The rise of decentralized applications (dApps) has strained traditional blockchain networks, leading to scalability issues and high transaction fees. This has hindered the widespread adoption of blockchain technology and its potential to transform various industries.
Modular blockchain protocols such as Celestia have emerged to address the challenges of scalability and data availability for dApps. This blog post will delve into Celestia's innovative approach to resolving these issues, which can lead to a more efficient and secure future for blockchain technology.
What is Celestia?
Celestia is a modular blockchain network designed to address scalability issues. This network separates execution from consensus and employs data availability sampling (DAS) as a key feature.
Rollups and L2s use the Celestia network to publish transaction data, providing high-throughput data availability that can be easily verified using a light node.
Making the blockchain stack modular allows anyone to launch their blockchain without needing a validator set.
Understanding Blockchain Modularity
Source: Celestia Docs
Celestia's mainnet was launched on October 31, 2023, marking the beginning of the 'modular era' in the blockchain industry. But what does it mean, and why is it essential for cryptocurrency?
Blockchain modularity is a design approach that divides traditional monolithic blockchains, which handle all tasks in one chain, into specialized, interconnected modules. The first-generation blockchains such as Bitcoin (BTC) and Ethereum (ETH) were designed to perform all the necessary functions of a blockchain, including data availability, consensus, execution, and settlement. These are also known as monolithic blockchains.
Meanwhile, modular blockchains are specialized and optimized to perform a specific function. Blockchain modularity aims to provide an optimized infrastructure to help blockchains achieve mass scale. The modular design also intends to make it easier and faster for developers to deploy new blockchains and dApps.
Here is an example of a modular blockchain system. A Layer-2 rollup executes transactions on-chain, makes transaction data available on Celestia, and depends on Ethereum for settlement.
How Does Celestia Work?
Data availability proofs rely on erasure coding to expand the current block data. For example, a block of 1MB can be expanded to hold 2MB of data. The block contains extra space filled with erasure code, allowing for the entire block recovery as long as 50% of it is available.
With this in mind, nodes can request small random parts of a block to verify data availability. If they don't receive a requested portion, they may conclude that their requested data is part of the 50% omitted by the block producer. It is essential to note that multiple random samples increase the confidence that all data has been published. One request provides only 50% probability, while seven requests can raise the probability to over 99%.
Celestia ensures data availability through data availability proofs for any chain built on it. Validators use this data to agree on and order transactions, providing consensus. Also, validators in this chain don't verify transactions. Rollups on Celestia handle verification through their own nodes.
Source: Celestia Docs
Besides validating transactions, each rollup on Celestia can build a customized chain and virtual environment that suits its needs. Due to its modular architecture, Celestia supports Solidity (EVM), Rust and Golang (Cosmos SDK), and any other language or virtual machine.
Celestia's strategy for achieving scalability involves the following:
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Modular Design: By separating execution and consensus responsibilities, Celestia improves flexibility and scalability.
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Data Availability Sampling (DAS): This feature allows nodes to process only relevant transactions, reducing load and enhancing efficiency.
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Security and Resource Efficiency: DAS and fraud/validity proofs secure light nodes like full nodes with fewer resources needed.
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Architecture: The architecture supports high user volume without sacrificing decentralization or security.
What Is Data Availability?
To understand Celestia, one must first comprehend data availability; this refers to ensuring all network participants have the necessary data to verify a block. Full nodes in Ethereum Layer-1 can download a complete copy of all data in a block, while blocks that lack data are discarded.
At first glance, the solution seems simple: Just get all the nodes to download all the blockchain data. However, for modular blockchains, Layer-2 rollups, or light clients, data availability ensures that summarized transaction data added to the blockchain represents valid transactions without requiring all nodes to download all the data.
A malicious transaction could be concealed and spread across the network if a node cannot confirm whether the block producer has included all data in the new block.
As such, the alternative is a solution proposed by Vitalik Buterin and Mustafa Al-Bassam in a research paper. Their solution was data availability proofs, which prove that all data has been published to the network using only a small portion of the block. Celestia's technology is built on the foundation of data availability proofs.
What Is TIA: Understanding Celestia Token Utility
Celestia uses TIA as its native currency, which plays a crucial role in staking and governance. The Celestia Staking Calculator can estimate rewards from staking TIA. However, these are just estimates, and actual returns may vary. According to Celestia's white paper, TIA tokens will have the following uses:
Bootstrapping New Rollups
A core tenet of Celestia's vision is to simplify blockchain deployment, enabling anyone to launch and deploy their own blockchain easily. Developers can use TIA tokens instead of issuing additional tokens to support the launch of their blockchain. Also, they can quickly bootstrap their chain using TIA as a gas token and currency, similar to using ETH on Ethereum-based rollups. In doing so, developers can focus on building their application or execution layer without worrying about creating or issuing tokens.
Paying for Blobspace
Developers use Celestia, TIA tokens as a crucial component in building and interacting with Celestia. To make data available on Celestia, rollup developers submit PayForBlobs transactions containing sender identity, data to be made available, data size, namespace, and signature. To complete these transactions, you must pay a fee using TIA tokens.
Staking Rewards
Celestia is a permissionless network that uses the Proof-of-Stake consensus mechanism to secure its network. It is based on CometBFT and the Cosmos SDK. Users can secure the network by delegating TIA tokens to the Celestia validator for staking rewards.
Decentralized Governance
Centralization among the founding developers in many blockchain projects can be a red flag. Fortunately, Celestia's governance approach leans towards decentralization, allowing for distributed decision-making. TIA tokens provide users with the right to vote and submit governance proposals without the need for staking. These proposals help modify network parameters, fund ecosystem initiatives and manage the community pool. This pool will receive a share of 2% of all Celestia block rewards.
Tokenomics: Harnessing the Power of TIA
TIA, often referred to as the "Celestia coin," has a genesis supply of 1 billion tokens and plays a crucial role in facilitating the deployment of new rollups, promoting seamless data storage, and governing the network's operations. Also, TIA has an initial inflation rate of 8%, which gradually tapers down to 1.5% per annum, making it a well-balanced and sustainable token economy.
Celestia plans to do a 'Genesis Drop' airdrop of 6% of TIA tokens, distributed to 600.000 addresses on Ethereum rollups, Cosmos Hub, Osmosis, and a pool of 7.579 adept developers.
Celestia's Partnerships
Celestia team is working with several teams to develop next-gen modular blockchains.
Caldera, Conduit, and Eclipse are working on integrating Celestia as a data availability layer for their RaaS projects. Celestia has collaborated with the Optimism Labs team to enhance the functionality of rollups built on the Optimism stack. This allows rollups from Caldera and Conduit to use any layer as their data availability layer, including Celestia, Ethereum, or even Bitcoin.
Celestia is also collaborating with Dymension, an Ethereum Virtual Machine (EVM) compatible RollApp, which will use the Celestia layer for its data availability on the Cosmos front. Dymension will work seamlessly with the Inter-Blockchain Communication (IBC) protocol.
The Takeaway
Celestia introduces a fresh approach to enhancing blockchain scalability through its modular architecture and data availability sampling.
By segregating core functionalities such as data availability from transaction execution and consensus, Celestia opens the doors for more efficient and scalable blockchain networks. This modular design also allows developers to build dApps on Celestia.
To learn more about Celestia and staking TIA, visit the Celestia page on our website.
If you require any assistance or have any queries, contact our Celestia Blockchain Manager via X.
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