How Modular Blockchains are Reshaping the Blockchain Landscape

5 min readSep 20, 2024

Blockchain technology has evolved dramatically since Bitcoin’s inception. However, scalability, security, and usability issues have persisted.

With modular blockchains, these limitations can be overcome by breaking down the monolithic design of the blockchain into specialised layers. This separation of concerns improves scalability and brings flexibility, decentralisation, and enhanced functionality to blockchain networks.

In this article, we’ll explore how modular blockchains are reshaping the future of Web3, focusing on leading projects such as Celestia and Dymension, which are pioneering this new approach.

Understanding the Limitations of Monolithic Blockchains

Traditionally, blockchains like Bitcoin and Ethereum have been monolithic, meaning they handle all three key tasks — consensus, data availability, and execution — within a single network. While this design ensures security and decentralisation, it also results in bottlenecks, particularly around scalability and transaction throughput. Ethereum’s high gas fees during peak usage are a prime example of the limitations of monolithic architectures.

This one-size-fits-all approach also limits flexibility, making it difficult for developers to optimise specific aspects of the blockchain for different use cases.

What Are Modular Blockchains?

The emergence of modular chains is not accidental but a natural evolution. Modular blockchains take a different approach by separating the core functions of a blockchain into distinct layers:

Consensus Layer: Responsible for network security and agreeing on the order of transactions.
Data Availability Layer: Ensures that transaction data is available for nodes to access.
Execution Layer: Handles the actual computation and execution of smart contracts.

By dividing these responsibilities, modular blockchains allow each layer to be optimised independently. This separation leads to enhanced scalability, efficiency, and flexibility, enabling better performance and more specialised applications.

Why Modular Blockchains Are Game Changers

Scalability and Efficiency

Modular blockchains scale better by splitting tasks across layers, which avoids bottlenecks seen in traditional blockchains. This results in faster transactions, lower fees, and supports more users.

Enhanced Flexibility

Each layer can be customised, allowing developers to optimise security, performance, or specific applications like gaming or finance.

Decentralisation and Security

Different consensus mechanisms can work independently, boosting security and resilience.

Interoperability

Modular blockchains enable cross-chain interactions, allowing DApps to easily communicate across ecosystems, expanding usability and connectivity.

Celestia: A Leading Example of Modular Blockchain Innovation

Celestia is one of the most notable projects leading the charge in the modular blockchain space. Celestia introduces the concept of a data availability layer designed to ensure that transaction data can be easily accessed by nodes, thus separating it from execution and consensus tasks.

In a traditional monolithic chain, every node must execute every transaction and store all data. Celestia solves this issue by allowing nodes to download and verify only a fraction of the data while ensuring that all transaction data is still available to those who need it. This data availability sampling process makes it significantly more efficient than traditional blockchains, reducing the resource burden on nodes and improving scalability.

Celestia’s modular design also enables developers to launch sovereign rollups — blockchains that use Celestia for consensus and data availability but manage their own execution environments. This allows for greater customisation, scalability, and reduced costs, making Celestia a strong choice for developers seeking to build high-performance DApps without the limitations of monolithic chains.

SubQuery supports developers building on Celestia with our powerful on-chain indexer. Read more here about how we empower Celestia developers to streamline on-chain data management and accelerate the development process.

Dymension: Taking Modular Blockchain to the Next Level

Dymension is another prominent project in the modular blockchain ecosystem, aiming to extend the capabilities of modular blockchains by focusing on layer 3 solutions. While layer 2 solutions like rollups have already shown promise in improving scalability, layer 3 aims to provide an even more optimized infrastructure for specific use cases.

Dymension’s key innovation lies in its RollApp framework, which allows developers to create highly specialized application chains (RollApps) that leverage Dymension for consensus and data availability, but have complete control over their own execution environments. This flexibility allows developers to build application-specific rollups that cater to the unique needs of their projects, such as gaming, DeFi, or NFTs.

Dymension’s modular approach ensures that RollApps can achieve high levels of throughput without compromising on security or decentralization. By providing a customizable execution environment, developers can optimize for transaction speed, cost, or even specific regulatory requirements, all while benefiting from the security of the underlying consensus layer.

Presently, Dymension is using the SubQuery SDK for their own indexing needs. We are proud to have been helping them since early-2024. Read about their use case here. All builders in the Dymension ecosystem can use SubQuery to power the data for their dApps, learn more here.

The Future of Modular Blockchains

The rise of modular blockchains represents a significant shift in how blockchain technology is designed and implemented. By breaking the traditional monolithic structure into specialised layers, modular blockchains offer a more scalable, flexible, and secure alternative that can meet the diverse needs of the evolving Web3 ecosystem.

Both Celestia and Dymension are prime examples of how modular designs can unlock new possibilities for developers and users alike.

Conclusion

As the blockchain space continues to grow, modular blockchains offer a promising solution to the challenges faced by monolithic networks by introducing a dedicated data availability layer that separates storage from core functionalities. This composability enables the creation of more efficient DApps and provides greater flexibility to innovate and build for developers.

In the coming years, as more projects adopt this modular approach, we can expect to see a more efficient, decentralized, and interconnected blockchain ecosystem that pushes the boundaries of what’s possible with decentralized technology.

About SubQuery

SubQuery Network is innovating web3 infrastructure with tools that empower builders to decentralise the future — without compromise. Our flexible DePIN infrastructure network powers the fastest data indexers, the most scalable RPCs, innovative Data Nodes, and leading open source AI models. We are the roots of the web3 landscape, helping blockchain developers and their cutting-edge applications to flourish. We’re not just a company — we’re a movement driving an inclusive and decentralised web3 era. Let’s shape the future of web3, together.