Rethinking “modular blockchain” and Rollup

I’ve been ashamed for spreading the “modular blockchain” meme for the last year, and of course there are some more influential players like Bankless, Celestia, The Daily Gwei, etc. who have brought the term to the spotlight . This year, I haven’t really used the term “modular blockchain”.

It is very clear that modularity is definitely orders of magnitude more efficient than monolithic chains. The problem with the multiple occurrence of monomer chains when tested with minimal stress makes this more clear than ever. Modular execution layers also have a lot of work to do, but they have a significant head start over monolithic execution layers.

My fault is not technically, but socioeconomically. Ali Atiia and Justin Drake‌ have emphasized this before. Consider the gold standard, an Ethereum rollup:

  1. Execution layer: rollup
  2. Settlement Layer: Ethereum
  3. Data Layer: Ethereum

By the way, recently I’ve seen someone call an execution layer that processes data elsewhere a “rollup”, it’s not a rollup, a rollup must be settled at the same settlement layer and DA layer . And the validation execution layer that publishes data on different layers is called validium, with additional assumptions. You can tag them with zkPorter, celestium, etc., but please don’t call them rollups. The fraud proof situation is more complicated, so I’ll skip it for now. The point is, if data availability is not agreed upon on the same protocol that validates state transitions, then it is not a rollup.

A properly implemented rollup means you don’t have to trust it at all, and you can withdraw your funds from the rollup to the Ethereum mainnet at any time. But it’s not completely foolproof, in fact, you might have rollups with different security models and standards, but I definitely want all major rollups to provide some kind of explicit exit mechanism that is ordered with trusted rollups are isolated from each other.

Different rollups have different security assumptions, you can have an immutable or enshrined (meaning divine, perfect) rollup that provides the same security as Ethereum (assuming no vulnerabilities). To upgrade this rollup, you must use the EIP process, or deploy a new instance entirely. And many rollups will opt for upgradability, which will be driven by token voting. This is an economic assumption similar to the proof-of-stake L1 upgrade, although rollups can try new upgrade mechanisms without tokens at all. There are other interesting risks that I won’t discuss here (see Justin and Ali’s comments above). Personally, I’m not worried about some of these risks, I believe a well-implemented rollup can achieve 99% of the divine rollup, but there will definitely be some rollups with unimportant assumptions.

For EIP-4844 and later danksharding, we added a fourth layer: the expired history layer. It’s a pretty simple 1-of-N trust assumption, but I’m going to add it to the mix anyway. Other data layers may choose not to expire history. So, now you have:

  1. Execution layer: rollup
  2. Settlement Layer: Ethereum
  3. Data Layer: Ethereum
  4. History layer: rollup and others

The ideal solution should be:

  1. Execution layer: Ethereum
  2. Settlement Layer: Ethereum
  3. Data Layer: Ethereum
  4. History Layer: Ethereum

Of course, it doesn’t have to be Ethereum, it could be Bitcoin, but the idea is anything that provides strong security. Now, don’t make the mistake of thinking that this is a monolithic solution, which will be modular, but all composed of divine (perfect) protocols:

  1. Execution layer: Divine rollups (e.g. zkEVM, or optimistic enshrined rollups after stateless) (Note: Before Justin Drake coined the term “divine rollup”, I called it “the most concise rollup” in previous articles)
  2. Settlement Layer: Divine Settlement Layer (eg EL)
  3. Data layer: sacred data layer (eg danksharding)
  4. History Layer: Sacred History Layer (eg Sacred Portal Network?)

This leaves you with only the protocol with the fewest assumptions and combines the most security into a single protocol. As far as I know, Tezos is currently the only project built this way. And Ethereum is likely to have its own sacred rollup in the next few years, and of course, there will be external rollup options in addition to that. Thus, you will achieve the best of both worlds: maximum socioeconomic security + experimentation and variety, which in turn will affect the progress of the Divine Layer.

So, as mentioned above, why not have a lot of “modular L1s”? What you want to do is aggregate rather than segment security and liquidity. Having a lot of “modular L1” would be a very fragmented and insecure mess. However, I think having 2-3 modular L1s would be an ideal outcome. You have at least one modular L1 that can be aggregated to national maximum security, and then there may be a long tail of niche modular L1s. In fact, over time, there will be consolidation in most industries, leaving 2-3 major players in the end. The pressure will be even greater for proof-of-stake blockchains due to the security accumulation mentioned above.

I’ve been very interested in volitions in the past, but it quickly ran into a bunch of hypothetical problems:

  1. Execution layer: Volition
  2. Settlement Layer: Ethereum
  3. Data Layer: Ethereum, zkPorter, Celestia, Polygon Avail, adamantium, etc.
  4. History layer: the respective solutions of the data layer, whether to choose volition or other

As you can see, this is obviously not as elegant as a modular L1, although if you’re in rollup mode it’s just as good as rollup. There are a lot of nuances here, but to put it simply, you now need to trust another entity – the DA layer. The most interesting solution I’m still interested in is adamantium. Here, by custodying your own data, or choosing your data provider, you completely forgo trusting a different and weaker honest-majority consensus. An honest minority consensus on the validium DA layer has not been investigated, but I believe there is also a lot of potential. (One could argue that DACs fall into this category, but the problem is that DACs are permissioned. Also, note that honest-minority DAs do not apply to rollups – only validiums that validate state transitions on an honest-majority settlement layer.)

In fact, we are likely to quickly enter a world where the schemes we see coexist with rollups, volitions, validiums, etc. With EIP-4844 and danksharding, Ethereum will have enough data capacity, but if the demand for the blockchain grows exponentially, we will see additional data layers handle the excess demand. Despite the inherent insecurity of the monolithic cross-chain bridge and serious inefficiencies at the monolithic execution layer, we will also see some monolithic chains persist through the network effects they are building now, as well as strong marketing.

However, what I absolutely believe is that even the most stubborn monolithic projects will eventually adopt modular components and you simply can’t resist a 1,000x efficiency gain! Unless, of course, you don’t need scale or innovation.

In an ideal world, we can form a clear order of merits and demerits of the execution layer through security:

Holy rollups > rollups >> validiums > AnyTrust >> Monomer sidechains & alt-L1

Posted by:CoinYuppie,Reprinted with attribution to:
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