Before understanding Modular Blockchains, it is important for us to understand how blockchains (monolithic blockchains) work and its limitations. As the name ‘Blockchain’ suggests it is chain or series of blocks. Each block contains the block header and the transaction data linked to that header. "Full nodes" analyse and compute the entire block data to validate blocks to make sure transactions are valid.

A blockchain functions in 4 layers, these are:

1) Data Availability

On this layer, the information needed to confirm the validity of a state change should be presented. In the event of assaults where rogue block producers withhold transaction data, this should be simple to verify.

2) Execution

Here is where transactions and state changes are first processed. Through this layer, users often communicate with the blockchain by executing smart contracts, signing transactions, and transferring assets.

3) Consensus

Blockchains' consensus layer establishes order and finality through a network of complete nodes that download and process block contents and agree on the legitimacy of state transitions.

4) Settlement

The verification of rollup execution and dispute resolution occur at the settlement layer. This layer is an optional component of the modular stack that does not exist in monolithic chains.

In a monolithic blockchain all these functionalities are carried on a single layer, i.e. the base layer. Due to this there are several drawbacks in the monolithic chain such as delays due to re-executions of transactions, lower efficiency due to bandwidth and storage limitations, etc. The solution to most of these problems is in the Modular Blockchain.

What is a Modular Blockchain?

The system is divided into a number of separately designed pieces or additives by a modular chain. The execution layer in a modular blockchain structure is independent of the bottom consensus and data availability levels, allowing nodes to execute transactions on their own instead of performing them all to validate their validity in a single block or space. The most well-known instances of modular blockchain systems are the Cosmos, Fuel, and Celestia blockchains.

In modular chains, three core layers work independently to make its output easier and quicker:

1) Consensus Layer

The consensus layer lays forth the rules that nodes must follow in order to validate blocks and maintain a canonical blockchain state. This guarantees genuine security and decentralisation by ensuring that there is agreement among all of the nodes in the consensus network regarding the installed blocks and transactions.

2) Data Availability Layer

The data availability layer manages the on-chain and stale-chain blockchain records, making sure that records are available and public for everybody to look at.

3) Execution Layer

All transactions are carried out by the execution layer in order to produce high-quality records that are then stored on the blockchain network.

Benefits of a Modular Blockchain

1) Scalability

A monolithic blockchain enables a user to access all of the anticipated blockchain features in only one layer, known as "Layer-1." Because it seeks to handle all operations at once under a single layer, this makes blockchain generation difficult to do. A modular blockchain increases scalability and prevents potential network interruption by sharing the functions among several layers.

2) Blockchain Creation

Miners must contend with a number of security and decentralization-related challenges to introduce a brand-new blockchain, which may also prohibit some from optimising the out-of-network hash rate. Regardless of the blockchain architecture, miners can take advantage of the layout and build new blockchains more quickly if they focus less on specific tasks like consensus.

3) Flexibility

The modular blockchain layout is substantially more adaptable than the monolithic blockchain. It is made to give miners access to functionalities that aren't available in the monolithic blockchain. A few basic traits are shared by all cryptocurrency blockchains, such as guaranteeing data availability, security, consensus, and transaction execution. Blockchains often handle this type of operation at the same layer. Blockchains that are modular ensure greater efficiency by delegating work to other layers.

Modular blockchains also have certain drawbacks including security. Even after such vulnerabilities modular blockchains are the future of blockchains. Since blockchain developers now recognise the requirement for a seamless and efficient transaction structure, monolithic chains like Ethereum and Solana are already moving toward a modular design.

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Author:

Shivam (Twitter || LinkedIn), technical writer BuildBear.

About BuildBear:

BuildBear is a platform for testing dApps at scale. It provides users with their own private testnet to test their smart contracts and dApps, which can be forked from any EVM chain. It also provides a Faucet, Explorer, and RPC for testing purposes.

BuildBear aims to be building an ecosystem for testing dApps at scale for the entire team

Modular Blockchains and how are they an upgrade over regular blockchains