The reason why modular blockchain is reconstructing the cryptoassets ecosystem

Why Modular Design is Gaining Attention

The blockchain industry has long faced the fundamental challenge of achieving scalability, security, and decentralization simultaneously. In traditional monolithic architectures, a single chain is responsible for all functions from transaction processing to consensus validation, leading to a rapid increase in hardware requirements as the network grows, making the operation of validator nodes increasingly difficult.

Modular blockchain is a new approach that breaks through this structural limitation. By dividing different specialized functions into individual layers, it alleviates the blockchain trilemma and enables the construction of a more efficient and flexible system.

Core Mechanism of Modular Blockchain

A modular blockchain typically consists of four main functional modules:

1. Execution Layer - Responsible for processing transactions and executing smart contracts. 2. Settlement Layer - The role is to check transaction history and conduct dispute resolution. 3. Consensus Layer - Verifying and agreeing on the authenticity of transactions across the entire network. 4. Data Availability Layer - Stores and provides transaction data, making it accessible to everyone.

This modular division allows each layer to be optimized independently, significantly improving overall throughput while maintaining levels of decentralization and security.

Main Modular Implementation Methods

There are various specific deployment methods for modular blockchain technology. Currently, the following three implementation forms are attracting attention:

Roll-up type is a method that processes a large number of transactions at the second layer and then records compressed data on layer 1, characterized by its processing speed and efficiency.

The Vardium type is an evolved version of rollups that completes processing off-chain before sending data to layer 1, and it is monitored by a Proof of Stake validator network.

Sovereign Rollup functions as an independent entity that takes on both execution and settlement responsibilities, without relying on Layer 1 smart contracts. It possesses greater autonomy since the verification process can be executed directly on the rollup.

Practical Benefits of Modular Design

The advantages of modular blockchain are not just theoretical.

Dramatic Improvement in Scalability - Each function operates independently, minimizing bottlenecks associated with network scale expansion and significantly enhancing overall transaction processing capacity.

Expansion of Development Environment Flexibility - The project side can freely choose and customize the optimal virtual machine environment, which lowers the difficulty level of development and reduces the barrier to DApps development.

Enhanced Interoperability - Communication between multiple Layer 1 and Layer 2 blockchains is enabled, advancing collaboration across the entire ecosystem. This promotes more comprehensive application development by adopting standardized virtual environments such as EVM.

Improving User Experience - The acceleration of processing speed and the reduction of transaction costs significantly alleviate the burden on DApps users.

Realistic Challenges Faced in the Process of Evolution

On the other hand, there are still challenges to be addressed in modular design.

Increased Development Complexity - Compared to monolithic types, the structure becomes more complex, requiring advanced technical knowledge and a long learning period for project development. This imposes certain constraints on the speed of adoption.

Insufficient Testing in Real-World Environments - Established monolithic networks like Bitcoin and Ethereum have been validated over several years in large-scale traffic environments. In contrast, modular networks have not yet undergone the same level of real-world operational testing, leaving uncertainties regarding their capability to handle large-scale traffic.

Technology Maturity Development Stage - The market is favorable to the concept, but modular blockchain technology is still in its early development stage. There are still many unverified areas regarding long-term stability and effectiveness.

Leading Implementation Examples

Celestia functions as a modular foundation that enables scaling without compromising the security of the blockchain. By leveraging Celestia's data layer, rollups and layer 2 networks can achieve fast and efficient data retrieval. In particular, the innovative aspect is the data availability sampling mechanism, which allows for flexible expansion of block size as the number of network nodes increases.

Dymension is an ecosystem that aggregates high-speed and scalable rollups called RollApps. It has a layered structure where RollApps handle frontend functionalities, Dymension manages backend functions such as coordination, settlement, and administration, and the data availability network takes care of the database functionalities, with each part of the system clearly differentiated in its functions.

Future Developments and Market Impact

The adoption of modular blockchains could bring significant changes to the entire decentralized application industry. As it continues to evolve towards solving the scalability trilemma, the application range of modular technology will continue to expand.

As more DApp projects, particularly in the DeFi space, choose to build on modular foundations, it is expected that the overall user experience and processing efficiency of the blockchain will be dramatically improved. Modular blockchains are not just a technological evolution, but they hold the potential to completely reconstruct the entire cryptocurrency ecosystem.