What is Celestia (TIA)?

By Lipsa Das

Many will be familiar with the blockchain trilemma, as first coined by Ethereum co-founder Vitalik Buterin. It’s the idea that a blockchain strives for three primary features – decentralization, scalability, and security. The problem is that a blockchain’s success in addressing one of these features will inherently impact the others. 

This stems from the monolithic structure of traditional blockchains. To explain, monolithic blockchains such as Bitcoin and Ethereum, handle execution, settlement, consensus, and data availability on the same blockchain.

There’s where the problem lies: as the amount of blockchain data increases, data availability becomes a major roadblock to the network’s scalability. To increase their throughput, they must compromise on either decentralization or security.

That’s where modular blockchains come in. Modular blockchains focus on only one task that a monolithic blockchain would handle, leaving the rest of the tasks for other chains. For example, Blockchain rollups are a prime example of modular blockchains: they only specialize in executing transactions and let their base chain handle the rest. 

Celestia is another type of modular blockchain. It focuses on carrying out consensus and data availability. But how does Celestia work and could it help solve the blockchain scalability problem?

Before we dive into Celestia and what it is, let’s first look at the reason it exists.

What Is Data Availability?

To understand the problem that it is solving, you need to know how the need for data availability affects scalability.

To explain, data availability refers to processes that ensure that all of a blockchain’s data is recorded on-chain and available to all participants. This allows anyone to audit the chain and view transaction data, which is critical for the security and integrity of a network.

So what does data availability have to do with scaling a blockchain? Well, for a monolithic blockchain like Ethereum, data availability is guaranteed by each full node in the network maintaining a copy of the whole blockchain. Every full node must store the data of every single transaction in the history of the network. While this is very secure, it limits the network’s speed. There’s too big a burden on each node.

The only way to increase transaction speed in a monolithic blockchain is to raise the hardware requirements for full nodes. The problem is that this leads to fewer full nodes, which causes both decentralization and security to suffer.

Celestia aims to provide a solution to this by essentially offloading the work of data availability, similarly to how rollups offload the work of transactions. But before we dive into the technical specifics, let’s dive into what Celestia is.

What is Celestia?

Celestia is the world’s first data availability blockchain network. By using a modular blockchain structure and separating data availability from transaction execution, it addresses the scalability challenges associated with traditional blockchains.

In other words, Celestia doesn’t multitask. The blockchain is not responsible for executing and settling transactions, nor is it responsible for making sure the transactions are valid. It has only one job – ensuring that transaction data is available for anyone to access and verify. So, rollups and layer 2 blockchains, which execute transactions, can connect to Celestia and publish their transaction data. 

The Origin of Celestia

Celestia is based on Mustafa Al-Bassam’s 2019 whitepaper, LazyLedger. The concept behind Lazy Ledger is that the ledger abstains from computation or execution tasks and just acts as a data availability layer.

Al-Bassam subsequently decided to build a team to develop a crypto project based on his ideas and onboarded Ismail Khoffi and John Adler as co-founders. Ismail Khoffi was a core developer for the Cosmos ecosystem and John Adler worked with optimistic rollup technology. They rebranded the project as ‘Celestia’ in 2021, eventually launching the Celestia mainnet on October 31, 2023.

Celestia has enjoyed the backing of some high-profile names in crypto such as Bain Capital Crypto, Coinbase Ventures, and Jump Crypto. The excitement around Celestia was further evidenced by its initial post-launch success. Indeed, after launching its mainnet on October 31, 2023, its native token, ‘TIA’, surged in price by 500% by mid-December. 

In December 2023, Polygon Labs announced the integration of Celestia with the Polygon Chain Development Kit (CDK). The integration now enables Polygon developers to use Celestia as a plug-in component. Celestia also teamed up with Optimism Labs to enable rollups built using the Optimism stack to use Celestia or any other blockchain as a data availability layer. 

In February 2024, Celestia became the first external project to contribute to the Arbitrum Orbit protocol layer. Celestia’s integration now allows developers to use Celestia alongside Arbitrum AnyTrust as a data availability layer for Arbitrum rollups.

What is TIA coin?

Celestia debuted its native token, TIA, at a price of around $2 in October 2023, along with the mainnet launch.

TIA coin primarily serves three use cases. Celestia is a proof-of-stake (PoS) network, which means TIA plays a key role in keeping the network secure. TIA holders can stake the token to participate in the consensus mechanism and governance of Celestia. Developers can also use TIA to pay for using Celestia’s data availability services. Additionally, developers deploying Celestia-based rollups can use TIA as a gas fee token.

TIA has a total supply of one billion tokens, of which around 170 million are currently in circulation. Around 6% of the total supply (about 60 million TIA) was airdropped to developers, researchers, and key community participants. The token is designed to be deflationary, meaning that its overall supply will decrease over time.

How Does Celestia Work?

So now you know what the Celestia network is all about, let’s dive into its tech. As you know, it’s a modular blockchain. To operate, it relies on a few key pieces:

Data Availability Proofs

As previously mentioned, traditional blockchains require their nodes to download all network data to validate transactions. The nodes with this ability are known as full nodes and are resource-intensive.

There are other kinds of nodes, however, called light nodes. Light nodes can download block headers but can’t download block data or validate transactions. On one hand, this makes them much easier to run than full nodes, which makes for a more scalable network. On the other hand, they are much less secure than full nodes because they can’t access block data to verify transactions. 

Celestia’s answer to this conundrum is data availability proofs, a way for light nodes to verify that block data exists on the blockchain without having to download all that data themselves. 

There are two processes involved in providing data availability proofs: erasure coding and data availability sampling.

Erasure Coding 

This process involves taking a block and expanding its data by adding erasure code. For example, we could take a block containing 1MB of data, and add another 1MB of erasure code turning it into a 2MB block. 

Erasure coding makes it possible to recover an entire block as long as 50% of the data is still there.

Let’s say a malicious block producer attempts to sneak some fraudulent transactions onto the blockchain by omitting block data. Due to erasure coding, a bad actor now must delete more than 50% of the block data to try and sneak their transaction in. The next step of data availability proofing is how light nodes carry out this function.

Data Availability Sampling

Data availability sampling is when light nodes download small random data samples from erasure-coded blocks. If a node’s download attempt fails, it assumes that block data has been omitted and rejects the block. After just seven rounds of random sampling, light nodes can be 99% confident that no block data has been omitted.

These processes make Celestia highly scalable.

Pros of Celestia

Accessibility

Celestia focuses on transaction data availability, separating execution and settlement layers. Developers can experiment by deploying customized blockchains and applications with their own terms of execution and settlement. 

Moreover, Celestia makes deploying blockchains and rollups accessible by reducing the associated overhead. Storing and processing large amounts of data can be resource-intensive and costly. Thanks to data availability sampling, fewer resources are required to run a node. 

Interoperability

Celestia is interoperable with any layer 2 blockchain or rollup, irrespective of which mainnet it uses for settlement. It’s also compatible with many developer tools, from the Polygon CDK to the Optimism Stack. Regardless of whether a rollup uses Ethereum, Optimism, or Arbitrum for settlement, it can publish its transaction on Celestia.

When layer 2 blockchains and rollups publish their transaction data on Celestia, they must submit data availability proofs. These cryptographic proofs demonstrate that a particular data set exists and is available on the blockchain, without revealing the data itself. All layer 2 blockchains and rollups connected to Celestia can verify each other’s data availability proofs. This gives these chains an indirect avenue of communication.  

Cons of Celestia

Not Battle Tested

Celestia is still in its nascent stages. As per the official documentation, Celestia is an “ambitious new technology”. It also warns users to expect “occasional instability or reduced performance.” 

Potential technical glitches aside, it is still too early to ascertain the project’s long-term viability and potential for adoption. While Celestia’s modular blockchain is a unique solution to blockchain scalability, some monolithic blockchains like Solana are already efficient and cheap. In other words, Celestia already has strong competition.

The Future of Celestia Network

Celestia has ambitious goals. Firstly it wants to increase its block size to 1GB, up from 2MB at launch. It also wishes to achieve data throughput to support a million rollups and have a billion light nodes. It also plans to create the ability to run these light nodes on smartphones.

Despite the competition, Celestia has already carved out an important place in the crypto market. Countless Rollups-as-a-service (RaaS) projects have already integrated Celestia into their ecosystems. The most popular of these projects include AltLayer, Caldera, Vistara, Gateway, and Snapchain.

And of course, to access the wider Celestia ecosystem, you’ll need some TIA. Luckily, it’s easy to manage your TIA with Ledger’s Celestia wallet. If you’re experimenting with layer 2 blockchains and rollups, Ledger supports countless chains and allows you to generate multiple accounts. And you can manage them all with a single device.

Prepare yourself for a multichain future with a Ledger device!