Celestia: The Modular Blockchain Stack Abstracting Consensus & Data Availability Layer

BTS Labs
14 min readDec 15, 2022

A new paradigm is emerging to solve the blockchain trilemma which refers to the idea that it’s hard for blockchains to achieve optimal levels of security, scalability, and decentralization simultaneously. A modular blockchain is a specialized blockchain that splits up its processes among multiple specialized layers. This is a novel approach that creates a more optimal system that is sovereign, scalable, and secure.

Key Takeaways

● The first design approach to building blockchains was a monolithic design where a single blockchain performs all key blockchain functions. Monolithic approaches, however, present a number of challenges.

● A modular blockchain is a type of blockchain that is part of a modular stack. A modular stack consists of layers of specialized blockchains that utilize each other to create a complete system.

● Celestia is the first modular blockchain network whose goal is to build a scalable data availability layer, enabling the next generation of scalable blockchain architectures.

● Celestia scales by decoupling execution from consensus and introducing data availability sampling. Similar to cloud services like Amazon Web Services (AWS), Celestia aims to make it possible to launch decentralized chains quickly by using the same consensus layer.

● Modular blockchains are expected to drive the next era of Web3 innovation. These specialized chains break the rigidity of monolithic chains into flexible components, promising unprecedented scale, security, and decentralization.

Typically, Blockchain networks are built using a Monolithic approach. The idea is that a blockchain can do everything. That includes things like processing transactions, checking whether they’re correct, and getting nodes to agree on them.

However, Monolithic blockchains like Bitcoin, Ethereum, and Solana suffer from certain drawbacks like sub-optimal throughput, inefficient execution, scalability, flexibility, State bloat, and unpredictable transaction fees due to the fact that all core functions; execution, settlement, consensus, and data availability compete for the same limited resources. Celestia proposes a paradigm shift through its modular architecture.

Celestia is a modular Layer 1 proof-of-stake (PoS) data availability blockchain that decouples transaction execution (and validity) from the consensus layer so that the consensus is only responsible for ordering transactions and guaranteeing their data availability. This is the bare minimum that the consensus layer of a blockchain needs to do in order to enable useful applications, such as cryptocurrency.

Background

Celestia (formerly LazyLedger) was founded in 2019, by Mustafa Al-Bassam, Ismail Khoffi, and John Adler. Mustafa Al-Bassam holds a Ph.D. in blockchain scaling and co-authored a paper on fraud and data availability proofs alongside Vitalik Buterin the founder of Ethereum. John Adler is also the co-founder of Fuel, a modular blockchain execution layer. In addition, the Celestia team is composed of engineers with experience in Google, AWS, Oracle, and other blockchain projects like Ethereum, Cosmos, and Harmony

Since its inception, Celestia has raised over $56 million in funding, with the latest round led by Bain Capital Crypto and Polychain Capital in October 2022.

Technology Overview

The core idea of Celestia is to reduce the overhead of any blockchain built on top of it. Celestia proposes a modular approach to scalability rather than the traditional monolithic architecture that most layer 1 networks use.

Celestia simply orders and publishes data pushed by developers and validators. Chains built on top of Celestia can then execute using said data in their own sovereign execution environment while inheriting the security Celestia’s consensus network can provide. Splitting the traditional monolithic layer 1 architecture into a 2-layer system (data availability layer and execution layer).

While Cosmos Tendermint already makes the distinction between consensus and application layer, Celestia is meant to operate as a data availability layer between consensus and execution to increase scalability.

The Basics of Modular and Monolithic Blockchains

Typically, a blockchain can consist of four core functions: Execution, Settlement, Consensus, and Data availability.

● Execution: the environment where applications live and state changes are executed.

● Settlement: an optional hub for execution layers to verify proofs, resolve fraud disputes, and bridge between other execution layers.

● Consensus: the consensus protocol determines how transactions are ordered and how new blocks are added to the chain.

● Data availability: verification that transaction data is available to download.

Monolithic blockchains implement all core functions together in a single base consensus layer. The problem with monolithic blockchains is that the consensus layer must perform a lot of different tasks and it cannot be optimized for only one of these functions. As a result, the monolithic paradigm limits the throughput and scalability of the system.

As a solution, modular blockchains decouple these functions among multiple specialized layers as part of a modular stack. Due to the flexibility that specialization provides, there are many possibilities in which the stack can be arranged. One such arrangement is Celestia’s approach which separates the four functions into three specialized layers. The base layer consists of Data Availability (DA) and Consensus and thus, is referred to as the Consensus and DA layer (or for brevity, the DA layer). While both settlement and execution are moved on top in their own layers.

As a result, every layer can be specialized to optimally perform only its function and thus, increase the throughput and scalability of the system.

How Celestia Works — Decoupling Execution From Consensus

Celestia scales by decoupling execution from consensus and introducing a new primitive, data availability sampling. Consequently, Celestia is only responsible for ordering transactions and ensuring data availability. This provides an efficient solution to the data availability problem by only requiring resource-limited light nodes to sample a small number of random chunks from each block to verify data availability.

Celestia’s Data Availability Layer

Celestia Data Availability (DA) layer provides a scalable solution to verify that all data is available and transparent for the entire node network when a new block is produced. Due to the permissionless nature of the blockchain networks, a DA layer must provide a mechanism for the execution and settlement layers to check in a trust-minimized way if transaction data is indeed available.

A block consists of two parts: a header containing the block’s metadata, and transaction data, which makes up most of the block. A typical blockchain network can consist of two types of nodes:

● Full nodes — fully verify the contents of received blocks by downloading & executing all transactions on the blockchain. This requires a lot of resources and storage space but is the most secure type of node.

● Light nodes — light nodes download only block headers that contain commitments (i.e., Merkle roots) of the block data (i.e., the list of transactions).

A common approach in monolithic blockchains like Ethereum guarantees data availability by depending on full nodes. Although this approach is more secure and removes any possibility of a double-spend transaction, this limits its ability to scale. This has resulted in Ethereum depending on rollups, both zero-knowledge (ZK-rollups) and optimistic-based, as a long-term solution.

However, Celestia supports multiple types of nodes, each node serves a specific purpose on the network making it more scalable. Celestia introduces Bridge nodes that connect the data availability layer and the consensus layer.

Two critical features of Celestia’s DA layer are Data Availability Sampling (DAS) and Namespaced Merkle trees (NMTs). Both features are novel blockchain scaling solutions: DAS enables light nodes to verify data availability without needing to download an entire block; NMTs enable execution and settlement layers on Celestia to download transactions that are only relevant to them.

Data Availability Sampling (DAS)

In general, light nodes download only block headers that contain commitments (i.e., Merkle roots) of the block data (i.e., the list of transactions).

To make DAS possible, Celestia uses a 2-dimensional Reed-Solomon encoding scheme to encode the block data: every block data is split into k × k chunks, arranged in a k × k matrix, and extended with parity data into a 2k × 2k extended matrix by applying multiple times Reed-Solomon encoding.

Then, 4k separate Merkle roots are computed for the rows and columns of the extended matrix; the Merkle root of these Merkle roots is used as the block data commitment in the block header.

Reed-Solomon encoding. source: docs.celestia.org

To verify that the data is available, Celestia light nodes are sampling the 2k × 2k data chunks.

Every light node randomly chooses a set of unique coordinates in the extended matrix and queries full nodes for the data chunks and the corresponding Merkle proofs at those coordinates. If light nodes receive a valid response for each sampling query, then there is a high probability guarantee that the whole block’s data is available.

Additionally, every received data chunk with a correct Merkle proof is gossiped to the network. As a result, as long as the Celestia light nodes are sampling together enough data chunks (i.e., at least k × k unique chunks), the full block can be recovered by honest full nodes.

Scalability

DAS enables Celestia to scale the DA layer. DAS can be performed by resource-limited light nodes since each light node only samples a small portion of the block data. The more light nodes there are in the network, the more data they can collectively download and store.

This means that increasing the number of light nodes performing DAS allows for larger blocks (i.e., with more transactions), while still keeping DAS feasible for resource-limited light nodes. However, in order to validate block headers, Celestia light nodes need to download the 4k intermediate Merkle roots.

Fraud Proofs of Incorrectly Extended Data

The requirement of downloading the 4k intermediate Merkle roots is a consequence of using a 2-dimensional Reed-Solomon encoding scheme. Alternatively, DAS could be designed with a standard (i.e., 1-dimensional) Reed-Solomon encoding, where the original data is split into k chunks and extended with k additional chunks of parity data. Since the block data commitment is the Merkle root of the 2k resulting data chunks, light nodes no longer need to download O(n) bytes to validate block headers.

The downside of the standard Reed-Solomon encoding is dealing with malicious block producers that generate the extended data incorrectly.

This is possible as Celestia does not require a majority of the consensus (i.e., block producers) to be honest to guarantee data availability. Thus, if the extended data is invalid, the original data might not be recoverable, even if the light nodes are sampling sufficient unique chunks (i.e., at least k for a standard encoding and k × k for a 2-dimensional encoding).

As a solution, Fraud Proofs of Incorrectly Generated Extended Data enable light nodes to reject blocks with invalid extended data. Such proofs require reconstructing the encoding and verifying the mismatch. With standard Reed-Solomon encoding, this entails downloading the original data, i.e., O(n) bytes. Contrastingly, with 2-dimensional Reed-Solomon encoding, only O(n ) bytes are required as it is sufficient to verify only one row or one column of the extended matrix.

Using light nodes allows Celestia to detect invalid transactions from the DAS process via fraud proofs. Light nodes rely on full nodes to send fraud proofs and are thus able to detect invalid transactions without knowing the state of the entire blockchain.

With more light nodes on the network, block sizes increase without compromising security or decentralization. On the other hand, in monolithic blockchains, decentralization would have been sacrificed due to higher hardware requirements for downloading and verifying data.

Ultimately, since rollups require data availability to scale, increased scaling on Celestia would lead to better scaling potential for rollups that use Celestia.

Namespaced Merkle Trees (NMTs)

Celestia partitions block data into multiple namespaces, one for every application (e.g., rollup) using the DA layer. As a result, every application needs to download only its own data and can ignore the data of other applications.

An NMT is a Merkle tree with the leaves ordered by the namespace identifiers and the hash function modified so that every node in the tree includes the range of namespaces of all its descendants. The following figure shows an example of an NMT with height three (i.e., eight data chunks). The data is partitioned into three namespaces.

When an application requests the data for namespace 2, the DA layer must provide the data chunks D3, D4, D5, and D6 and the nodes N2, N8, and N7 as proof (note that the application already has the root N14 from the block header).

As a result, the application is able to check that the provided data is part of the block data. Furthermore, the application can verify that all the data for namespace 2 was provided. If the DA layer provides for example only the data chunks D4 and D5, it must also provide nodes N12 and N11 as proofs. However, the application can identify that the data is incomplete by checking the namespace range of the two nodes, i.e., both N12 and N11 have descendants as part of namespace 2.

Key benefits of Celestia’s Modular Stack

Scalability

A core idea of modular blockchains is that they separate functions across multiple chains. Data Availability Sampling enables Celestia to scale the DA layer. This concept brings extra scalability. A modular L1 like Celestia can now specialize in data availability. Without smart contracts, the L1 can focus all its resources on providing data for L2s, like rollups. Specialization is key because the more data the L1 can provide allows rollups to process more transactions.

Transactions in monolithic blockchains live on the same layer. The downside is that users of different applications all have to compete to get their transactions processed. In the modular paradigm, applications live on separate layers. This means that a user of one app isn’t competing with the users of a different app for computation. For example, nodes of a gaming app (app-specific rollup) don’t have to take interest in executing transactions of a DeFi app or an NFT app. Consequently, many different apps can process transactions simultaneously.

Shared security

When a monolithic blockchain launches, a crucial part of the process is the bootstrapping of a validator set. It can be difficult to find a validator set large enough to satisfy all the requirements in order to become secure. Differences between chains can lead to uneven security in an ecosystem of monolithic chains. A few with large validator sets will have high security, while many others with small validator sets will have low security.

With shared security, deploying new blockchains like rollups doesn’t require bootstrapping a new validator set. Security is provided to blockchains by a common source, like Celestia. A new blockchain can deploy to Celestia and immediately benefit from the security that it has built.

Sovereignty

Modular blockchains enable control over rules like social consensus or technical rules of an application through sovereignty. Developers can make changes to the tech stack without permission from outside applications. For example, they could make a more performant execution environment or change how transaction processing works.

Importantly, sovereignty gives independence. Developers and the community can freely set the rules for their sovereign chain that aligns with their app and the community’s ethos. It is sovereignty that places autonomy back in the hands of the community.

Ecosystem

Celestia’s growing ecosystem is attracting projects from all corners of blockchain, including rollups, rollup infrastructure, DeFi apps, and more. Currently, Modular blockchain projects such as Eclipse, Constellation, and dYmension have chosen Celestia to be their data availability layer. More projects are expected to launch on Celestia as new upgrades and developments are released by the community.

Celestia has also introduced “Modular Fellows” A program designed to empower modular builders with the right resources to build the future of scalable and sovereign blockchain networks.

Roadmap

Celestia launched its testnet codenamed “Mamaki” on May 25, 2022. it features Celestia’s data availability API that enables developers to submit data for a namespace and retrieve data by namespace from Celestia. Developers can also build Cosmos SDK rollups using Optimint as the ABCI client, although fraud proofs are not yet available. In the future, Celestia plans to enable developers to use Celestia to deploy EVM-based rollups, and a Quantum Gravity Bridge as a secure source of off-chain data availability guarantees for their sidechains and validiums, while still using Ethereum for settlement.

Community members can participate in Mamaki to operate nodes, receive testnet tokens from the faucet, delegate to and undelegate from validators, and send transactions between wallets. However, it is important to note that the current testnet is not incentivized — incentivized testnet will launch closer to the mainnet in 2023. To learn more, check out the documentation.

Drawbacks and limitations

Celestia proposes a new paradigm in blockchain design. While this may offer a superior model to existing solutions there remain some possible challenges.

One such challenge has to do with bootstrapping network effects on Celestia. A specialized DA layer without an Execution layer doesn’t serve much purpose. Unlike other blockchain networks, Celestia will consequently rely on other Execution chains to kickstart user activity.

Another possible challenge has to do with Celestia’s native token utility. Just like any other chain, Celestia will have a transaction fee to interact with the network and incentives for the validators. However, because Celestia doesn’t perform state execution (except for a very tiny state execution for PoS-related activities), unlike most chains, its token’s utility as a liquidity source in DeFi and other areas may be limited. For example, unlike ether which can freely move between rollups and Ethereum in a trust-minimized way, Celestia’s native token will have to rely on trusted bridges to be ported over to other chains.

Conclusion

By decoupling execution from the consensus/DA layer Celestia presents a new way of scaling and decentralization. Celestia also offers unique advantages including trust-minimized bridges, sovereign chains, efficient resource pricing, simpler governance, and flexible virtual machines.

Going forward, we will see further developments with modular blockchain powering more dApps and building the future of Web3 space as a whole, tackling unique problems with specialized solutions. Particularly as Celestia moves towards mainnet and developers start to utilize it.

🇷🇺 Read in Russian: https://reurl.cc/WqVxxe

🇫🇷 Read in French: https://reurl.cc/VRqzY5

🇵🇭 Read in Filipino: https://v.gd/0v5aJm

Further Reading

Celestia.org

Celestia docs

Mamaki testnet

Twitter

About BTS Global

BTS Global (including BTS Ventures, BTS Labs, and BTS Trading) helps projects and venture capital firms reach their goals and bring sustainable growth to communities with a variety of advisory services including financing, PR & Marketing, and Market Maker.

Disclosure

The material above has been prepared by BTS Ventures and is intended for information purposes only. This material is not intended to be relied upon as investment or forecast advice. This article does not recommend or suggest buying or selling any cryptocurrencies, or implementing any type of investment strategy. BTS Ventures research derived this information and opinions from proprietary and nonproprietary sources it considers to be reliable. They aren’t necessarily all-inclusive and can’t be guaranteed to be completely accurate. Always remember to Do Your Own Research (DYOR) and tread carefully.

Join BTS Global community;

Website: http://www.bts.global

Twitter: https://twitter.com/BTS_Ventures

Twitter: https://twitter.com/btslabs_global

Telegram: https://t.me/officialbtslabs

--

--

BTS Labs

BTS Labs mainly provides a wide range of consultancy services including Financing, Listing, and PR & Marketing.