Tatooine’s Dual Suns Monolithic Blockchain and Modular Blockchain Will Coexist

Author: Nosleepjon; Translation: Luffy, ForesightNews

In the past few months, I have been forced to read a lot about the progress in the field of blockchain scalability while browsing Twitter. This has made me both unhappy and pleased. You may have seen some promotions and debates about modular blockchains and monolithic blockchains, which have turned into a narrative massacre.

Each camp believes that their technical solution is better than the other. It has evolved into a narrative of monolithic blockchain vs modular blockchain, with many “either this or that” statements: “This is my chain and your chain”, “This is Solana vs Ethereum”, “My chain is faster/cheaper”, “Your chain is not decentralized”, “Hardware cannot scale”, “Rollup cannot scale”…

Despite this noise, I am confused about both. How can we prove that these seemingly opposite ideas are reasonable? Don’t believe everything they say.

• Zhao Changpeng BTC price will not double overnight after halving, but may reach multiple historical highs in a year.
• Two giants monopolize 88% of the blockchain transaction fees. How can other blockchains break through?
• Exploring Fully Homomorphic Encryption Part II Lattice Cryptography and LWE Problem

Let’s try something new (this is the TL;DR):

• Monolithic blockchains and modular blockchains provide different trade-offs for different use cases;

• Both have their uses, and they will grow together;

• The real competition is monolithic vs monolithic, modular vs modular;

• 2 different battlefields, 2 different North Stars;

• The theory of dual suns.

I thought of this name from “Star Wars”. Tatooine’s dual suns represent the dark side and the light side, the Sith and the Jedi, etc. (Note: In the movie “Star Wars”, the planet Tatooine has two suns.)

What is modular? What is monolithic?

Monolithic Blockchain

A monolithic blockchain vertically integrates the entire blockchain stack. Therefore, this type of blockchain can handle all the work from processing transactions to ordering transactions to ensuring data availability. So, in simple terms, it is a blockchain that can handle all blockchain work.

As a side note, I don’t think “monolithic” is the best way to describe it. I would say they are more like “integrated” blockchains, but for the sake of clarity, I will stick to using the term “monolithic blockchain”.

Modular Blockchain

A modular blockchain focuses on different parts of the blockchain stack, such as Rollup focusing on execution or Celestia focusing on data availability. By separating different components, different teams can specialize in their work and innovation. Each blockchain becomes a Lego block, and these specialized modular chains can be combined to build a more scalable blockchain.

Modular blockchains are much more complex than I described, for more information click here.

The Landscape of Scalable Blockchains

To understand the landscape of blockchain scalability, I have summarized a rough framework. Some disclaimers:

– The focus here is on the execution layer (the chain that processes user transactions) because they are user-facing and imply that the rest of the modular stack is working behind the scenes.
– It is oversimplified and generalized, omitting many details.
– For simplicity, ZK Rollup and Optimistic Rollup are treated as the same, but they are quite different.
– Your favorite blockchain may be missing from the diagram (you can contact me on Twitter).

Here is the framework I am currently considering:

Single-threaded Monolithic Blockchain:
A monolithic blockchain that processes one transaction at a time. Due to limitations, most of them have turned to Rollup or horizontal scalability roadmaps.
Examples: Ethereum, Polygon, Binance Chain, Avalanche

Parallel Processing Monolithic Blockchain:
A monolithic blockchain that processes multiple transactions at once.
Examples: Solana, Monad, Aptos, Sui

Single-threaded Modular Blockchain:
A modular blockchain that processes one transaction at a time. There are more subtle differences here, but this article does not go into detail.
Examples: Arbitrum, Optimism, zkSync, Starknet

Parallel Processing Modular Blockchain:
A modular blockchain that processes multiple transactions at once.
Examples: Eclipse, Fuel

Key Points:
– This is a scalability arms race, and single-threaded monolithic blockchains lag behind in terms of speed, cost, and user experience compared to parallel processing monolithic blockchains like Solana. This is not a good sign for widespread adoption.
– The introduction of modular blockchains/Rollups provides another scalability path, known as “horizontal scalability,” but it has yet to be fully explored. Optimistic Rollup, ZK Rollup, and application chains are examples, especially ZK Rollup, which is still in its early stages but worth the wait.
– What interests me the most is the upcoming parallel processing modular Rollups, such as Eclipse, which leverages the best parts of modular stack and parallel processing design to build a blockchain that may be comparable to existing parallel processing monolithic chains in terms of speed and cost.

Wait, is Nosleepjon advocating against Ethereum, against Solana, and in support of modular blockchains? No.

Monolithic blockchains and modular blockchains will coexist:
I believe we will see both of these scalability strategies succeed because they offer different trade-offs for different use cases.

Monolithic Blockchain Use Cases: Easily Composable
Most users and developers start with monolithic blockchains as they are easier to get started with and everything is readily available.

As a monolithic blockchain is a vertically integrated system, you don’t need to worry about infrastructure or anything else besides building smart contracts/applications.

A monolithic blockchain is an ideal general-purpose blockchain. You can combine it with the most chain primitives, existing application ecosystems, existing communities, and the largest liquidity pools.

Building on a monolithic blockchain architecture is cheaper. Most applications don’t need their own chains, and the cost of running and coordinating chain infrastructure is high.

Modular Blockchain Use Case: Sovereign Super Apps

To be honest, the term “modular” is actually a distraction, the real benefits and theme are sovereignty/ownership.

• You can have more control and customizability, such as compliance, permissions, risk limitations, forkability/upgradability, and iterative direction.

• Fat application theory. Most value will accrue to a few applications rather than the base chain they are on. We have seen this on Ethereum, where Uniswap, Lido, MakerDAO generate huge fees. Therefore, some super apps naturally want to capture more value by building their own application chains. This is particularly applicable to consumer applications and games, but not so much for DeFi due to the disruption of composability.

• Easier, more customizable cross-chain composition.

• More ways to profit. For example, you might be able to charge fees on your application chain but not on chains you don’t control.

• Avoid the noisy neighbor problem by running your own infrastructure to ensure uptime.

• More ambitious and smart teams continuously innovate across different parts of the stack, and new modular technologies can evolve over time.

• Do you think Coinbase doesn’t know what they’re doing? They control the sorting income and can attract customers to their Base blockchain. Enterprises and Web2 companies will like this, controlling sovereignty, monetization, and easy building out of the box.

Side note: Interestingly, we have been progressing in the narrative circle of new technologies, but ultimately we always come back to the theory proposed by Cosmos years ago.

The Endgame of Gaming

Monolithic blockchains and modular blockchains both have their merits, and there is not such a sharp opposition as in public opinion.

The endgame of the dual suns seems to be:

Monolithic blockchains will eventually compete with each other in general + composability DeFi use cases.

Modular blockchains will eventually compete with each other in sovereign super app use cases.

One dominant monolithic blockchain emerges, along with smaller alternatives.

A modular/sovereign super app chain + a smaller ecosystem of Rollup/application chains that are interoperable.

• There will be one dominant monolithic blockchain because consumers naturally gather around a category leader. Network effects help expand liquidity, user base, developer community, brand awareness, etc. The most effective pricing and user experience will be concentrated on a globally universal monolithic blockchain.

• Some smaller monolithic blockchain alternatives will still exist, but most monolithic blockchains will die out. Just like the market share split of Uber/Lyft, Google/Bing.

• Several large-scale modular super app chains will emerge. For these super apps, it is more advantageous to break away from the original blockchain and launch their own blockchain rather than paying rent to a monolithic blockchain.

• Long-tail interoperable Rollup/application chain networks (like the rise and fall of apps in an app store?).

In this case, Rollup as a service provider becomes like a VC, betting on a combination of Rollup/application chains with limited engineering time. If one succeeds, the fees/token shares will bring several times the return to the provider.

It is important not to underestimate the scale of some future Rollup/application chains. The fees generated by consumer apps with fewer than 100,000 users like friend.tech are more than the entire blockchain of Bitcoin, Arbitrum, BSC, etc.

So how should we bet?

My guess:

• The native tokens of the winning monolithic blockchain may gain currency status and become the most recognized trading units in the largest monolithic blockchain.

• The native tokens of the settlement layer of modular Rollup/application chains may gain currency status and become the most recognized trading units in the modular ecosystem.

• The dominant wallets and interoperability layers abstract all these application chains into a seamless user experience. For convenience, there may be pricing power to charge spreads on all the applications they integrate, just like credit card companies facilitate consumer/merchant interactions?

Final Thoughts

• Make your own conclusions and don’t let those speakers force you to believe everything they say. Being loud doesn’t mean they are necessarily right (including me).

• I’m glad to see more experiments on parallel processing Rollup and ZK Rollup that may be comparable to parallel processing monolithic blockchains in terms of performance.

• If we indeed have a dual ecosystem of modular/sovereign chains + monolithic blockchains, then we will need scalable interoperability to solve the fragmentation of liquidity and user experience. It is not just about connecting modular Rollups with each other, but also connecting monolithic blockchains to other Rollups.

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