Modular Blockchain Meaning

Feb 16, 2024 | Updated Feb 16, 2024

A modular blockchain is a blockchain that specializes in performing a few responsibilities or functions and delegating the rest to other layers.

What Is a Modular Blockchain?

Monolithic blockchains employ a unified structure model, meaning that all activities and tasks are performed on a single layer. However, as the amount of transactions or activities in the network grows, the cost associated with verification resources proportionally increases. Instead of trying to do everything on the base layer, modular blockchain follows the principles of separation of concern to scale throughput while maintaining security and decentralization.

A modular chain defines a blockchain network that focuses on a specific function(s). Its essence lies in dividing the blockchain’s core functions into smaller, distinct modules. This modular approach optimizes resource utilization and reduces network congestion by offloading other tasks to separate chains. It also allows autonomous development, maintenance, and upgrading of individual modules, promoting greater efficiency, scalability, and overall network performance.

Such blockchains can specialize as:

Execution: Blockchains specializing in execution process transactions and state changes. They also facilitate interactions between the blockchain and its users, such as signing transactions, exchanging assets, and creating smart contracts.
Settlement: Settlement-specific blockchains resolve disputes and verify the execution of transactions. The settlement layer is non-existent in monolithic blockchains and optional in a modular stack.
Consensus: The consensus layer is responsible for ordering transactions and transaction finality. It achieves this through the full nodes that confirm the authenticity or validity of a transaction.
Data availability: The data availability layer holds the transactional data necessary to verify state changes. In simpler terms, it ensures that historical data is available whenever needed.

Most popular blockchains were designed to handle all these functions on the base layer, making them monolithic. Modular stacks, on the contrary, distribute the core functions across several specialized chains.

Modular Blockchain Examples

Some common modular chains include Celestia and Polygon Avail, which specialize in data availability and consensus by offloading execution to rollups (modular chains focusing on execution). Other solutions include StarkEx, zkPorter, Optimism, Arbitrum, and zkSync.