Understanding the recent popularity of modular public chains in one article

Recently, modular public chains have gradually become a hot topic in the industry. Literally, modular public chains modularize the technology, applications, rules and standards of public chains to facilitate different project developers to match processing solutions according to their personalized needs.

Of course, the modular public chain is essentially a concept proposed around the expansion solution, and there has not been a completely successful experimenter in the current technical environment. Therefore, for the projects that currently focus on this concept, both investors and developers should carefully identify and rationally choose.

In addition, given that this concept is not yet mature and there are different interpretations in the industry, this article only introduces its core principles in the most simple and easy-to-understand language on the premise of ensuring the accuracy of the macro logic. Please understand if there are some deviations in some details.

Concept collection based on Layer2

Specifically, the modular public chain aims to split the system into multiple modular components, giving them the attributes of blockchain. They can even have subdivided functions such as DEX application chain, stablecoin application chain, NFT application chain and derivative application chain. Developers can extract these new modules and arbitrarily sort and combine them to achieve more advanced functions. In addition, the modular public chain has its own unique logic, trying to weaken the problem of the "impossible triangle" and practice the core spirit of blockchain technology. We will talk about the details below.

In fact, the concept of modular public chain was mentioned several years ago, but it was soon diluted by other hot topics. Since the second half of last year, modular public chain has been repeatedly mentioned by big Vs, because Ethereum Layer2 solution began to rise at that time, and Layer2 is an important foundation and prerequisite for realizing the modularization of public chain. It should be noted that modular public chain is mainly a solution proposed for Ethereum upgrade, and its narrative logic revolves around Ethereum. However, there are also projects on other chains that use this as a reference for performance improvement.

As we all know, the "impossible triangle" of blockchain technology has always been a headache for developers and users. Solutions such as Layer2 are designed to solve this core pain point. The specific path of Layer2 is to put the calculation and processing of data on the second layer of Ethereum. The first layer of the network focuses on security, that is, consensus. Modular public chains go a step further and subdivide blockchain into three layers: execution layer, settlement layer, and data availability layer.

Generally speaking, the above three layers have already existed, but they are coupled in the Ethereum network without clear boundaries and division of labor. What modular public chains need to do is to decouple. First, using Layer2 applications as the technical environment, they classify and refine functions such as privacy security, node verification, transaction confirmation, data storage, and fraud proof, and achieve overall chain expansion. The following is a specific interpretation of these three layers.

3-layer network deep collaboration , sequential processing of transaction data

First, let's look at the execution layer, which is mainly for the user side, that is, various Layer2 Rollup applications, such as Arbitrum and Optimism, etc. The core function is to quickly package and process user transactions. This layer is relatively easy to understand and is also the primary function of on-chain applications. However, there has been constant doubt about various Rollup solutions sacrificing decentralization in pursuit of performance. In extreme environments, will the other side of the high speed of the modular public chain execution layer be the joint evil of large nodes? This question will be solved by the settlement layer.

The settlement layer is mainly responsible for verifying the security of transaction information, also known as the consensus layer. The operating speed of Bitcoin and Ethereum is widely criticized by the public, but this is caused by the full node verification mode under the POW consensus mechanism. Therefore, Bitcoin and Ethereum are recognized as the safest public chains in the entire network. At present, many high-performance public chains ranked at the top of TVL have partially abandoned decentralization in order to achieve performance breakthroughs.

In the design of modular public chains, the packaged transaction data of the execution layer is submitted to tens of thousands of nodes in the Ethereum settlement layer for joint processing and verification, and the anti-fraud proof technology will play a role in it, which can greatly reduce the risk of some nodes doing evil and hedge the hidden dangers of the Rollup end being suspected of centralization. Of course, Rollup itself is also constantly iterating on the technical side to further embrace decentralization.

However, with the surge in transaction data, Ethereum in full-node verification mode will certainly become more congested, which will further overdraw users' patience. In this regard, the idea given by the modular public chain is to prioritize the verification data according to importance. The more important the data, the higher the priority, and can be verified by more nodes earlier. For small point-to-point transfer data between individual users, there is no need to mobilize a large number of nodes to participate in processing. In this way, the on-chain load of Ethereum can be greatly reduced and the operation speed can be increased.

It is worth noting that the Ethereum consensus mechanism will be transferred from POW to POS in the second half of this year, which creates the conditions for this. It can be said that the settlement layer's structuring, differentiation, ordering, and classification of transaction data is the soul of modular blockchain.

Finally, let’s look at the data availability layer, which is the storage layer of Rollup data and is used to store the original transaction data. We can think of it as a spare tire because its function is very simple, only storage, no execution of any smart contract protocol, and no calculation involved. Its core function is to ensure that transaction data is correct and available, to provide information for anti-fraud proof, or to help users trace assets and reduce losses with original data in the event of a network attack.

Another point that cannot be ignored is that if data is stored in the L1 layer (settlement layer), it will be very expensive. Setting up a separate chain just for storage may be a cost-effective option. Therefore, the data availability layer is a supplement to the entire public chain system and can provide double insurance for information security.

Some players initiated the exploration, hoping that the idea will be finally realized.

The reason why modular public chains have become popular recently is mainly due to a series of related projects such as Celestia.

On February 7, Cosmos officially announced that the first public testnet of its modular blockchain network Celestia will be launched in the second quarter of 2022 and will be launched on the mainnet at the end of the year. However, Celestia has not issued a token or announced an economic model. Avail, which has similar technical logic to Celestia, was launched by Polygon at the end of June last year. The commonality between the two is that technically, they play the role of a separate data availability layer or consensus layer to assist the operation of the entire system. The most critical thing is that Celestia and Avail are pluggable, have a small memory footprint, and their functions are limited to transaction sorting, but this also provides flexibility for the modularity of the entire system. Interestingly, Avail was accused of plagiarism by Celestia at the same time as its launch last year.

In addition, IOTA, a public chain project that has been depressed in the industry for many years, has also begun to actively try to transform modularization. At the end of last year, IOTA developed a new chain Assembly. Assembly is scalable, can continuously deploy new contract chains, and is compatible with EVM. Some analysts believe that Assembly can be regarded as Layer 1.5, which is a smart contract architecture layer, and the various smart contract chains built on Assembly are the real Layer 2.

It is worth noting that starting this year, the Ethereum community stopped using "Eth1" and "Eth2" and instead used "execution layer" and "consensus layer" to describe the upcoming Ethereum upgrade. This change in the name seems to have inadvertently given a boost to the modular public chain. At least the fact that these two major events roughly overlapped in time when they were being paid attention to by the outside world also implies a kind of coincidence.

It should be noted that this change is also accompanied by the approach of Ethereum's transition to the POS consensus mechanism, and the technical performance is likely to decline as a result. We have already explained the specific technical logic in "ETH 2.0 has a new look, what is the impact of the June upgrade?", please click to view. At this time, the popularity of the modular public chain concept has become clearer and clearer.

Although some players with decent strength have tried to modularize the public chain, it will take time to verify whether it can be successfully implemented. Although these public chains are high-performance public chains, they are different from Ethereum's technical logic and mechanism design, and even limited by its transaction volume and number of nodes, there is no need to build Layer2 so far, but there is no doubt that the industry is developing, the number of users is increasing, and more flexible modular public chains may be more able to adapt to the needs of the future multi-chain era, which is also a precautionary measure.

In summary, the core idea of ​​the modular public chain is to divide the network structure into three layers according to the functions of Layer2: transaction packaging, node verification, and data storage, and automatically identify the attributes of transaction data to call on the power of nodes in a differentiated manner to complete efficient and decentralized operation. In this ideal virtuous cycle system, the number of nodes can be increased to achieve the expansion of the entire chain system.

It can be said that the idea is beautiful and the logic is very rigorous, but the technical implementation is still very difficult. Therefore, it is currently impossible to judge whether it can really be implemented. However, in the pain point of the "impossible triangle", there seems to be no perfect solution. The idea of ​​modular public chain shows a pragmatic spirit of seeking a balance between the three points, which is worthy of recognition.

Regardless of success or failure, the modular public chain is also a hope to promote the in-depth development of the industry, and users also look forward to seeing real breakthroughs in related technologies and solutions.