Separated but still connected
- What are monolithic blockchains?
- What are modular blockchains?
- Monolithic vs modular blockchains
- The future of modular blockchain
What are monolithic blockchains?
From the outside, a blockchain seems like an easy concept, you execute a transaction, a miner picks it up, verifies it, and stores it on the blockchain. Although it sounds simple, the blockchain consists of various layers with each having its function such as execution, consensus, settlement, and data availability. In a monolithic blockchain, the network operators are responsible for all functions. So, these operators have quite a high burden and when more users are active on the network, the burden increases.
Unfortunately, as all functions are executed in a single system, these networks are more difficult to scale, but also upgrading the network and interoperating it with other networks. A well-known example of a monolithic blockchain is Bitcoin. However, this all-in-one blockchain can be inconvenient at times, so developers explored the possibility of separating these functions.
What are modular blockchains?
In modular blockchains, these layers are separated and execute a specific function. By separating each component, these networks can optimize each and create a product where the whole is greater than the sum of its parts. This design allows these layers to specialize in their specific tasks, creating an overall better architecture than an all-in-one blockchain. One example of a modular architecture is Ethereum, which through its rollups executes transactions in a separate environment but settles or verifies it on the main blockchain.
Monolithic vs Modular blockchains
As aforementioned, modular blockchain can separate its functions, allowing these layers to specialize in their functions. This allows the blockchain to scale more efficiently as modular blockchains can improve the settlement and execution layers while a monolithic architecture needs to modify its entire architecture. Additionally, scaling a monolithic blockchain introduces the “Blockchain Trillema”, referring to the trade-off between 3 critical aspects of blockchain technology: Security, scalability, and decentralization. Furthermore, a modular architecture allows for greater flexibility as a system might include modular chains focused on security and data availability, while others focus on execution.
However, modular blockchains also have their challenges, for example, security is a greater challenge than with monolithic blockchains. In monolithic networks, all layers leverage the security of the blockchain as it is consolidated in one layer, in modular architectures, each layer is responsible for its security, potentially comprising the entire chain if one separate layer fails. Secondly, they are more complex. As the functions are separated, the layers still need to be connected to communicate with each other.
The future of modular blockchain
When examining monolithic blockchains, it appears that this architecture lacks the long-term potential to accommodate the continuous influx of users. As previously mentioned, scaling a monolithic blockchain presents challenges that require upgrading the entire network, thus introducing the Blockchain Trilemma. Although modular blockchains add complexity, they currently offer a suitable solution for scalability issues. Over the past few years, we have witnessed the introduction of various modular solutions, such as Celestia, a data availability network that allows new networks to store data on the Celestia network, thereby decreasing the data burden on network operators. As more of these modular layers are introduced, the entry barriers for other networks are significantly reduced since an entire network does not have to be created from scratch. This potentially enables the blockchain ecosystem to develop more efficient and, most importantly, scalable networks.