📝 Editor’s Note:

A new paradigm has emerged in which modular blockchains are enabling new chains to be constructed in more customizable ways, unlocking scale that wasn’t previously possible on ETH L1 alone. Modularity is the the disaggregation of the blockchains' different functions into composable, plug-and-play protocols — these functions are: 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: Agreement on the order of transactions.
• Data availability: Verification that transaction data is available to download.

In taking execution off mainnet, L2s were arguably the first major step for Ethereum trending towards modularity. Since then, other projects have moved to specialize in different components of the blockchain stack, each aiming to improve scale & throughput with nuanced tradeoffs. For this issue, we tapped some prominent voices to cover some of the most influential and emerging projects in the modularity sector. Enjoy!

– ON Editorial Team

Celestia | Omni Network | AltLayer | Conduit

• The modular category has received a lot of push back about the fragmentation problem. Cross-rollup interoperability is the biggest focus for scaling the modular expansion — crypto may have reached inflection point with the breakthrough of chain abstraction teams building a better UX for the modular ecosystem. The market map below depicts 80+ teams leading the unification of the modular ecosystem.

• Some big players are showing some signs of momentum — Celestia has gained 44% of total marketshare of data posted of all data availability providers including Ethereum. And total transaction count on Hyperlane, a project designed to facilitate inter-chain interactions, has exceeded 4M transactions. Hyperlane has been able to connect to longer-tail L2s allowing them to dominate niche routes.

• The modularity mindshare metric from Kaito AI has shown a steady sideways trend in the past year. Excitement grew in February and spiked in July, but has tailed off in August with the late summer lull across crypto markets.

• Celestia is a data availability solution for modular EVM blockchains, meaning that it makes it allows nodes to verify data without needing to download entire blocks. Eclipse, an emerging Layer 2, has become Celestia's biggest user since launching on July 31. LightLink, another Ethereum L2, is the 2nd major consumer of Celestia blobs.

• In the past three months, Celestia has gone from 9.9% of market share to over 40% in terms of the amount of data posted to its solution. Ethereum Blobs, which went live on Mar. 13 as part of the Dencun upgrade, are still the main source of data availability with over 58% market share.

• EIP-4844 was implemented on Ethereum in March 2024 to introduce a new type of transaction called “blobs." These transactions are specifically designed to lower the cost of data storage on the network, which directly impacts rollups by reducing their transaction fees. Since March, average transaction fees on rollups have decreased ~98% and are now only a few pennies. This decrease will create a favorable UX for Omni users that use cross-rollup applications across the Ethereum ecosystem.

• Over the last year, Ethereum TVL has grown more concentrated in Arbitrum, Optimism, and Base. These rollups account for 91% of 1Y net rollup inflows. Omni is prioritizing support for these three rollups with its upcoming mainnet V1 deployment, enabling unified liquidity and a chain abstracted devX.

• The Omni Foundation recently distributed its $ETHFI and $ALT airdrops to 15,735 unique $OMNI stakers. Collectively, this group staked 8.7% of circulating supply and received a 14.5% APR during Omni’s Genesis Staking period. 97% of stakers staked less than 100 $OMNI.

• AltLayer’s “restaked rollup” framework leverages the power of EigenLayer's restaking mechanism to provide rollups with enhanced security, decentralization, and crypto-economic fast finality. MACH, AltLayer’s actively validated service (AVS), provides fast-finality for any given rollup. Of the 16 live AVSs on EigenLayer mainnet, AltLayer has helped launch 5. Each of these AVS are sufficiently decentralized with 33-57 operators and 19k-75k delegators.

• AltLayer’s AVSs have recorded $11.45B in restaked TVL. The TVL measured in dollar notional has been in the range of $9.3-$11.45B, which shows that the TVL has been sticky for these AVSs as there is no slashing currently enabled. Periodic surges in TVL coincide with new AVS launches by AltLayer.

• Conduit is the rollup-native cloud platform powering the highest-performing rollups in operation — rollups like Proof of Play. Proof of Play’s Pirate Nation is the world’s biggest fully onchain game, with tens of thousands of players and all gameplay taking place on the Apex Chain, an Arbitrum L3 powered by Conduit. Apex Chain regularly leads all rollups in data throughput as measured by megagas per second – a measure that accounts for both transactions and the complexity of those transactions – and has peaked to over 67 megagas/second at its time of highest usage.

• This summer, Conduit teamed up with Celestia to launch SuperBlobs, a new blob mechanism that increases maximum data per blob to 2.5x what’s possible on ERC-4844 blobs. This translates to huge savings for rollups — Orderly Network, the biggest SuperBlobs user, saw daily average settlement costs fall 73% when they made the switch. Overall, Conduit rollups using SuperBlobs pay just $0.09 per mb of data settled.

• As a leading rollup platform for teams building on OP Stack, Conduit is a huge supporter of Optimism’s vision for the Superchain. Currently, five of the top ten Superchain rollups are powered by Conduit: Mode Network, Derive (formerly Lyra), Build on Bitcoin, Orderly Network, and Zora Network.