A Quick Overview of the Design Advantages of Modular Blockchain Celestia and the Market Value Potential of TIA Token

Original author: Poopman

Original compilation: BlockBeats

Editor's Note: Crypto researcher Poopman delves into the core mechanisms and future potential of Celestia in this article. The article primarily focuses on Celestia as a modular data availability (DA) layer, detailing its working principles, data availability sampling (DAS), namespace Merkle trees (NMT), and other key technologies, emphasizing Celestia's advantages in addressing the rising processing costs associated with increased on-chain activity in monolithic blockchains. Additionally, the article discusses Celestia's future development directions, including the quantum gravity bridge and Cevmos, explaining why Poopman believes that TIA, as its native token, has a reasonable market cap target of over $2 billion.

In monolithic blockchains, processing costs increase with the rise in on-chain activity. Celestia addresses scalability issues through a modular data availability (DA) network, maintaining relatively stable validation costs.

In this article, I will discuss the following 7 aspects:

1. What exactly is Celestia?

2. Monolithic vs. Modular

3. What is Data Availability (DA)?

4. Data Availability Sampling (DAS)

5. Namespace Merkle Trees (NMT)

6. The three main design principles of Celestia

7. The utility of TIA and the future of Celestia

What exactly is Celestia?

Celestia is a modular DA layer that allows applications/Rollups to deploy on top of Celestia's ready-made DA and consensus layers. Therefore, applications can focus on execution itself while leaving DA and consensus tasks to Celestia. To better understand, it is necessary to grasp the basics of data availability (DA), monolithic, and modular networks.

Monolithic vs. Modular

Monolithic: In blockchain networks like Solana or Avalanche, a full node must perform all four responsibilities of the blockchain, including execution, settlement, data availability (DA), and consensus.

However, as network traffic increases, the burden on the network also rises, making transaction fees more expensive.

To address this issue, modular blockchains break the network down into several independent modules while providing flexibility for upgrading and independently handling tasks for different modules. For example, Celestia only handles DA and consensus layers, while Dapps are responsible for execution and other tasks.

What is Data Availability (DA)?

Data Availability (DA) refers to the accessibility of transaction data for nodes in the network to view or download. DA also needs to ensure that transaction data is not subject to malicious attacks; this can occur if a block proposer only publishes the block header without releasing the transaction data within the block.

To prevent malicious transactions, blockchains typically require full nodes to download, verify, and store all data from the network. However, this design presents three challenges:

1. Significantly reduced throughput

2. Sacrificed efficiency

3. Increased barriers to running full nodes

To address these issues, some off-chain methods can "lighten the load" on the network by storing transaction data elsewhere. Common off-chain solutions include:

1. Data Availability Committees (DAC);

2. Data Availability Networks (DAN).

Among all DANs, Celestia is the most popular choice. Celestia is a modular DA layer composed of two important functions:

1. Data Availability Sampling (DAS);

2. Namespace Merkle Trees (NMT).

Data Availability Sampling (DAS)

First, light clients only download block headers (similar to a summary of block data). To prevent light clients from accepting malicious transactions, DAS allows light clients to perform multiple rounds of random sampling on different parts of the block data.

The more rounds of sampling conducted, the higher the confidence in data availability. Once a 99% confidence level is reached, the data is considered "valid" and available. To make DAS possible in Celestia, they adopted a 2D Reed-Solomon coding scheme.

What is the 2D Reed-Solomon coding scheme?

In simple terms, if we imagine all the data of a block as a large puzzle made up of K x K pieces, Celestia uses a 2K x 2K piece and the "Reed-Solomon coding" scheme to rearrange this data into a larger puzzle.

Subsequently, light nodes randomly select several puzzle pieces and query full nodes for the corresponding data. If full nodes can consistently provide answers, the likelihood of the data being "valid" increases.

Moreover, as long as light clients on Celestia sample enough data, full nodes can reconstruct the complete block data. In other words, the more light clients Celestia has, the more transactions they can handle, and the larger the blocks they can process.

Namespace Merkle Trees (NMT)

Meanwhile, data in Celestia is divided into different parts (i.e., namespaces). Each namespace corresponds to a specific application using the DA layer. This helps applications download their own data while ignoring data from other applications.

Next, to organize and verify data, Celestia uses NMT to sort data by namespace identifiers. Now, each node in the Merkle tree has a series of namespaces that belong specifically to that node, allowing Celestia to provide proof of data integrity.

The three main design principles of Celestia

Combining DAS and NMT, the main design principles of Celestia can be summarized as follows:

1. Celestia only provides data availability and consensus layer services, without handling settlement and execution

Execution is handled by applications. This gives them higher scalability compared to monolithic blockchains, as they delegate DA to Celestia and utilize DAS to enhance scalability.

2. Security increases with the number of light clients

The more light clients there are in Celestia, the greater the likelihood that full nodes can reconstruct the original block data. At the same time, more light clients equal larger blocks without sacrificing decentralization.

Thus, the growth of nodes on Celestia is an important performance metric for Celestia.

3. Interoperability

Finally, Cosmos allows Celestia to connect to networks that support IBC, enabling interoperability between all chains built on Celestia.

Future Outlook for Celestia

Celestia has two exciting development directions:

1. Quantum Gravity Bridge

2. Cevmos

Quantum Gravity Bridge: QGB will enable Celestia to connect with any EVM-compatible chain beyond the universe, including ETH and AVAX, bringing more liquidity.

Cevmos: Cevmos is a Cosmos SDK chain specifically designed for Rollup settlement. The functionality of this EVM-integrated chain allows ETH Rollups to upload their data to Cevmos and then pass it to Celestia, improving the connection between the EVM and Celestia ecosystems.

TIA

TIA is the native token of Celestia:

Fully diluted valuation (FDV): $6 billion

Circulating supply: $846 million (4.1%)

The utility of the token includes:

1. Rollup/developers pay TIA for data publishing, with fees determined by fixed and variable costs

2. Using TIA as the native GAS token for Rollups

3. Governance

4. Staking

Investing in TIA means users are betting on the future where more Rollups and applications will use Celestia as their DA and consensus layer, all of which require TIA to publish data.

Optimistically, as the demand for DA layers grows, it will attract more stakers to stake TIA for data processing, forming a stronger and more secure network.

With the development of the quantum gravity bridge and Cevmos, I believe TIA is a long-term hold (HODL) asset, and I estimate that a market cap target of over $2 billion seems reasonable.