Modular blockchain refers to a type of blockchain in which at least one component, such as the execution layer, settlement layer, consensus layer, or data availability layer, is completely outsourced to an external chain.

Providing services to millions or billions of users on a single chain is too complex and has limited scalability, which led to the development of sharding and Layer2 solutions, eventually evolving into modular blockchain. The initial implementation of modularity was rollups, and the concept has since expanded into modular blockchain.

Modular blockchain can significantly reduce the cost of running nodes.

Advantages of modular blockchain:

Sovereignty: Despite using other layers, new modular blockchains can have sovereignty like Layer 1. This allows the blockchain to respond to hacker attacks and push upgrades without any underlying permission.

Convenient for launching new blockchains: Since modular blockchains do not need to handle all functions, new blockchains can simply use existing modular blockchains for the components they want to unload. Rollups "SDKs" like Optimint combined with Cosmos SDK will help facilitate the creation of new blockchains without requiring a bootstrapping of security validator sets.

Improved scalability: Modularization enables scaling without sacrificing security or decentralization.

Below are 12 modular blockchain projects for those interested to follow (this article represents personal opinions and is not investment advice):

1）zkPorter

In zkSync 2.0, the L2 state will be split into two aspects: zkRollup with on-chain data availability and zkPorter with off-chain data availability. The off-chain data availability of zkPorter will be maintained by Guardians (zkSync token holders) and includes a penalty mechanism. Relying on Guardians to maintain the data availability is a more centralized approach.

Official website: zksync.io

Official Twitter: twitter.com/zksync

2）StarkEx DAC

StarkEx DAC is the off-chain data availability solution of StarkEx. The data availability is maintained by the Data Availability Committee (DAC) and the maintenance of DAC is more centralized than that of zkPorter. StarkEx also has the Volition solution, where DA can be placed on-chain or off-chain optionally.

Starkex is an "execution" engine developed for application-specific chains. It can use Ethereum as data accessibility or use the committee to use data accessibility, providing Starkex with great flexibility.

Official website: starkware.co/starkex/

Official Twitter: twitter.com/StarkWareLtd/

3）Arbitrum Anytrust

Arbitrum's Nova chain is based on the Anytrust technology, which is Arbitrum's off-chain data availability solution. The off-chain DA in Anytrust is also maintained by a data availability committee (DAC), making it relatively centralized.

Official website: nova.arbitrum.io

Official Twitter: twitter.com/arbitrum

4）Celestia

Celestia, formerly known as LazyLedger, is a unique Layer1 blockchain network that positions itself as the "first modular blockchain network." Specifically, Celestia modularizes the technology stack of a blockchain network, decoupling the consensus layer and execution layer. It serves only to sort transactional transactions and verify data availability as a consensus layer, while specific transaction execution is distributed to other execution layer networks linked to Celestia (such as Celo).

The roadmap shows that Celestia plans to launch a testnet in 2022 and gradually launch an incentive testnet and mainnet in 2023. The development team has confirmed that they will issue a token for PoS staking in the future.

In terms of architecture, Celestia has some similarities to Polkadot's "relay chain + parachain" multi-chain framework. However, the development path of Polkadot's multi-chain structure does not seem to be as expected, so it remains to be seen whether Celestia can achieve its expectations when it goes online.

Celestia uses an off-chain method to implement DA, ensuring data availability through Reed-Solomon erasure coding and a dedicated Namespaced Merkle Trees structure to make DA cheaper and more efficient. Celestia adheres to the Cosmos philosophy of being open, independent, and sovereign, focusing on data availability as a modular public chain, and has implemented consensus (Tendermint) without providing an execution environment.

In October 2022, Celestia completed a $55 million funding round, led by Bain Capital Crypto and Polychain Capital, with participation from Placeholder, Galaxy, Delphi Digital, Blockchain Capital, NFX, Protocol Labs, Figment, Maven 11, Spartan Group, FTX Ventures, Jump Crypto, A&T Capital, CFG Labs, and angel investors Balaji Srinivasan, Eric Wall, and Jutta Steiner.

Official website: celestia.org

Official Twitter: twitter.com/CelestiaOrg

5）Cevmos

Cevmos is a rollup stack developed in collaboration between Cosmos EVM application chain Evmos and Celestia, aiming to be the best settlement layer for EVM rollups built on Celestia. Cevmos is an abbreviation for Celestia, Evmos, and Cosmos. Cevmos is an open modular stack for EVM-based applications utilizing Celestia rollups. The Cevmos stack will be optimized for the settlement chain based on Evmos. The settlement chain (to be named) will implement Celestia rollup using Optimint (short for Optimistic Tendermint) as the consensus engine, instead of Tendermint Core used on existing Cosmos chains.

Related article: medium.com/evmos/introducing-cevmos-an-open-scalable-and-modular-stack-for-evm-based-applications-72930ce6b85c

6. Fuel

Fuel is the first Optimistic Rollup deployed on the Ethereum mainnet, mainly used for payment-centric applications. The upcoming Fuel V2 will feature a highly parallelizable minimal execution system based on UTXOs (Unspent Transaction Outputs) and enable smart contract support, with Ethereum-style interoperable Turing-complete smart contracts rather than just simple transfers.

Progress: Fuel is a modular execution layer. In June, it launched a demonstration application called SwaySwap on its developer network, which is an AMM.

Funding: Fuel raised $1.5 million in September 2021, led by CoinFund with participation from Fenbushi Capital and Origin Capital.

Features: Fuel is Ethereum's Optimistic Rollup, originally designed to scale Ethereum through technologies such as UTXOs. Version 1.0 is mainly used for payment applications. However, after the mainnet launch, due to limited use cases and lack of smart contract support, the interaction volume was relatively low. Therefore, Fuel 2.0 began to transform into a modular execution layer. One of the project's co-founders, John Adler, is also a co-founder of Celestia.

Fuel's official focus is on three technical implementations:

1. Parallel execution of transactions through UTXOs to improve performance;

2. Launching FuelVM (Fuel Virtual Machine) to optimize traditional virtual machines and address EVM compatibility issues;

3. Introducing the Sway programming language and Forc toolchain for developers.

Fuel Labs has more than 60 engineers and provides the Ethereum ecosystem with a blockchain with maximum security and highest flexible throughput. Its founders are Nick Alexander, Samuel Borin, and John Adler, with John Adler also being a co-founder of the Celestia Labs project. Emily Herbert is a computer scientist and Sway language expert at Fuel Labs.

In September 2022, Fuel completed an $80 million financing round, led by Blockchain Capital and Stratos Technologies, with participation from Alameda Research, CoinFund, Bain Capital Crypto, TRGC, Maven 11 Capital, Blockwall, Spartan, Dialectic, and ZMT.

Official website: www.fuel.network

Official Twitter: twitter.com/fuellabs_

7. Dymension

Dymension is a sovereign Rollup built on Cosmos, aiming to simplify RollApp (Rollup applications with custom focus) development through Dymension Chain (settlement layer), RDK (RollApp Development Kit), and IRC (Rollup Inter-Chain Communication).

Official website: dymension.xyz

Official Twitter: twitter.com/dymensionXYZ

8. Eclipse

Eclipse is also a sovereign Rollup based on the Cosmos ecosystem, allowing the construction of customizable modular Rollup settlement layers using the Solana VM on any chain.

In September 2022, Eclipse completed a $15 million Pre-Seed and Seed funding round, with a Seed round of $9 million led by Tribe Capital and Tabiya, with participation from Infinity Ventures Crypto, Soma Capital, Struck Capital, and CoinList. The earlier Pre-Seed round of $6 million was led by Polychain Capital, with participation from Tribe Capital, Tabiya, Galileo, Polygon Ventures, The House Fund, and Accel.

Official website: www.eclipse.builders

Official Twitter: ttwitter.com/EclipseFND

9. Polygon Avail

Polygon Avail's solution is very similar to Celestia. In fact, Mustafa Al-Bassam, co-founder of Celestia, has suggested that Avail may have copied Celestia. The introduction of Avail is almost a complete copy of Celestia's introduction written in 2019.

Official website: polygon.technology/solutions/polygon-avail/#

Official Twitter: twitter.com/0xPolygon

10）EigenDA

EigenDA is a DA (Delegated Authority) solution proposed by EigenLayer. EigenLayer itself is the restaking layer of Ethereum.

Founder Sreeram Kannan proposed the idea that trust between blockchains and DApps is fragmented, and each one has to pay a high cost to maintain trust within its own ecosystem. For example, Ethereum's beacon chain currently has more than 13 million ETH staked, and to maintain this staking volume, Ethereum now offers around 5% APR to stakers.

EigenLayer deals with restaking of funds, allowing stakers to re-stake funds into middleware, oracle, DApps, etc., in addition to PoS staking, thereby improving capital efficiency and reducing trust costs.

EigenLayer is based on Danksharding and ETH staking. EigenDA is a DA solution proposed by EigenLayer, designed specifically for Optimistic-Rollup and ZK-Rollup. There is not much information about the project.

Official website: www.eigenlayer.xyz

Official Twitter: twitter.com/eigenlayer

11）Assembly

Assembly is a modular smart contract layer on IOTA. It is currently in pledging period 3. By pledging MIOTA through firefly.iota.org, pledgers can receive 0.000001 Assembly tokens ASMB every 10 seconds. The wallet must have at least 1 ASMB to receive the airdrop. 20% of the total ASMB will be distributed to IOTA pledgers. Assembly's mainnet is expected to launch this year and will enable ASMB transfer functionality.

Features: Assembly is based on IOTA. Unlike Ethereum's account model, IOTA is based on UTXO ledger, which supports high concurrency, but UTXO is not compatible with smart contracts like the account model. In addition, IOTA also uses a DAG (Directed Acyclic Graph) data structure, which is also beneficial for high concurrency.

In the combination of IOTA+Assembly, IOTA can achieve high performance due to UTXO and DAG. Because UTXO is not compatible with smart contracts, IOTA is very suitable for being an L1 that only focuses on DA and settlement (like an L1 without DApps and execution layer competing for block space). Assembly is a smart contract layer built on top of IOTA to support Rollup's smart contracts.

The security of Rollup to the IOTA main chain (transaction validity/fraud proof) is monitored by a smart contract chain deployed specifically on Assembly, and transaction verification is carried out by root chain validators with high reputation ranking.

The structure of IOTA+Assembly is similar to Polkadot+Moonbeam and Cosmos+Evmos. The modular smart contract layer supports Rollup, parallel chains, and other smart contracts.

The total funding amount is $118 million. Investors include Huobi, LD Capital, HashKey Capital, Signum Capital, etc.

Official website: assembly.sc

Official Twitter: twitter.com/assembly_net

12）Mantle Network

Mantle is a layer 2 scalability solution built on top of Ethereum. Validator nodes in the Mantle network collect user transactions and submit them to Ethereum in the form of "compressed blocks." This compression saves users expensive gas fees and increases the overall transaction throughput.

By building on top of Ethereum, Mantle inherits ideal properties such as industry-leading security and general developer infrastructure.

Mantle provides many improvements over traditional layer 2 solutions:

1. Modular data availability: By using a feature layer, Mantle can increase transaction throughput beyond traditional layer 2 solutions. Accessible data availability also means that Mantle can increase throughput without compromising security or reducing node operation costs. This reduces the processing requirements for validators and promotes further decentralization.

2. Multi-party computation (MPC): Mantle uses MPC to minimize trust risks for secondary execution results. Using threshold signature scheme (TSS) technology, dedicated nodes help with multi-party signatures to increase the correctness of off-chain transaction execution results. This allows us to shorten the challenge period for withdrawals.

3. Decentralized sequencer: Mantle decentralizes its sequencer to provide secure and trustless block production. By rotating a permissionless set of sequencers, Mantle reduces the possibility of single point of failure and censorship on the network. Mantle will decentralize its sequencer over time to provide secure and trustless block production.

Official website: www.mantle.xyz/

Official Twitter: twitter.com/0xMantle

Overall, modular blockchain is still in its early stages of development. Celestia and Fuel have made the most progress in various aspects and have the potential to become leading modular blockchain projects. The future remains to be seen.