A deep dive into Celestia

the first modular blockchain network

a deep dive into cELESTIA

There’s a gold rush on Layer 1 blockchains right now. Billions in funding, maybe a few hundred projects. However, in a gold rush my friends, you don’t want to dig for gold. You want to be the one selling the shovels.

Following that exact framework brings me to Celestia. THE FIRST modular blockchain network. The enabler of monolithic blockchains. Harmony co-founder as COO. $56 million in funding. The internet of blockchains. If Ethereum and Cosmos had a baby it would be Celestia.

Excited yet? Reaching for the wallet? Where to buy? Wen? Let me put you up on game real quick, in another Cryptomendo deep dive.

what is celestia — a basic introduction

Celestia is the first modular blockchain network. It allows anyone to easily deploy their own blockchain on top of Celestia, without having to create their own consensus network. Celestia does not execute transactions, they only order and publish them.

Their main focus is ‘data availability’, we’ll circle back to that in a minute.

The basics; what are modular blockchains?

Unlike in a monolithic blockchain (think; sol, eth, btc), the four main blockchain function are spread across various layers. Each layer has its own main thing that it takes care of. Most importantly, Celestia seperates consensus from execution. This theoretically means each layer is specialized in a couple function — unlike a typical blockchain where there is one layer that has to take care of everything.

Rollups (those layer 2’s that you love so much), are basically modular blockchains that are specialized in one of the four key functions, which is execution.

Celestia on the other hand, is the modular blockchain that provides consensus and data availability. Each blockchain that gets launched on top of Celestia, gets their own execution and smart contract layer.

what are the benefits to this approach?

I know you’re scratching your head thinking to yourself, why should I care?

Well, you simpleton, there are a slew of benefits of this approach:

Scalability

Modular blockchains separate the core function across multiple layers. That’s guuud for scalability. Since Celestia doesn’t have to execute transactions, and doesn’t have to take care of smart contracts, it can put all its effort into data availability. E.g. providing data to rollups.

Also, since apps have their own chain, there is no competition between apps to get transactions processed (unlike, let’s say, on Ethereum).

Shared security

A challenge of launching a new layer 1, is having to put into place a large enough set of validators. This is not always achieved, therefore not every L1 is actually decentralized or properly secured. With Celestia, there is shared security between chains launched on top of it.

New chains immediately gain acces to the already strong security of the consensus layer of Celestia.

Sovereignty and customizability

Apps on Celestia – unlike those on L1’s like eth or sol – are not subject to a set of rules that you can’t possibly deviate from. For example, on chain x you can only code in language Y.

Modular blockchains have sovereignty. After looking that word up in the dictionary, I can tell you this means that that developers are able to make changes to the design and infrastructure of their own chain, even though there is shared security among all of them. They have completele ownership and can freely set the rules. Autonomy for the win.

B-b-bbu-but, aren't these just appchains?

No and yes. Celestia is basically powering rollups. Remember when I told you that rollups execute transactions?

They do this to become a cheaper option for applications to build on, while not having to sacrifice security or decentralization. They achieve this by leveraging an L1 for consensus and data availability.

Celestia is powering rollups. Anyone can launch both zk and optimisitc rollups on it.

And that bring us back to the super sexy topic of data availability. Trust me, bring this up on your first date and you’ll be married on the next one. Take advice from the single guy.

Data availability — What is it, why do rollups need it, and what are the implications for Celestia?

Remember that one Nillion article? I highly recommend reading it if you haven’t. It’s good, trust me, I know the author.

Anyway, I mentioned that Nillion is solving the ‘data processing‘ problem. Well, Celestia is solving the ‘Data Availability‘ problem.

We mentioned Rollups. Rollups are fast af. They can handle a lot of throughput. However, a rollup on Ethereum is bottlenecked by the one thing it’s trying to speed up; Ethereum itself.

See, the Ethereum main chain has a certain capacity for data availability. If that data availability would be at a higher capacity, rollups could really show what they’re made of. After all, if chains have to execute transactions, the nodes need access to transaction-related data.

It’s like wanting to walk fast, but you’re stuck behind a fat dude with a super tight t-shirt whose jeans are falling off a bit.

A solid Data Availability mechanism is essential for execution and settlement layers, as that enables them to check in a trust-minimized way if transaction data is indeed available.

Celestia has two novel scaling capabilities that empower their data availability later:

1) Nodes nodes can verify data availability without having to download an entire block

2) Execution and settlement layers on Celestia can download transactions that are only relevant to them.

Data availability is also important for the security and decentralization of the network. With the techniques described above, the average user of the network can download small portions of the available data to check if the data has indeed been published, which makes it possible to verify large blocks at a low cost.

This is opposite of most blockchains, where users have to download all the data to check if it is available. This prices out the average user, which negatively impacts scalability.

the opportunity for rollups that are not built on celestia - celestiums

My dear friends, it’s not just new rollups being deployed on Celestia that gets me so excited.

There is a huge impact that Celestia could possible have on currently existing layer 2’s. Namely, through their ‘Quantum Gravity Bridge’ – a Celestia to Ethereum data availability (DA) bridge.

This is how ETH rollups operate: they collect data from multiple transactions, they roll them up (hence the name) and post it into a single ball (batch) of transactions, then post that to Ethereum. This data is posted on Ethereum, but not executed by it (the reasoning behind why L2’s can help with scaling).

ETH has limited capacity however, which makes this an expensive endeavor. Now this is where it gets exciting..

This is where Celestia enters the chat, and with them, they bring in ‘Celestiums‘:

“A Celestium is an Ethereum L2 chain that uses Celestia for data availability, but uses Ethereum for settlement and dispute resolution.”

The picture below shows in detail how this would work. In case it’s blurry, you can also find it here.

THE CELESTIA TOKEN — WHAT DO WE KNOW SO FAR?

Celestia uses proof-of-stake, therefore users can stake the token to help validate the network.
Celestia is mainly used as a gas-fee token
Celestia will have a fee burn mechanism similar to EIP-1559 on Ethereum
Celestia is already valued at over a billion dollars

TLDR;

Celestia is powering the next level of rollups. Not only can devs launch rollups on Celestia that have significantly higher transaction throughput, they also power Ethereum-based layer 2’s with data availability layers.

Raised over $50M from the biggest names you can think of. Be careful with supply inflation after listing.
Nick Smith, the Harmony co-founder, is Celestia’s COO.
Celestia’s token will be PoS and will have a similar fee burn mechanism as Ethereum’s EIP-1559, dare I say the highly-sought after buzzword that is.. deflationary?
Data availability is a huge bottleneck for rollups, Celestia fixes this.
Celestia empower anyone to launch a chain they have complete sovereignty over and are free to upgrade or fork as they see fit.

Rollups are the future, and Celestia is making them faster and more secure.

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Celestia website: celestia.org
Celestia Twitter: twitter.com/CelestiaOrg

My Twitter: https://twitter.com/cryptomendo
Rarestone Compass community: t.me/rarestonecompass

I hope you enjoyed this article! If you do decide to invest in Celestia, please do so by doing your own research and coming up with your own thesis.

I am not a financial advisor. And while I am excited about Celestia, I am also just a pig on the internet. I just read words, process them, and write my own words. No thoughts behind these eyes of mine.

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