There’s a gold rush on Layer 1 blockchains right now. Billions in funding spread across 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 logic brings me to Celestia. The next major modular blockchain network. The internet of blockchains. If Ethereum and Cosmos had a baby, it would be Celestia.
Enough buzzwords? Excited yet? Where to buy? Wen? Let me enlighten you, with another Cryptomendo deep dive.
What is celestia — a basic introduction
Celestia is a modular blockchain network, allowing anyone to easily deploy their own blockchain on top of Celestia. One of the main benefits of this route, is not having to create your own consensus network.
Celestia itself doesn’t execute transactions, they only order and publish them. The main focus is on ‘data availability’, I’ll circle back to that in the paragraph about data availability. But first, let’s explore the basics for modular blockchains:
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The basics; what are modular blockchains?
We can categorize blockchains as monolithic or modular. Examples of monolithic blockchains are Solana, Ethereum and Bitcoin.
What sets modular blockchains apart from monolithic blockchains, is that in modular blockchains the four main blockchain function are spread across various layers. Each layer has its own core “task” that it takes care of, as depicted in the image below.
On Celestia, consensus is separated from execution. This theoretically means each layer is specialized in a couple functions — unlike a monolithic blockchain where there is only one layer that has to take care of everything.
Those layer 2’s that you love so much, are rollups. Rollups are basically modular blockchains that are specialized in one of the four key functions. In their case: execution.
Celestia on the other hand, focusses on facilitating consensus and data availability. Each blockchain that gets launched on top of Celestia, gets their own execution and smart contract layer.
TLDR; Celestia takes care of the consensus and data availability. You take care of the execution and settlement.
What are the benefits to the modular approach?
I know you’re scratching your head thinking to yourself: why should I care?
Well, you simpleton, there is slew of benefits of this approach. I’ll give you the 3 most important ones:
1. Scalability
Modular blockchains separate the core function across multiple layers. That’s good for scalability. Since Celestia doesn’t have to execute transactions or take care of smart contracts, it can put all of its effort into data availability. E.g. providing data to rollups.
With Celestia each (D)app can easily deploy their own chain. This means there is no competition between apps to get transactions processed. Unlike, let’s say, on Ethereum.
2. Shared security
The universal struggle for launching a new layer 1 is that you have to attract a large enough set of validators. This isn’t something that’s easily achieved, which is why 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. Shared security removes the need for each project to build their own validator network.
3. Sovereignty and customizability
Unlike Dapps on L1’s like eth or sol, Dapps on Celestia aren’t subjected to a set of rules that you can’t possibly deviate from. For example, when chain X only allows you to code in language Y. That’s a rule you can’t escape.
In contrast, modular blockchains have sovereignty. Big word, I had looked it up in the dictionary. In this context, it means 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, each of them has complete ownership and can freely set the rules.
Autonomy for the win.
B-b-bbu-but, aren’t these just appchains?
No and yes.
Remember when I told you that rollups typically focus on executing transactions? The ultimate goal is to become a cheaper option for applications to build on, without having to sacrifice security or decentralization. Which is why rollups leverage an L1 for consensus and data availability.
Celestia is powering rollups, allowing anyone to launch both zk and optimistic rollups on it.
Which 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.
Data availability — What is it, why do rollups need it, and what are the implications for Celestia?
Remember my Nillion article? I highly recommend to read it, I promise you won’t be disappointed. Not because I’m such a great author, but because Nillion is building something that’s truly impressive.
Anyway, I mentioned that Nillion is solving the ‘data processing‘ problem. Well, Celestia is solving the ‘Data availability‘ problem.
I mentioned Rollups earlier in this article. We know that rollups are fast af. They can handle a lot of throughput. However, rollups on Ethereum are 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 faster, but you’re stuck behind a wobbling fat dude.
Strong data availability mechanisms are essential for execution and settlement layers. It enables them to check in a trust-minimized way if transaction data is indeed available.
All of a sudden, you’re not just trying to walk faster. You’re sprinting. And the person in front of you is David Goggins.
Two novel scaling capabilities empower Celestia’s data availability layer:
1) Nodes can verify data availability without having to download an entire block
2) Execution and settlement layers on Celestia download transactions that are only relevant to them.
Because of these two techniques, even the average user of the network can download small portions of the available data to check if the data has indeed been published. Just having to download small portions of data makes it possible to verify large blocks at a low cost.
This is the opposite of other blockchains where users have to download all the data to check if it is available. Having to download all the data prices out the average user, which negatively impacts scalability.
TLDR; strong data availability has a positive effect on both the security and decentralization of the network.
CELESTIUMS: the opportunity for non-celestia rollups
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 have on currently existing layer 2’s. How? 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
- Roll them up (hence the name)
- Post it into a single ball (batch) of transactions and subsequently post that to Ethereum
The data (the batch of transactions) is posted on Ethereum, but not executed by it. That’s how L2’s help with scaling.
ETH has limited capacity however, which makes this whole proces 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 ($TIA) — WHAT DO WE KNOW SO FAR?
- Celestia uses proof-of-stake. Users stake the token to help validate the network.
- Celstia confirms there will be a token with the ticker $TIA
- $TIA is mainly used as a gas-fee token
- $TIA has a fee burn mechanism similar to EIP-1559 on Ethereum
- $TIA 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 with 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 has 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 empowers 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.
I hope you enjoyed this article. I am not a financial advisor. And while I am excited about Celestia, I am also just a pig on the internet. Would you really take investment advice from a pig?
