A New Era of Blockchain Architecture: A Review of 35 Modular Protocols

Author: THOR

Translator: Baihua Blockchain

What does modular currency really mean? Why are there hundreds of new "modular" protocols emerging in the market now?

Modularity has been a hot topic this year, initiated by the launch of Celestia and TIAToken last year. However, it is not just a buzzword, as modular infrastructure components can address the scalability bottlenecks of blockchains by offloading certain components to specialized infrastructures.

It is important to emphasize that modularity is not a short-term narrative that gradually fades as we move further into a bull market. Instead, it is a core design principle of blockchains that is likely to play an increasingly important role in the future of cryptocurrencies. In this context, understanding what modularity means and which protocols to pay attention to is crucial.

1. What is Modularity?

What does modularity mean in blockchain architecture? You may have heard of this concept, but as a quick recap, the image below illustrates it well:

Comparison of Monolithic and Modular Blockchain Architectures

At its core, a blockchain consists of four roles or layers:

• Execution Layer - Handles transactions of on-chain dapps and executes smart contracts. Computation occurs here, and account balances are updated.
• Settlement Layer - Determines the overall state of the blockchain. Finalizes the state of on-chain transactions.
• Consensus Layer - Orders transactions by ensuring that nodes reach consensus on the state of the chain.
• Data Availability Layer - Ensures that data (transactions, blocks, etc.) is publicly available to all network participants, meaning it can be accessed by everyone.

Monolithic chains like Ethereum mainnet, Solana, Avalanche, Sui, and Sei handle all these components as monolithic chains. Optimistic rollups like Arbitrum and Optimism are part of the modular stack as they serve as execution environments, offloading data availability, settlement, and consensus to the Ethereum mainnet.

Rollups like Manta are even more modular as they use Celestia for cheap data availability and leverage the Ethereum mainnet for consensus and settlement.

There are many examples and various combinations of modular infrastructure. By understanding the following, you will be on the right track in your modular journey.

2. Modular Ecosystem (Alphabetically Ordered)

1) Aethos

A decentralized strategy engine for smart contracts. Allows embedding requirements in smart contracts, such as completing game milestones to earn game items, prohibiting exploiters from using the smart contract, integrating identity on rollups, embedding token strategies, etc. Aethos is an AVS utilizing EigenLayer.

2) AltLayer

Provides rollups as a service and re-mortgaged rollups. Re-mortgaged rollups leverage Eigenlayer's re-mortgaging capabilities and further provide decentralized ordering. AltLayer is collaborating with Arbitrum to easily create Arbitrum Orbit L3 chains, optionally using EigenDA or Celestia for data availability. AltLayer completed a $14.4 million funding round led by Polychain and is an AVS utilizing EigenLayer.

3) Astria

A shared sequencer network for rollups. Through Astria, rollups can utilize a unified decentralized sequencer network, achieving fast, censorship-resistant, and permissionless block confirmations. Astria appears to be closely collaborating with the Celestia team.

4) Avail

"The foundational layer of blockchain" - Avail recently announced the "Avail Trinity": 1. Data availability, 2. Consensus, 3. A shared security layer applicable to various rollups (zk, optimistic, sovereign, and application-specific). Avail also completed a $27 million funding round led by Dragonfly and Founders Fund.

5) Babylon

Provides native permissionless staking on Bitcoin, earning rewards through protecting rollups. Babylon is collaborating with AltLayer to establish a "decentralized validation layer for rollups protected by Bitcoin."

6) Blockless

Modular infrastructure for launching network-neutral applications (nnApps). Through Blockless, applications can be powered by the use of community devices linked to computational tasks. Blockless is an AVS utilizing EigenLayer.

7) Caldera

Rollups as a service. Easily deploy rollups on Arbitrum, Optimism, or Polygon with just a few clicks, with a choice among numerous data availability providers. See the video below.

8) Cartesi

Specific application protocols built using the Cartesi virtual machine, which includes the Linux operating system. The power of Linux lies in "allowing Web3 developers access to decades of existing codebases, programming languages, and open-source tools." $CTSI, this native governance token, has been around since 2020.

9) Celestia

A data availability provider built as a Cosmos chain. Celestia has supported numerous projects, including Aevo, Lyra, Manta, Dymension, Arbitrum Orbit chains, AltLayer, Berachain, Eclipse, and more. Celestia has ushered in the modular era, with a valuation of over $15 billion for $TIA.

10) Conduit

Provides rollups as a service on Arbitrum and Optimism, offering various data availability solutions. Some rollups that have already been built using Conduit include Zora, Aevo, Lyra, Mode, Parallel, and others.

11) Drosera

"Decentralized Autonomous Responders Collective (DARC)." Drosera provides a permissionless secure marketplace for mitigating and containing attacks. Drosera has raised $1.5 million from Arrington Capital, Comfy Capital, and is an AVS supported by EigenLayer.

12) Dymension

Drives "Rollapps," a standardized template for modular rollups built on the Dymension hub, supported by Cosmos IBC bridging. "RollApps are like ERC-20 tokens on-chain." The Dymension hub handles the settlement and consensus of Rollapps while offloading data availability to Celestia.

13) Eclipse

A rollup set to launch on Ethereum. Uses the Solana virtual machine for execution, Ethereum for settlement, Celestia for data availability, and Risc 0 for proofs. Aims to bring Solana's dapps to Ethereum.

14) EigenLayer

A permissionless Ethereum re-mortgaging market. Ethereum validators can deposit ETH and choose to "re-mortgage" to power rollups, bridges, oracles, or other services (AVS) that wish to inherit Ethereum's native security. These AVS pay rewards to re-mortgagers. EigenLayer recently announced a $100 million Series B investment led by a16z.

15) EigenDA

The first EigenLayer AVS. EigenDA is an Ethereum-native data availability layer. Once launched, EigenDA will support Mantle, Celo, Caldera, certain Arbitrum Orbit chains, and several other projects.

16) Espresso

Provides "Espresso Sequencer" for rollups. Espresso recently announced the launch of "Based Espresso," a shared sequencing marketplace where different types of rollups can sell block space to block proposers. Espresso raised $32 million in 2022 from Electric Capital, Sequoia, and is supported by EigenLayer for alignment with Ethereum and strong economic security.

17) Ethos

Brings Ethereum security into the Cosmos ecosystem through integration with EigenLayer and re-mortgaging. EigenLayer re-mortgagers can choose to provide security for Ethos, an AVS supporting the Ethos L1 chain. Re-mortgagers can utilize this security through Cosmos chains and earn additional rewards.

18) Fluentxyz

Building Fluent zkWasm L2 on Ethereum, providing the Fluent virtual machine (VM) and a modular framework for creating Wasm execution environments. Wasm stands for WebAssembly, a "platform-independent and efficient stack-based virtual machine binary instruction format." The Fluent execution environment has multiple data availability layers as the protocol integrates EigenDA, Celestia, and others.

19) Fuel

"The rollup operating system for Ethereum." Using the UTXO model, Fuel is a design framework and SDK for parallel transactions and high-throughput execution environments/rollups on Ethereum. Fuel created its own programming language, called Sway, inspired by Rust and other languages. Fuel raised $80 million in 2022 led by Blockchain Capital.

20) Hyperlane

An interoperability layer designed to connect blockchains. Hyperlane allows modular rollups to integrate Hyperlane's interoperability with just a few clicks to avoid liquidity fragmentation. Hyperlane raised $18.5 million in 2022 led by Variant.

21) Hyperspace AI

A peer-to-peer artificial intelligence network. Hyperspace AI is a large LLM network project designed for anyone to use in a permissionless manner. The network operates on community infrastructure with a low entry threshold (smartphones, browsers, etc., can run nodes).

22) Initia

"The network of interwoven rollups." Initia enables the construction and scaling of interconnected blockchains with different modular components. The first rollup launched on Initia is Blackwing, a modular rollup for margin trading. Initia raised $7.5 million in funding led by HackVC and Delphi Ventures.

23) Karak

"A second-layer blockchain for risk management, powering re-mortgaging, AI, and next-generation security applications." Karak supports "rollaps" through its modular security, highly customizable features, and built-in machine learning tools. Karak recently announced it raised $48 million in Series A funding from Lightspeed, Pantera, and others.

24) LaGrange

Builds "state committees" for generating zero-knowledge proofs for optimistic rollups. These can be embedded into bridging and other cross-chain messaging protocols, increasing security by several orders of magnitude. LaGrange operates as an EigenLayer AVS, with re-mortgagers' power driving LaGrange zk light clients. LaGrange raised $4 million from 1kx, Maven11, Lattice Fund, and others.

25) Lava Network

A modular data layer for chains and rollups. Lava essentially serves as the RPC and indexing layer for chains. In many cases, data access is decentralized, so by using the Lava network, chains can ensure that users and developers can easily and quickly access data. Lava raised $15 million from Hashkey, Jump, Tribe Capital, and others.

26) MegaETH

"Building ultra-high throughput and low-latency EVM-compatible second layers." MegaETH focuses on improving Ethereum execution clients, scaling L2 rollups through parallel execution and other means. Its vision is to provide "MegaRollups" capable of handling 100,000 to 200,000 transactions per second, including zk and optimistic rollups. MegaETH will use EigenDA for data availability.

27) Mitosis

"A modular liquidity protocol." Mitosis aims to unify the increasingly fragmented DeFi liquidity landscape by building cross-chain protocols that facilitate asset and message transfers between blockchains. Mitosis achieves capital efficiency by making bridged assets liquid. Mitosis collaborates with Hyperlane to make deploying Mitosis smart contracts and connecting modular chains easier.

28) Movement Labs

Creates a modular blockchain network built with the Move programming language. Movement runs a builder program to attract developers and has created M2: a MoveEVM zk second layer on Ethereum with parallel execution and shared sequencing. Movement raised $3.4 million in seed funding to promote the adoption of Move.

29) Neutron

A Cosmos application chain for building "integrated applications," providing a framework for building DeFi applications on Neutron L1, inheriting features from application chains and smart contracts. Integrated applications can access features like mempools, block automation, custom block space, and more. Neutron raised $10 million in 2023 led by BN labs.

30) Omni

Connects Ethereum rollups securely through a "low-latency interoperability network" powered by re-mortgaged ETH. Omni L1 (communication layer) is protected by re-mortgaged ETH and has secured $600 million in re-mortgaged ETH promised by EtherFi. Omni is also collaborating with Mantle, Injective, and several other companies, raising $18 million from Pantera, Two Sigma, Coinbase, and others.

31) Plume

The Plume network is a modular second layer designed for RWA (Real World Asset) applications. This means it focuses on compliance (with built-in KYC and AML features), ease of onboarding for users, instant settlement, and more. Plume L2 integrates with Celestia, Hyperlane, EigenLayer, Omni, and others. Learn more.

32) Risc Zero

zk proofs that can integrate with modular infrastructure components. Provides Bonsai smart contract SDK, Risc Zero zkVM, and Risc Zero proof system. For example, the SVM L2 (Eclipse) described above uses Risc Zero for zero-knowledge proofs. Other protocols built using Risc Zero include Altlayer, Citrea, Drosera, Layer N, Optimism, Avail, and more. Risc Zero raised $40 million in 2023 led by Blockchain Capital.

33) Ritual

A community-owned artificial intelligence network. Ritual provides a blockchain AI co-processor, making it easy to integrate AI models into crypto applications. The Ritual Superchain is a set of modular execution layers centered around different AI models. To launch this ecosystem, Ritual will use EigenLayer for security. Ritual raised $25 million in Series A funding led by Archetype.

34) Ternoa

A cross-layer multi-chain technology stack aimed at maximizing developer accessibility. Ternoa offers features like a privacy-focused file system and a first-layer blockchain. The chain has been operational since 2022 and has over 50 dapps built on it. Ternoa's native governance token ($CAPS) has been trading since 2021.

35) Taiko

Builds an equivalent zkEVM (Type 1) to Ethereum. Taiko also designs a "competitive rollup" architecture with competitive ordering and dispute mechanisms. Competitive ordering is a decentralized and permissionless way of ordering L2 transactions. The uniqueness of the Taiko stack lies in its equivalence to Ethereum while also being highly scalable. Taiko has raised $22 million led by Sequoia China and Generative Ventures.

3. Conclusion

Note that this is just a selection of some protocols in a rapidly expanding ecosystem. Additionally, more familiar names like Ethereum, Arbitrum, Optimism, zkSync, Polygon, Near, etc., are also building their own modular stacks, including L3 and DA layers.