This year, can modular public chains become a new trend in public chains? What are the leading projects?

Original Title: "New Trends in Public Chains in 2022: The 'New Route for Scalability' You Need to Know ------ Modularization"

Original Author: Baihua Blockchain

Recently, many of you might have noticed a new term: modular public chains. Simply put, it breaks down what was originally done in one layer into two or even three layers, after all, in one layer, the impossible triangle acts like a tightening spell, restricting every public chain that wants to scale.

Of course, concepts like L1 and L2 are not unfamiliar to many, but modular public chains are more like the TCP/IP protocol of the traditional internet, with a more refined layering.

In the current mainstream consensus, a modular public chain should have the following three layers:

1. Execution Layer - Execution Layer
2. Settlement Layer - Settlement Layer
3. Data Availability Layer - Data Availability Layer

01 Execution Layer - Execution Layer

This layer is user-facing, on the ETH side, the execution layer consists of various Rollups, such as Arbitrum, Optimism, and in the future, ZK-rollups like Starkware and Zk-sync will also be on this layer. The purpose of the execution layer is to quickly process and package transactions.

If you, like me, often switch between different chains, you might have felt that most of the time, Arbitrum is faster than so-called high-speed chains like Solana, Fantom, and Avax. Sometimes, when you click Swap, the transaction completes within a second, while other high-speed chains take at least a few seconds.

Why is that?

Because no matter how fast a chain is, it still requires a large number of nodes to reach consensus quickly. Just like BSC, it also needs 21 nodes to reach consensus before confirmation, which takes a few seconds. However, Rollup does not need that; a high-performance server can handle it as a Sequencer, making it fast like a single Web2 server!

What?! Is this still blockchain???

If you haven't understood why Rollup can be handled by a single server, it means you haven't grasped the concept of Rollup…

Of course, in the future, there won't be just one Sequencer for each Rollup, but that's not important. What matters is that whether there is one Sequencer or multiple Sequencers, the impact on performance and security is minimal.

Because even if the Sequencer acts maliciously, your assets are still safe; you can still initiate a challenge, after all, security is the responsibility of the Settlement Layer.

02 Settlement Layer - Settlement Layer

The dream of Ethereum as a world computer is likely shattered, but the world settlement layer really has the potential to make it happen. As an L1, ETH is undoubtedly the best settlement layer under the modular public chain scalability approach. The reason is simple: the most important thing about the settlement layer is two words - security!

In this world, apart from BTC, who dares to say their chain is more secure than ETH?

This is also why Rollup can currently run on a high-performance server without sacrificing decentralization and security - the scalability of the impossible triangle is maximized in L2, leaving security and decentralization entirely to L1.

Of course, ETH also has some minor issues as a settlement layer, which is that there are too many DAPPs running on ETH…

In other words, these DAPPs are using ETH L1 as the execution layer, while the transactions submitted by Rollup treat ETH L1 as the settlement layer. From the perspective of nodes, these are just transaction information, which leads to competition for ETH L1 resources between DAPP computation requests and Rollup settlement requests.

Usually, this might not be very noticeable; it's simply because the Gas fees are relatively high, causing transactions on Arb, OP, etc., to be quite expensive compared to other Alt L1s, although they are much cheaper than ETH L1. But when a hot NFT launches on ETH L1, or a sudden crash leads to liquidations of some DeFi protocols, when everyone starts a Gas War, all Rollups cannot escape, and both fees and speed will be affected.

In the coming years, as more and more DAPPs turn to L2 and ETH L1 is increasingly used for execution and settlement layer needs, ETH can rightfully be called - the world settlement layer!

Of course, don't get me wrong, the Rollup technology is not exclusive to ETH; you can also apply Rollup on Solana and Near, but these high-speed chains are currently still focused on L1 and have no plans for L2 for now. Chains like Polkadot, which are "natively modular public chains," have their relay chain inherently serving as the settlement layer for all parallel chains.

03 Data Availability Layer - Data Availability Layer

This is a trend that has just become popular this year, currently led by Cosmos's Celestia and Polygon's Avail.

What is this layer for? It serves as a "storage layer" for storing Rollup data. As mentioned earlier, Rollup focuses on execution and speed, leaving security to the L1 settlement layer, but the problem arises: if the nodes of Rollup act maliciously, what evidence does the challenger have to contest? Naturally, it is the original transaction data!

In other words, to ensure that the original transaction data is securely stored on-chain is to guarantee that challengers can correctly contest, which in turn ensures the security of Rollup.

On ETH, this compressed original data is stored on L1, meaning that ETH L1 serves both as the settlement and data availability.

However, it is well known that storing data on ETH is expensive, which is why L2 transaction fees, although much cheaper than ETH L1, are still relatively high compared to other Alt L1s, not to mention competing for resources with existing ETH L1 DAPPs.

Thus, the idea of extracting the DA (Data Availability Layer) layer separately and creating a chain to serve various Rollups has been proposed. This chain would not run DAPPs or smart contracts, but simply serve as a DA layer, ensuring that the original transaction data on Rollup is correct and available for legitimate challenges in fraud proofs or to help users recover funds during Zk-Rollup escape events.

Regarding this issue, there is currently much debate on Twitter, as it is a brand new concept that has not yet been truly deployed. Vitalik believes that abstracting DA separately may pose security risks, while ETH L1 would not have this problem at all.

However, as Rollups continue to increase and fees on ETH remain high, having a dedicated low-cost, relatively secure DA chain that can serve various Rollups, and even cross-chain services for Rollups on other chains, seems like a very reasonable choice for modularization.

Currently, the preferred options for DA layers are Celestia based on Cosmos, Polygon's Avail, and the future data sharding of ETH2.0.

04 Summary

Overall, in 2022, we have a very clear and defined route for blockchain scalability, namely modular thinking.

Through high-speed Rollup executing transactions, a secure settlement layer handling settlements, and a low-cost, high-capacity data availability layer ensuring safety, we have reason to believe that the blueprint for the infrastructure of the Web3.0 era is gradually unfolding before us. The only thing left is to BUILD!