The Rise of Modular Blockchains: Scalability Revolution Solution Beyond Layer 2

Introduction

Don't get me wrong, blockchain is powerful. But it is not perfect. If it is super busy, sending a transaction can feel frustrating when you are waiting for the transaction to confirm, especially if fees have increased as a result of scalability issues. I mean, how frustrating is it? For your average user, of course waiting for a routine transaction to confirm can result in waiting hours or even minutes until it's done. For developers, having apps that are clunky and expensive to use makes it unbearable, and you can guarantee that adoption will dwindle quickly.

What is the problem? Scalability. If there isn't scalability, blockchains will never see true mainstream adoption. However, with modular blockchains, you can change that narrative. Modular blockchains promise scalability that is fundamental scalability, and goes beyond layer two solutions even. But how are modular blockchains changing the game?

Scalability Issues

In the end, scalability determines whether Blockchain is a niche or mainstream technology. High traffic slowed everything down on blockchain networks, thus increasing transaction time and fees. Remember the NFT craze of 2021? Minting or trading Ethereum digital art cost over $100! This type of friction keeps newcomers to blockchain away, and annoys everyone else currently in the ecosystem.

Now imagine yourself playing a fast action online game, but every move costs you a few dollars, and every action takes 30 seconds to register. Not fun. Most blockchain applications behave the same way during peak periods of demand. As long as scalability is an issue, the true features of decentralized applications cannot be realized.

Layer 2 Options

Layer 2 solutions were the first "heavy-duty" pressure relief. The work of Layer 2 is done "off-chain", as opposed to processing each transaction on the main chain, which is settled afterward. Off-loading the work speeds it up and reduces costs.

Arbitrum, Optimism, and Polygon PoS are all involved in Layer 2 solutions that create a much better user experience, as well as cost savings. However, the limitation is Layer 2s still settle with the main chain, often Ethereum. The underlying congestion is felt by all layers. Layer 2s, while ultimately helpful, were first aid, not a cure.

Blockchain Modularity

Interactive things happen here. Modular blockchains create the model not just adjust it (expand it). One-layered monolithic blockchains like Ethereum and Bitcoin have execution, consensus, and data all in one layer. A bit like a restaurant that has one machine cooking, cleaning, and serving all of the food. Why is that slow?

Modular blockchains split those tasks up into even more granular layers; one layer for the transactions, one for consensus, and another for data. Now everything is broken down into its individual labor. It is combinatorics as you can stack layers and let each part do what it does best.

If each layer can stack then you can also resize the layers. The multi-layered execution layer can do thousands of transactions in parallel, they are checked into a consensus then stored in the data layer. The system is simply operating faster and smarter.

Key Modular Blockchain Components

Here are the key components of modular blockchains explained in a way that will make them easier to understand:

• Execution layer: This is the “application” layer for smart contracts and transactions. A developer can create a gaming chain that values speed over security or a DeFi chain that values security before speed.
• Consensus layer: The consensus layer is where everyone comes to agreement on what’s valid on the blockchain. This is what keeps everything in the network honest and trustworthy.
• Data Availability Layer: The data availability layer makes the transaction data verifiable and available. The data layer is the backbone that allows other layers to be informed and in sync.

Since parts can evolve separately, it's easier to improve the functionality of the data layer without adjusting the execution layer. Improving the data layer is as simple as upgrading your kitchen instead of rebuilding your house.

Modular Architecture: How

This means they are intuitive to visualize modular blockchains, offer many highways with the same destination, and are all capable of handling gaming financial and NFT traffic seamlessly and efficiently.

The modular system achieves the same effect as parallel processing with task separation of work. Thus the busyness of one chain does not affect the busyness of another chain. The architecture remains efficient even at peak use. This design offers true scalability to blockchain technology.

Modular Blockchain Benefits

What is behind the excitement of modularity? It changes everything, literally.

What does it mean for scaling? Layer 1 chains often have congestion and a myriad of other issues. With modular chains, we now can scale layers independently of a busy base chain.

What does it mean for decentralization? With modularity, communities can build their chains without costly mainnet upgrades or gas fees. A gaming guild may start their chain with no congestion and very low fees per microtransaction, real decentralization.

What do modular chains mean for innovation? If you are not limited to Layer 1 then a team can iterate and experiment with changes much quicker.
What does modular chains mean for interoperability? Modular chains can easily provide cross-chain capabilities through data and layers, thereby eliminating the silos established by previous systems.

Real-world Examples

Supply some details. Polygon Avail is the leader for modular data availability. Any blockchain or rollup can plug into its data layer because it allows developers to focus on execution and innovation instead of extending their data storage.

Another big player is Celestia. Celestia allows many lightweight rollup blockchains to run concurrently, each in their execution environment, so if NFT projects are having trouble due to spikes in DeFi protocols, the neighboring NFT projects won’t be slowed down.

Modular blockchains allow us to all learn together instead of hindering each other.

Modularity's Glue: Interoperability

Clearly, these levels and chains need to work together. Interoperability is a key trait of modular ecosystems: otherwise, you'd just have isolated chains with disjointed liquidity.

The shareability is what makes modular systems great. Just like neighborhoods connected by highways and bridges, users and assets can move seamlessly between them. It will make it much easier to work with apps symbiotically, integrate and develop user-friendly cross-chain experiences.

Concerns and Issues

As with any technology, there are negatives associated with modular blockchains. One risk is the splintering of user bases and liquidity if there is an excess of independent chains. If you have numerous layers, it may be difficult to coordinate security because one weak link may veto the integrity of the whole.

There is also a steep learning curve; everyone, including the user and developer, is still learning about modular systems. This is related to most innovations, if everyone rides the wave of potential, eventually it takes shape, which will, in turn, lead to adoption that feels totally natural.

Active Modular Blockchains

There are limitless possibilities with these applications. Scaling on DeFi platforms is simple and cheap. A gaming environment can facilitate hundreds of microtransactions per second. Businesses can create private modular chains for supply chain monitoring, identity systems and internal payments while on traditional blockchain performance limits.

Not only is speed a factor, but development of real world blockchain environments as well.

Financial and Governance Impacts

Modular blockchains represent a new way to configure governance. With a separate governance model or token for each level of a community, a modular blockchain could vote and make decisions internally.

Decentralization means that the users and developers own the infrastructure rather than a central authority or foundation; therefore, blockchains will become more democratic and self-sustaining.

Future Prospects

In the future, modular blockchains will redefine the meaning of scalability. We are just getting started with Celestial, Avail, and EigenDA. In the years to come, modular ecosystems will emerge and will not be limited in growth, change and linking.

Think of the early internet as a fun and messy time but full of potential. This time we have some architecture that may allow it to scale on a global level.

Conclusion

Modular blockchains reconsider the functionality of the blockchain, rather than just improving upon it. They are addressing the scalability gap by separating computation, consensus, and data into layers that are more specialized and dedicated.

They can add flexibility, innovation, and improved user experience that may bring blockchain to the mainstream. In fact, modular blockchains could be the future of developers who want to build their own chains and users who dislike high gas fees.

 

This article is contributed by an external writer: Razel Jade Hijastro.
 

 

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