicable to monolithic chains. As the name implies, these chains rely on the structure formed from a single piece, i.e. they are unified.
The architecture of a monolithic blockchain is alone responsible for all the key processes. At this, the chain handles all of the following core components:
As it usually happens, the approach has both upsides and downsides.
Security. Managing all the processes under one roof makes monolithic blockchains ultra-secure. Nodes can check the validity of transactions on-chain before verifying them. Besides, end-users can enjoy the same level of transparency as the nodes do.
Simplicity. Monolithic chains represent fully-functional platforms created and polished by many developers. They come with out-of-the-box functionality and, as a result, require lower technical skills.
Inefficient execution. Nodes may occasionally re-execute transactions to verify their validity which results in delays.
Limited resources. The nodes of monolithic chains have limited bandwidth and storage which eventually reduces the network capacity.
Scalability. To process more transactions, monolithic chains increase block sizes. As a result, the whole chain requires more resources, i.e. more powerful equipment to maintain. This leads to higher centralization as the number of users who can afford such equipment gets smaller.
State bloat. Since nodes store all the data online, the ever-growing number of transactions results in the exponential growth of the system. This also increases hardware requirements and leads to centralization.
Some of the most popular monolithic systems include, of course, Bitcoin and Ethereum.
Bitcoin relies on the Proof of Work consensus mechanism. It makes the network ultra-secure and at the same time limits its scalability. The Lightning Network resolves the problem to some extent. However, the number of nodes that use it remains pretty low throughout the years.
Ethereum has already switched to the Proof of Stake but still struggles to support the growing user base. Its developers are currently in the process of implementing sharding to make the network more scalable.
Solana is another well-known monolithic chain. The network has overcome the scalability issue by sacrificing decentralization and security. It claims to handle up to 65,000 tps. Yet, high hardware requirements do not allow for a large number of validators.
A modular blockchain is a totally different story. Unlike a monolithic blockchain, it focuses only on one process and “outsources” the rest to separate layers.
In fact, it segregates the system into distinct components. What’s more, such an approach makes it possible to combine these components in many different ways to achieve various goals.
Modular blockchains work on the same tasks as monolithic chains do, i.e. execution, consensus, data availability, and settlement. Yet, since every module has a narrow specialization, it handles its functions much better than a monolithic chain.
Modular chains make it possible to resolve the blockchain trilemma. Thus, these blockchains come with the following benefits:
Despite numerous benefits, modular chains have some drawbacks as well:
Cosmos is one of the earliest examples of modular chains that have ever gone live.
Its subchains rely on the read-made modules that developers can easily obtain from the Cosmos Stack and use for their own purposes. These modules include a consensus protocol Tendermint Core, a dev kit Cosmos SDK, and a network communication protocol Cosmos SDK.
Celestia is another modular PoS-based blockchain network that focuses primarily on the data availability layers.
As stated on the official website, Celestia decouples the consensus and execution layers and enables developers to run many execution layers in parallel. Thus, it makes the deployment process simple while keeping the system scalable and secure.
Unlike monolithic chains, modular architecture segregates each function into a separate layer. Thus, it contributes to efficiency, security, and decentralization
The deficiencies of monolithic blockchains are hard to ignore. With the ever-growing interest in blockchain, switching to modular blockchain networks seems to be a logical solution.
For example, Ethereum works on several upgrades such as Optimistic rollups, Plasma, zk-Rollups, and more. All these solutions should enable the most popular platform to switch to a modular architecture.
In addition, many new projects emerge that implement these layers from the very start. Therefore, we may expect the blockchain landscape to gradually switch to modular architecture in the upcoming years.
Join The Leading Crypto ChannelJOIN
Disclaimer:Please note that nothing on this website constitutes financial advice. Whilst every effort has been made to ensure that the information provided on this website is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we strongly recommend you consult a qualified professional who should take into account your specific investment objectives, financial situation and individual needs.
Kate is a blockchain specialist, enthusiast, and adopter, who loves writing about complex technologies and explaining them in simple words. Kate features regularly for Liquid Loans, plus Cointelegraph, Nomics, Cryptopay, ByBit and more.