Modular blockchains are the new paradigm for network scaling and infrastructure.
The next generation of blockchain will allow for principle separation of concerns, which can be used to increase throughput. This is possible while maintaining trustless and decentralized network. Modular blockchains are able to break the link between computation and verification costs.
Volt Capital performed an in-depth study of modular blockchains earlier in the month. We will only cover the basics since their deep dive is beyond this article’s scope.
1/ Blockchain modularity: a mental model, in-depth analysis of current architectures, the market landscape, and resources to better understand this nascent but category-defining narrative:https://t.co/8yv1oJgYxa pic.twitter.com/PRJMvtU4sD
— Soona (@soona) July 7, 2022
Researchers discovered that Layer 1 blockchain core components can be dissected. Additionally, individual layers are vastly improved by the results. The ultimate goal is a more flexible, decentralized, and composable system.
Blockchains are subject to the scalability dilemma. This means that compromises on security, decentralization, and scalability could provide strong properties for each of the two. It is difficult to attain all three without compromising any one.
Decentralized block validation can be solved using fault proofs. One way to solve decentralized block validation is to split the blockchain nodes into full clients and light nodes. These light clients will then be able to rely on the fault proofs generated for transaction validation by full nodes.
The light clients should assume transactions are valid, even though they do not have to download all of the block. This is possible with optimistic rollups. This can also be done using an algebra primitive called erasure code.
Erasure coding allows data availability sampling. This allows light clients access the data to verify it without downloading the block.
Decentralized block validation can also be achieved with validity proofs or zero-knowledge rollups. This is achieved by removing transaction data that could be used for state transitions.
Security concerns have prompted some resistance. Researchers also noted that there are additional trust concerns due to fragmented settlements and the lack of data availability layers.
Blockchains are developing in the same way as web infrastructure. Data storage has changed from central server storage to distributed cloud storage. “The decentralized web is evolving from monolithic blockchains and siloed consensus layers to modular, application-specific chains with shared consensus layers,” the researchers stated.
Avalanche, Polygon and Polygon already use application-specific chains. Altcoin Buzz reviewed them earlier this week and called them subnets/supernets.