Katherine Ross

David Canellis

Michael McSweeney

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox.&nbsp;<a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">When in Rome</h2>



It took the Romans about 500 years to build the aqueducts.&nbsp;



Thankfully, crypto isn’t taking quite as long to build out its own plumbing systems.&nbsp;



Before the aqueducts, citizens mostly relied on local water sources: rivers, springs and streams. Water was also available through groundwater wells and ancient cisterns which harvested the rain.



This meant the overall supply was spread across the land, fragmented, which stifled Rome’s growth. Demand outstripped supply, and aside from basic hygiene, water was needed to <a href="https://en.wikipedia.org/wiki/Roman_aqueduct#:~:text=The%20Romans%20constructed%20aqueducts%20throughout,milling%2C%20farms%2C%20and%20gardens.">expand</a> Roman industry, including mining, farming and milling.&nbsp;



So, over five centuries (the mid-to-latter half of the empire’s lifespan), Rome constructed 11 aqueduct systems, including pipes, tunnels, bridges and canals. The aqueducts brought in freshwater from sources as far as 57 miles <a href="https://education.nationalgeographic.org/resource/roman-aqueducts/">away</a> from the city, supplying over 1.5 million cubic yards of water per day (750 liters per person, per day).&nbsp;



Crypto is busy with aqueducts right now. The Romans often bored wells inside their own homes. Blockchains have effectively done the same thing — attracted gluts of crypto capital to power their networks, but it’s effectively stuck within their respective ecosystems.



Monolithic chains like Ethereum mainnet, Binance Smart Chain and Solana have largely sucked up the majority of crypto capital staked, both directly to the chains themselves through validators and via their DeFi ecosystems.&nbsp;



Liquid <a href="https://blockworks.co/tag/staking">staking</a> protocols like Lido, Rocket Pool and Jito have helped tap some of that locked capital, tokenizing staking receipts so they can be traded, lent out, or otherwise put to work in liquidity pools.&nbsp;



Those have enabled crypto stakers to keep their digital assets productive even after they&#8217;ve contributed to the economic security of Ethereum, Solana and the like. About $54 billion in crypto is tied up in those liquid staking protocols right now, more than half of the total value locked in all of DeFi, according to <a href="https://defillama.com/">DeFiLlama</a>.



Restaking protocols like EigenLayer, Karak and <a href="https://blockworks.co/news/symbiotic-seed-round-shared-security">debutante Symbiotic</a> are working on ways to channel that productivity into securing other platforms, rather than for trading and liquidity farming.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXez8GUtodRf_Seyf8dZvJ8yxY0r0Ci8xljVsuUdxfPVulhFVgdS9eaKuTwqg3dXO1nLMDmMCFXkxzl-NaGGTR9Ek6iz80rFwjGVUbEqXyJqTFIl27RnvfJWGi1QVLxvL-lb1SlALEZKEnpiuIlJukOQZUU?key=t6vNZeCk8CsN6yelmM2wDg" alt=""/><figcaption class="wp-element-caption">A large ETH rally led to a major influx into EigenLayer</figcaption></figure>



The idea is to pipe that liquidity to smaller offerings that also need economic backing to secure their functions. 



So far, $20 billion has been locked up in those crypto-aqueducts, most of it with EigenLayer, which now has about a <a href="https://dune.com/hahahash/eigenlayer">dozen</a> actively-validated services.&nbsp;



Karak has crossed over the $1 billion mark as it builds out its own ecosystem, although it also accepts other types of collateral than staked ether, including wrapped bitcoin and stablecoins.



Where Romans couldn’t get enough water, crypto users can’t get enough yield. Both dynamics have led to an explosion in infrastructure.&nbsp;



It certainly worked for the Romans — until it didn’t. Better blame that on governance.



P.S. Katherine and I need your help. No, we’re not soliciting you for donations. Phew. We just want to get to know you better. <a href="https://empire-31ed59.beehiiv.com/forms/81e8b876-5f2b-4428-9a77-21803dcf3a5d">Fill out this survey</a> and help us produce journalism tailored to you and your interests.



— David Canellis



<h2 class="wp-block-heading">Data Center</h2>



<ul class="wp-block-list">
<li>Over 27% of the ETH supply is now <a href="https://dune.com/hildobby/eth2-staking">staked</a>, up from 24% in January.</li>



<li>1/3 of staked ETH is with liquid staking apps like Lido. Another 9% is staked through restaking protocols, mostly EigenLayer.</li>



<li>$175 million in WBTC, FIL and NEAR is currently in smaller restaking platforms Pell, Parasail and Octopus, per DeFiLlama.</li>



<li>BTC is working on reclaiming $67,000 after falling 6% over the past week.</li>



<li>NOT, UNI and TON are leading the bounce, with the former up 21% in the past day but still down 4% over the past week.</li>
</ul>



<h2 class="wp-block-heading">Follow the (modular) money</h2>



I’m always curious — about everything, but let’s focus on what tickles me in crypto — where money’s going and who’s interested in what.&nbsp;



Last week, we saw a multimillion-dollar raise for a modular blockchain solution, and over the first quarter of this year we’ve seen a bit of money trickle in for other similar projects.&nbsp;



Naturally, this led me to wonder how venture capital is approaching modularity, a buzzy but still little, sector of crypto.



Framework Ventures co-founder Vance Spencer said the interest in modularity “has declined a bit in comparison to last year.”



“I doubt that the wave of interest will return until we see more adoption,” he added.



Ali Yahya, general partner at a16z Crypto, <a href="https://x.com/a16zcrypto/status/1744504271989858475?s=46">wrote</a> in January that “monolithic architectures, meanwhile, have the advantage of allowing deep integration and optimization across what would otherwise be modular boundaries, leading to greater performance… at least at first.”



But he praised modular tech stacks for allowing “permissionless innovation” which then allows those interacting with it to specialize, and promotes organic competition.



While I’ve heard about the interest in SocialFi and the need to focus on building infrastructure, modularity largely didn’t come up in conversations I had around capital flows in this year’s first quarter.



Spencer thinks there’s been enough raised in one part of the modularity tech stack, which would drive down interest in similar projects.



“If anything, I think there’s a non-zero chance that VC interest [in modularity] either stays flat or slightly decreases, at least in the short term,” Spencer said.



This doesn’t mean there isn’t interest, just that capital is unlikely to continue to flow into certain parts of the tech stack because some players — think Celestia and EigenLayer (and maybe even Avail, after its raises) — are becoming more established.&nbsp;



If you’re familiar with those projects then you know that they specialize in data availability, the first layer of the modularity tech stack, as Spencer put it, and they’ve secured millions in funding. In February, EigenLayer raised $100 million from Andreessen Horowitz.&nbsp;



Then you have the millions raised by rivals Celestia and Avail. Maybe Spencer had a point when he told me he struggled to see the case for more major funding in new data availability projects without some kind of differentiation…



That leaves two other parts of the overall tech stack: settlement and execution layers.



“I’d argue that we might see more experimentation within these layers, but I think the tweaks will be smaller, like different programming languages (see Movement Labs). I think a few of these types of projects will continue to get funded, but I think we’re less likely to see something emerge at the same size as a project on the DA layer,” Spencer said.



To David’s point above, there are only so many “crypto aqueducts” that need to be built at the same time, especially if the offerings aren’t that different. But with the ability to spark competition and allow more innovation — as Yahya pointed out — modularity remains really interesting even if the VC funding is taking a breather.&nbsp;



— Katherine Ross



<h2 class="wp-block-heading">The Works</h2>



<ul class="wp-block-list">
<li>Binance CEO Richard Teng said this year is a “landmark year” for crypto, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-06-13/binance-ceo-teng-sees-landmark-year-as-crypto-goes-mainstream">reported</a>.</li>



<li>Riot Platforms boosted its <a href="https://www.riotplatforms.com/riot-platforms-inc-reports-beneficial-ownership-of-14-in-bitfarms-ltd/">stake</a> in Bitfarms to 14% despite the latter adopting a poison pill strategy to fend off the former.</li>



<li>Bernstein <a href="https://www.coindesk.com/markets/2024/06/14/bitcoin-could-hit-1m-within-10-years-bernstein-says-as-it-initiates-coverage-of-microstrategy/?_gl=1*1as423f*_up*MQ..*_ga*NTkzNDI4MzA5LjE3MTgzNjU3MzE.*_ga_VM3STRYVN8*MTcxODM2NTczMS4xLjAuMTcxODM2NTczMS4wLjAuMjAwNTk1NDA0NA..">initiated</a> coverage of MicroStrategy with an outperform rating on Friday.</li>



<li>Ripple’s pushing for a <a href="https://www.theblock.co/post/300093/ripple-argues-for-lower-fines-than-secs-proposed-2-billion-cites-terraform-settlement-to-make-its-case#:~:text=The%20company%20compared%20the%20SEC's,signed%20off%20on%20the%20settlement.">lower fine</a> in the SEC’s case, using the $4.5 billion Terraform sum to make its point.</li>



<li>Trezor unveiled its newest hardware wallet, Safe 5, Friday in a <a href="https://x.com/Trezor/status/1801562827641040915">post</a> on X.</li>
</ul>



<h2 class="wp-block-heading">The Morning Riff</h2>



More proof of an elevated crypto spring arrived yesterday with news that Paradigm has raised a big new pot of venture funding.



Sure, it didn’t cross the $1 billion mark, but <a href="https://x.com/matthuang/status/1801283717664526835?s=46">$850 million is no small potatoes</a>, either. Coupled with the fact that these funds will be directed to “crypto projects at the earliest stages,” it’s safe to say these funds will go far.



Paradigm’s round would seem to support the narrative that crypto venture capital <a href="https://www.reuters.com/technology/venture-capital-funding-crypto-rises-24-bln-pitchbook-says-2024-05-20/#:~:text=May%2020%20(Reuters)%20%2D%20Crypto,spot%20ETF%20whetted%20investor%20appetite.">is back</a> after an extended chill.&nbsp;



Sure, investment levels —&nbsp;actual dollars deployed to startups —&nbsp;<a href="https://defillama.com/raises">are still well below</a> 2022’s days of wild abandon, but maybe that’s a good thing. Maybe a more modest funding landscape is a net positive compared to the, uh, reckless insanity over in the “celebrity” memecoin gambling inferno.&nbsp;



Of course, the wheels could always fly off if the crypto VC brakes are released entirely in the months ahead. I hope that’s not the case.&nbsp;



— Michael McSweeney



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Empire Newsletter: What the Roman Empire and crypto have in common

Niko Hosn

The year is 2024, and the fast-paced realm of crypto shows no signs of slowing. Innovation is the name of the game, and monolithic blockchains like Ethereum and Bitcoin still reign supreme.&nbsp;



But as someone who&#8217;s been knee-deep in the trenches of blockchain development, I can&#8217;t help but wonder if these behemoths are really cutting it anymore. Herein lies my thesis:&nbsp;



Modular blockchains are the disruptors poised to revolutionize scalability and creativity towards the next Cambrian explosion of Web3 products as we know them.&nbsp;



As engineers and product developers, it&#8217;s time to embrace specialized tools for specialized tasks and leave the one-size-fits-all approach behind. This isn’t to say that prior layer-1s haven’t paved the way for some incredible innovations, but attempting to scale legacy layer-1 blockchains like Ethereum and Bitcoin has proven inefficient and counterproductive. They&#8217;re dragging us down, like trying to sprint through quicksand.



Blockchain researchers have grappled with the challenge of creating the optimal system for years. Many architectures attempted to accommodate all users on a single chain or a tightly coupled group of chains. Yet, scaling such systems for billions of users is complex and limited. We&#8217;ve thrown everything and the kitchen sink at it with solutions like sharding and layer-2 blockchains to provide additional scaling methods.&nbsp;



Despite this, most efforts still fall somewhat short in addressing all fundamental scalability issues. As a result of these failings, and perhaps in response to them, modular blockchains are strutting onto the scene as a more efficient and scalable alternative. Prime yourself and think, “more legos.”



<h2 class="wp-block-heading">The emergence of modular blockchains</h2>



Think of modular blockchains like the Swiss Army Knife of blockchain development.&nbsp;



These chains break down the blockchain into modular components, specializing in specific tasks at the core of a blockchain’s architecture: execution, settlement, consensus and data availability. By distributing tasks across multiple specialized layers, modular blockchains can, in theory, achieve greater scalability, customizability and security at a faster pace. When you distribute the workload like that, magic happens — so why waddle about in intellectual exercises of scaling bloated layer-1s?



At the core of modular blockchain architecture lies a layered approach that&#8217;s as elegant as it is efficient. The old heavyweights like Bitcoin and Ethereum remain the foundational layer of the crypto economy and hold down the fort with their robust security and stability. Meanwhile, layer-2 solutions like rollups and sidechains provide scalability without compromising the security of the base layer. Lastly, layer-3 protocols offer specialized environments tailored to specific development needs.



Read more from our opinion section: <a href="https://blockworks.co/news/ethereum-is-too-hard-to-use">Ethereum is too hard to use</a>



One of the <a href="https://blockworks.co/news/data-availability-transaction-costs-blockchain">first projects</a> to propose modular blockchain development is the Celestia network. Celestia currently functions by separating execution from consensus and implementing data availability sampling (DAS) as a core feature.



Modular blockchains’ adroit-like qualities for specific engineering challenges translate into a targeted effectiveness to service specific industry niches.&nbsp;



To illustrate, GameSwift, a modular blockchain project, is currently working to facilitate the development of games hosted on-chain. Their goal is to create a network of applications that will help avoid gamers’ in-game purchases or earned assets being stored in a central server and consequently hacked. To highlight the relevance of this innovation, global gaming audiences spent approximately $54 billion on additional in-game content in 2020.



<h3 class="wp-block-heading">The shape of things to come</h3>



Modular projects are already pushing boundaries and redefining what&#8217;s possible in the blockchain space. Hybrid optimistic and zero-knowledge solutions are on the horizon, promising even greater scalability and security, as is the application of sharding, incentivized verification and parallelized VMs (virtual machines) on the execution layer of a chain.



With layer-1s feeling the heat, Ethereum devs released plans for a unified settlement and data availability layer: danksharding, a promising development, and a term I can’t say aloud without curling my lips. But development and on-time delivery for these monolithic chains’ upgrades have been historically slow and unmet.



By accepting monolithic chains as what might be holding us back, modular architectures offer a glimmer of hope. We are transitioning from monolithic blockchains and siloed consensus layers to modular, application-specific chains with shared consensus layers.&nbsp;



While challenges remain in standardizing cross-chain communication and ensuring decentralization at each level, the potential benefits of modular blockchains are too compelling to ignore. These blockchains have the potential, and are already being applied, to impact industries like supply chain management, real estate (property transactions), digital identity verification, energy grid management and even healthcare data management.&nbsp;



Whether you&#8217;re a die-hard Bitcoin maximalist or an Ethereum enthusiast, one thing&#8217;s for sure: In a modular future, users emerge as the ultimate beneficiaries.



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">Niko Hosn, CTO of ZTX and founder of RareMint, is an expert in Web3 gaming and blockchain development. At ZTX, leveraging ZEPETO&#8217;s IP — the largest metaverse in Asia with over 430 million lifetime users — he empowers blockchain adoption, fostering a thriving on-chain world for communities and creators.</div>


<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Ethereum and Bitcoin are holding us back

Jack Kubinec

0G Labs has raised $35 million in fresh funding for its development of infrastructure aimed to help AI and other compute-intensive applications run on-chain. The round drew participation from Hack VC, Stanford Builders Fund, Delphi Digital and GSR, among several others.&nbsp;



The platform is hoping to stake its claim as a go-to layer for data availability (DA), joining a field of current and forthcoming DA providers that <a href="https://blockworks.co/news/arbitrum-ethereum-data-availability">includes the likes of Celestia</a>, EigenLayer, NEAR and Avail. 0G, shorthand for Zero Gravity, hopes to scale by separating data storage from data publishing.



Data availability refers to the ability of nodes in a blockchain network to access and verify transaction data. For optimistic rollups like Arbitrum and Optimism, for example, nodes need to be able to access all the chain’s transactions to run proofs and weed out fraudulent transactions.&nbsp;



Read more: <a href="https://blockworks.co/news/data-availability-transaction-costs-blockchain">Celestia, the first modular data availability network, launches on mainnet</a>



But publishing large amounts of data is expensive: A Blockworks Research report <a href="https://app.blockworksresearch.com/research/the-data-is-available-an-overview-of-data-availability-layers#introduction">estimated</a> that DA costs account for 90% of transaction costs on some <a href="https://blockworks.co/tag/rollups">rollups</a>. The cost is exacerbated by the fact that many rollups use Ethereum for DA, <a href="https://blockworks.co/news/ethereum-rollup-data-availability-alternatives">and Ethereum blockspace is expensive</a>.&nbsp;



As a result, startups like 0G have cropped up to provide much cheaper DA layers. These are particularly attractive to high-throughput sectors like <a href="https://blockworks.co/tag/gaming">gaming</a>, on-chain social media or <a href="https://blockworks.co/tag/artificial-intelligence">AI</a>.&nbsp;



Michael Heinrich, founder of 0G, told Blockworks that the protocol is working with “a number” of AI projects including ORA and Modulus Labs.&nbsp;



Read more: <a href="https://blockworks.co/news/ora-on-chain-oracle-ethereum">ORA’s on-chain AI oracle is now available on Ethereum mainnet</a>



“Their horizontal <a href="https://blockworks.co/tag/scaling">scaling</a> approach is different from other players in the space, and it&#8217;s going to be able to hit the throughput you need to support high volume applications [on-chain],” Sam Lehman, principal at 0G Labs investor Symbolic Capital, told Blockworks.



0G is <a href="https://0glabs.gitbook.io/0g-doc">designed</a> with two lanes: one for data publishing and one for data storage.&nbsp;



The platform’s data publishing lane <a href="https://0glabs.gitbook.io/0g-doc/docs/0g-da/architecture">makes</a> use of data availability sampling.&nbsp;



DA sampling involves so-called light nodes in a blockchain network downloading random subsets of data to conclude with high statistical probability that all data has been published correctly. DA layers Celestia and Avail also make use of data availability sampling. Ethereum’s planned upgrade to full danksharding <a href="https://ethereum.org/en/roadmap/danksharding/">will</a> shift the network to start using DA sampling as well.



Read more: <a href="https://blockworks.co/news/data-availability-ethereum">Why data availability sampling matters for blockchain scaling</a>



With the 0G platform, batches of data that are sent to 0G’s storage contract also go through the data publishing lane. In the storage lane, data sent to 0G is erasure coded, meaning some data is duplicated so that block data can always be recovered even if data is lost or withheld. Celestia, Avail and EigenDA either do or plan to use erasure coding for their data availability systems. 



0G then sends chunks of erasure coded data to a decentralized storage system that is secured by paying rewards to data storers. This system is meant to be horizontally scalable, meaning that each node has to download less data as more nodes are added to the system.



In general, DA providers are premised on modularity, which is the idea of breaking complex systems (like blockchains) into smaller, interchangeable parts. DA layers are used by <a href="https://blockworks.co/news/monolithic-modular-blockchain-debate">modular, as opposed to monolithic</a>, blockchain systems.



Before starting 0G, Heinrich previously founded office food service Garten.



Updated March 26, 2024 at 10:23 am ET: Amended to clarify that Avail is a separate entity from Polygon.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

0G Labs raises $35M for data availability, spurring competition with Celestia, EigenLayer, others

Web3 gaming startups not named Axie Infinity don’t tend to pull show-stopping funding rounds, but there’s a fairly constant trickle of investment into various games and developer studios.&nbsp;



That trend continued this week as a host of companies integrating <a href="https://blockworks.co/tag/gaming">gaming</a> with Web3 announced funding rounds.



Gaming studio Carbonated <a href="https://x.com/CarbGames/status/1768399341734285819?s=20">announced</a> $11 million in funding this week alongside the early access playtest of its NFT-enabled mobile shooter game MadWorld. The round was led by South Korean gaming firm Com2uS.



MadWorld is set in a post-apocalypse world where gamers battle to control plots of land tokenized as <a href="https://blockworks.co/tag/nfts">NFTs</a>. a16z participated in the round, and also <a href="https://x.com/illscience/status/1283808540545576966?s=20">invested</a> in Carbonated in 2020.&nbsp;



Read more: <a href="https://blockworks.co/news/a16z-2024-ideas-list">A16z&#8217;s crypto ideas list for 2024 spotlights AI, gaming</a>



The developers of the massively multiplayer online game MetaCene <a href="https://twitter.com/MetaCeneGame/status/1767461662271951091">announced</a> a $10 million Series A round with participation from The Spartan Group, Animoca Ventures and others. This follows on $5 million in seed funding MetaCene <a href="https://medium.com/@MetaCene_Official/metacenes-seed-round-fundraising-completes-with-an-impressive-roster-of-renowned-investors-df3d96eb0682">raised</a> in July 2023.



The Singapore-based gaming company boasts many of the typical Web3 gaming integrations <a href="https://medium.com/@MetaCene_Official/gear-up-for-metacene-alpha-test-iii-1-000-000-rewards-await-on-pc-mobile-86d0f8cabc0d">alongside</a> “social guild DAO governance.” The game is still in alpha testing for whitelisted participants.&nbsp;



On the infrastructure side, Blockus <a href="https://www.prnewswire.com/news-releases/all-in-one-web3-gaming-ecosystem-blockus-raises-4m-pre-seed-after-completing-a16z-incubator-program-302085489.html">raised</a> a $4 million pre-seed for a service helping game developers add blockchain-enabled features. Blockus participated in a16z’s crypto startup accelerator, though the VC did not apparently participate in the round.&nbsp;



<h2 class="wp-block-heading">Eclipse hauls in $50 million for modularity&nbsp;</h2>



The potential for <a href="https://blockworks.co/tag/modular-blockchains">modular</a> blockchains is a buzzy topic among developers, and one firm cashed in on the concept this week. The modular layer-2 blockchain Eclipse raised a $50 million Series A, <a href="https://blockworks.co/news/eclipse-series-a-funding-mainnet-launch">Blockworks reported</a>. Placeholder Ventures and Hack VC led the round.&nbsp;



Modular blockchains divide up the different tasks carried out by blockchains into different layers, as opposed to monolithic chains like <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a> where the same set of nodes do everything.&nbsp;



Despite <a href="https://blockworks.co/news/ethereum-dencun-upgrade-mainnet">Ethereum’s fee-reducing Dencun upgrade</a> this week, Eclipse will continue to use high-throughput network Celestia to post its transaction data, founder Neel Somani told Blockworks. The chain is expected to go to mainnet next quarter.&nbsp;



<h2 class="wp-block-heading">Other notable fundraises</h2>



<ul class="wp-block-list">
<li>Zk proof-focused infrastructure firm Polyhedra <a href="https://www.finsmes.com/2024/03/polyhedra-network-closes-20m-in-funding-at-1-billion-valuation.html">raised</a> $20 million at a $1 billion valuation.</li>



<li>Steve Cohen’s Point72 Ventures <a href="https://x.com/p72vc/status/1768653548143665652?s=20">led</a> a $10 million round in D2X, which is launching an EU-based derivatives exchange.&nbsp;</li>



<li>Data computing for blockchain startup Clique <a href="https://www.globenewswire.com/news-release/2024/03/14/2846590/0/en/Clique-raises-8M-in-Series-A-to-revolutionize-the-way-smart-contracts-access-data.html">announced</a> an $8 million Series A.&nbsp;</li>



<li>Web3 social platform UXLink <a href="https://twitter.com/UXLINKofficial/status/1767745717119135776">raised</a> $9 million.</li>
</ul>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Funding Wrap: Gaming continues to draw investor intrigue

Bessie Liu

Modular blockchain Eclipse has secured $50 million in a Series A funding round led by Placeholder and Hack VC, bringing its total funding to $65 million. 



Other investors including Polychain Capital, Delphi Digital, Maven 11, DBA and Fenbushi Capital also participated in the round.



Blockchain modularity refers to the different design layers of a blockchain stack. These include execution, settlement, consensus and data availability.&nbsp;



Read more: <a href="https://blockworks.co/news/monolithic-modular-blockchain-debate">A spicy salvo launched in the monolithic vs modular debate</a>



For blockchains like Bitcoin, Ethereum and Solana, this activity is carried out by the same set of nodes. Modular blockchains, on the other hand, divide these different functionalities into separate specialized layers.



Neel Somani, the founder of Eclipse, told Blockworks that he believes that there are no <a href="https://blockworks.co/tag/layer-2-2">layer-2s </a>on <a href="https://blockworks.co/news/lightspeed-yakovenko-layer-2-scaling">Ethereum today that are built for scale</a>.&nbsp;



“There are many theoretical solutions, and plenty of infrastructure being funded which will mitigate the issues of liquidity fragmentation in the coming years, but our view is that there is tons of low-hanging fruit at the execution layer which we will happily incorporate to provide a superior user experience on <a href="https://blockworks.co/tag/ethereum">Ethereum</a>,” Somani said. “Eclipse is intended to be the most performant layer-2.”



Eclipse is built using the Solana Virtual Machine (SVM) for execution, Celestia for data availability, and Ethereum for settlement and consensus.&nbsp;



Read more: <a href="https://blockworks.co/news/eclipse-solana-virtual-machine">Eclipse is using Solana’s virtual machine to launch an Ethereum L2</a>



Although the Dencun upgrade <a href="https://blockworks.co/news/ethereum-dencun-upgrade-march-13">is just around the corner</a>, which will make data posting much more affordable through the introduction of EIP 4844. Somani notes that Eclipse will continue to use Celestia for data availability however, at least for the time being.



“Despite the Polymarket poll saying blobs will be practically free after Dencun, I find it unlikely that this will actually be the case,” Somani said.&nbsp;



The team may consider publishing some data to Ethereum following full Danksharding, like state diffs.&nbsp;



Read more: <a href="https://blockworks.co/news/ethereum-rollup-data-availability-alternatives">For Ethereum rollups, dealing with data remains a bottleneck</a>



Despite these considerations, Somani notes that publishing all transactions onto a data availability layer, even for <a href="https://blockworks.co/tag/zero-knowledge-rollup">zk rollups</a>, has advantages. This approach ensures transparency, enabling anyone to promptly verify if a zk proof system has been tampered with or compromised.



“We are constantly monitoring DA advancements on the Ethereum layer-1. At the same time, for infrastructure it&#8217;s always wise to place a premium on any dependencies that are stable and live today,” he said.



The company noted that it will launch mainnet in Q2 of 2024. It has so far released a devnet and testnet version of its protocol, with several <a href="https://blockworks.co/tag/dapps">dapps</a> already testing out its infrastructure. These <a href="https://blockworks.co/news/the-investors-guide-to-rarible">include NFT marketplace Rarible</a>, oracle infrastructure Pyth Network and lending protocol Solend.



Following its mainnet launch, the company said it would sponsor hackathons and accelerators and organize community events for its users.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Eclipse secures $50M ahead of mainnet launch

Macauley Peterson

Ethereum’s roadmap for scaling employs a combination of specialized infrastructure components for disparate steps in the life of a blockchain transaction: execution, transaction ordering, data availability, settlement and consensus, as opposed to an all-in-one solution.



In short, modular vs. integrated.



A chief impediment is the potential degradation of the user experience in the process, as applications run across multiple chains that don’t necessarily talk to each other in anything like real-time.



Avail, known primarily as a provider of data availability (DA) — as the name suggests — has been quietly working on a more holistic suite of solutions to this burgeoning interoperability problem.



Read more: <a href="https://blockworks.co/news/ethereum-rollup-data-availability-alternatives">For Ethereum rollups, dealing with data remains a bottleneck</a>



The project announced a $27 million seed funding round on Monday, led by prominent investors Founders Fund and Dragonfly, alongside SevenX, Figment, Nomad Capital and various angel investors.



The funding will help Avail move beyond DA to encompass two other primary products that it calls Nexus and Fusion.&nbsp;



Together, this “Avail Trinity” is intended to address issues of fragmentation and pave the way for a more integrated experience across <a href="https://blockworks.co/tag/modular-blockchains">modular</a> ecosystems.



Founded by Anurag Arjun and Prabal Banerjee —&nbsp;both formerly part of <a href="https://blockworks.co/tag/polygon">Polygon</a> — Avail’s Nexus is a conceptual cousin of Polygon’s aggregation layer (or AggLayer), zkSync’s Hyperchains and Starknet’s layer-3s, all of which are aimed at providing cross-chain interoperability.



Read more: <a href="https://blockworks.co/news/polygon-zkevm-type-1-prover">Polygon zkEVM prover reaches Type 1 status</a>



<h2 class="wp-block-heading">Cross-rollup proofs</h2>



Nexus serves as a hub for proof aggregation — to provide verification of various <a href="https://blockworks.co/tag/rollups">rollups</a> through a zero-knowledge proof-based coordination mechanism.



“There will be a lot of rollups that use their respective stacks but are connected to each other in some way or the other,” Arjun told Blockworks.


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><img loading="lazy" decoding="async" width="2560" height="1707" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/02/Anurag-and-Prabal_1-scaled.jpg?w=1024&amp;h=1024" alt="" class="wp-image-81004" style="width:433px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/02/Anurag-and-Prabal_1-scaled.jpg?w=2560 2560w, https://blockworks-co.imgix.net/wp-content/uploads/2024/02/Anurag-and-Prabal_1-scaled.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/02/Anurag-and-Prabal_1-scaled.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/02/Anurag-and-Prabal_1-scaled.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/02/Anurag-and-Prabal_1-scaled.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/02/Anurag-and-Prabal_1-scaled.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2024/02/Anurag-and-Prabal_1-scaled.jpg?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2024/02/Anurag-and-Prabal_1-scaled.jpg?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2024/02/Anurag-and-Prabal_1-scaled.jpg?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2024/02/Anurag-and-Prabal_1-scaled.jpg?w=80 80w" sizes="auto, (max-width: 2560px) 100vw, 2560px" /><figcaption class="wp-element-caption">Anurag Arjun and Prabal Banerjee. Source: Avail</figcaption></figure></div>


Right now, the hypothetical user experience within an ecosystem like zkEVM chains <a href="https://blockworks.co/news/polygon-validum-zk-tech-future">using Polygon’s CDK</a> is generally considered good. But according to Arjun, “once the user falls outside of the ecosystem, then they&#8217;ve got a very subpar experience.”



Arjun argued that while all the major zk rollup teams are talented and well funded, they are also extremely competitive, which may make it difficult to sit down together and focus on the interoperability pain points between their various ecosystems — or what Polygon co-founder Jordi Baylina calls “constellations.”



Nexus can orchestrate such a solution as an independent third party.



“It doesn’t matter that they use Avail,” Arjun said. “This is not like a standard that we are imposing on these stacks, it&#8217;s essentially more like a permissionless play.”



Avail doesn’t compete with these teams on the execution front; it’s a rollup service provider, not a rollup builder.



And it’s not limited to <a href="https://blockworks.co/tag/evm">EVM</a>-based rollups either. Avail plans to support other execution layers rollups as they gain traction.



<h2 class="wp-block-heading">Differentiating DA solutions</h2>



Avail runs its own consensus protocol to provide data availability with some novel properties. For instance, it is <a href="https://blog.availproject.org/avails-core-features-explained/">designed</a> with data availability sampling (DAS) based on validity proofs.



In contrast, EigenDA will not offer DAS, making it more challenging to <a href="https://celestia.org/glossary/data-withholding-attack/">detect</a> a data withholding attack, Arjun said.



Celestia’s DAS implementation uses fraud proofs, so that even once its <a href="https://blockworks.co/news/celestia-airdrop-oct-17">light client verification solution is live</a>, reaching true finality can take hours as the network must accommodate a fraud proof challenge window.



Avail’s proofs are generated almost as soon as a block is finalized, giving overall finality in about 40 seconds, Arjun explained.



Avail’s testing shows the computing resources for proof generation are not a bottleneck: A block storing even 300 times the data that Ethereum mainnet will <a href="https://blockworks.co/news/ethereum-dencun-upgrade-live">after the Dencun upgrade</a> takes just three seconds to generate a proof.



Therefore, it won’t get in the way of building <a href="https://blockworks.co/tag/dapps">dapps</a> that are composable across rollups.



“You take proofs from various rollups and then aggregate them into one proof on an intermediate settlement layer,” he said.



That could be a specialized chain like Dymension, but Avail Nexus will also post to <a href="https://blockworks.co/tag/ethereum">Ethereum</a>.



Another proposed solution, coincidentally also called “Nexus” but unrelated to Avail, would use Ethereum as a go-between.



Read more: <a href="https://blockworks.co/news/nexus-liquidity-fragmentation">zkLink’s Nexus wants to solve liquidity fragmentation between ZK ecosystems</a>



<h2 class="wp-block-heading">Securing chains with Fusion</h2>



Avail necessarily will have its own token — its <a href="https://blockworks.co/news/avail-bridge-data-availability-ethereum-rollups">nominated proof-of-stake</a> consensus mechanism depends on it. But the security of chains using Avail may not be limited to the economic stake of its native asset.



That’s where Fusion comes in. In theory, Avail Fusion looks to borrow security from existing crypto assets like bitcoin and ether, inspired by EigenLayer, and the concept of Mesh security from Osmosis, Arjun said.



This is likely to become a trend, with <a href="https://blockworks.co/news/bitcoin-staking-protocol-babylon">teams like Babylon focused on employing</a> the economic weight of BTC to help secure proof-of-stake chains and let bitcoin holders earn a yield in the process.



Taken together, components of the modular Ethereum stack aim to provide a scalable, secure and interoperable foundation for future Web3 dapps in the multi-chain world. And ideally, users won’t have to worry about any of it.



“This is more inspired from how apps on the internet really evolved over the years,” Arjun said. “It&#8217;s going to follow that paradigm in the sense that there are going to be a lot of rollups asynchronously communing with each other whenever required.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Avail raises $27M, readies entrance into modular narrative

Dymension&#8217;s mainnet launch has encountered significant challenges due to consensus issues among its validators.



Chorus One, the ecosystem’s largest validator, has experienced node issues that disrupted its ability to participate effectively in the consensus process. This is particularly concerning given that Chorus One holds 34.8% of the network’s voting power.



In blockchain technology, validators are individuals or groups that lock up tokens and run software that can store and verify data to ensure its accuracy.&nbsp;



Achieving consensus — a mutual agreement among validators on the validity of transactions — is critical to the blockchain’s operation. It safeguards the network against fraudulent activities and ensures that only verified transactions are recorded.



Read More: <a href="https://blockworks.co/news/consensus-mechanisms-guide">The beginner’s guide to consensus mechanisms</a>



To prevent malicious transactions, validators must agree, or reach a “consensus.” Failure to do so may lead to a network shutting down. For a network like Dymension, which seeks to leverage modular blockchain architecture to offer superior performance and customization, maintaining a cohesive and stable group of <a href="https://blockworks.co/tag/validator">validators</a> is essential for its success and reliability.



The majority of blockchains today require 66% of the stake to agree on a topic before it can achieve consensus.



In the case of Dymension, however, the failure of its largest validator meant that regardless of whether or not other validators had operative nodes, the network itself could not reach consensus.



Dymension has not responded to Blockwork’s request for commentary before publication time.



Chorus One <a href="https://twitter.com/ChorusOne/status/1754877315647955440">noted</a> in a post on X that all Dymension validators are currently coordinating to perform a restart. The team stated that it will join the chain as soon as the issue is resolved.&nbsp;



“We are addressing an issue on our side that led to a less than ideal launch experience for the Dymension mainnet ~2 hours ago,” Chorus One wrote.&nbsp;



The team notes that the cause of the issue is still unknown, but likely relates to the network’s node software.&nbsp;



“We followed all the guidelines issued by [the] Dymension team, so this might be some subtle bug in the node software,” the company wrote.&nbsp;



It added that the reason it held over 33% of the network stake is that it had been an early Dymension supporter who had staked a significant amount of its DYM token in the genesis block.&nbsp;



“Other early-stage investors didn’t stake to genesis, which led us to have 34% power in the failed launch,” Chorus One wrote.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Dymension fails to reach consensus because of bad validator set

Crypto markets, overall, are about where they were at the start of 2024. But not every crypto has <a href="https://blockworks.co/news/bitcoin-price-43k-sideways">gone sideways</a> like bitcoin and ether.



SUI, the native token for the layer-1 blockchain of the same name, has almost doubled its price against bitcoin since January 1.&nbsp;



The network, stewarded by <a href="https://blockworks.co/news/mysten-labs-launches-blockchain-platform-sui">former Meta employees once focused on Diem</a> and considered a rival to Solana, also just <a href="https://defillama.com/chain/Sui">passed</a> $500 million in total value locked in its DeFi apps for the first time.



SUI leads a small set of cryptocurrencies which have seen their bitcoin ratios increase year-to-date. 



Bitcoin generally leads the market. US dollar-denominated prices for other cryptocurrencies are usually heavily influenced by bitcoin movements — they tend to go up and down alongside BTC.



Bitcoin price ratios offer a less noisy alternative. Pricing ether in bitcoin, for example, makes it easier to determine whether ETH is simply rising or falling <a href="https://blockworks.co/news/bitcoin-ether-correlation">due to its correlation with bitcoin</a>, or whether markets are valuing them more independently.



Of the 60 or so cryptocurrencies worth $1 billion or more that aren’t stablecoins, wrapped assets or liquid staking tokens, only 14 are ahead against bitcoin.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/16715474/embed#?secret=P4lYbKJDmM" data-secret="P4lYbKJDmM" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Bitcoin, ether and solana are plodding along</figcaption></figure>



The bitcoin price ratio for machine-learning marketplace token Bittensor (<a href="https://blockworks.co/price/tao">TAO</a>) is up 60% this year, followed by <a href="https://blockworks.co/news/data-availability-transaction-costs-blockchain">modular data layer</a> Celestia’s <a href="https://blockworks.co/price/tia">TIA</a> at 46%. 



ASTR, the crypto central to public Polkadot parachain Astar, has also added nearly one-third to its bitcoin price ratio.&nbsp;



Astar presents itself as a “smart contract hub” that helps move assets between blockchains including Ethereum and Cosmos. The team maintains a strong presence in Japan and is preparing to debut its own zkEVM based on Polygon’s <a href="https://blockworks.co/news/polygon-validum-zk-tech-future">chain development kit</a>.



Bitcoin-powered memecoin <a href="https://blockworks.co/price/ordi">ORDI</a>, layer-1 token algorand (<a href="https://blockworks.co/price/algo">ALGO</a>) and decentralized storage asset filecoin (<a href="https://blockworks.co/price/fil">FIL</a>) have performed the worst against bitcoin so far this year, each down around 30%.&nbsp;



ORDI — styled as the first-ever BRC-20 token issued via <a href="https://blockworks.co/news/ordinals-impact-on-bitcoin-network">Ordinals</a> — had however multiplied its bitcoin ratio over the past six months, leading TIA and TAO for bitcoin-denominated returns.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/16715857/embed#?secret=zl5tQP7yMz" data-secret="zl5tQP7yMz" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Ether’s bitcoin ratio is down 14% in six months</figcaption></figure>



Of the studied cohort, cryptocurrencies for legacy layer-1s Stellar (<a href="https://blockworks.co/price/xlm">XLM</a>), <a href="https://blockworks.co/price/xrp">XRP</a>, Litecoin (<a href="https://blockworks.co/price/ltc">LTC</a>) and Monero (<a href="https://blockworks.co/price/xmr">XMR</a>) fared the worst against bitcoin in the past half-year, each losing about 40%.



Updated Feb. 6, 2024 at 8:59 am ET: Added context.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Sui, Bittensor, Celestia top small pack with rising bitcoin price ratios

When it comes to scaling Ethereum, rollups are the name of the game. But as rollups increase transaction throughput, they face a challenge in where to store their data.



The obvious option is on Ethereum itself. Some argue that doing so is even core to the claim that rollups “inherit” Ethereum security. Ethereum’s execution layer nodes store a complete copy of the blockchains ledger and history, allowing clients to independently verify the accuracy of its transaction history.



While great for security and resilience, this comes at the cost of scalability. This is one of the main reasons why the Ethereum mainnet maxes out at around 15 transactions per second (TPS), and can be expensive during times of high demand.



Read more: <a href="https://blockworks.co/news/layer-2-secured-by-ethereum">So your layer-2 is ‘secured by Ethereum’ — what does that mean?</a>



Increasingly, blockchain developers are looking <a href="https://blockworks.co/news/sovereign-rollups-blockchain-scaling">at alternatives for “data availability”</a> to resolve Ethereum’s shortcomings. Some developers are <a href="https://blockworks.co/news/avail-bridge-data-availability-ethereum-rollups">turning towards modular blockchain solutions</a> such as Celestia and Avail.



Modular blockchains often refer to networks that disaggregate specific blockchain functionalities. Dedicated data availability layers are designed to increase the efficiency of a blockchain, improve its transaction speeds and minimize costs.&nbsp;



Read More: <a href="https://blockworks.co/news/data-availability-ethereum">Why data availability sampling matters for blockchain scaling</a>



Celestia was one of the first data availability layers to <a href="https://blockworks.co/news/data-availability-transaction-costs-blockchain">launch its mainnet beta</a>. Since October, it has seen over 900,000 <a href="https://celenium.io/">transactions</a> and around 278,000 accounts on its network, according to <a href="https://celenium.io/">Celenium</a>, Celestia’s block explorer. The explorer does not break down the network’s data volume or number of submissions.



The network has also been working on integrations with other layer-2 solutions, most recently with the Polygon CDK, enabling interested developers to choose Celestia for data availability&nbsp; alongside other options.&nbsp;



For developers using Optimism’s OP Stack, Celestia also introduced <a href="https://docs.celestia.org/developers/ethereum-fallback">Ethereum fallbacks</a> — a backup solution for data availability. That means that if the Celestia network is temporarily unavailable, layer-2s can post their transaction batches back onto Ethereum mainnet. This avoids the risk that end-user funds remain stranded.&nbsp;



Avail recently launched its <a href="https://blog.availproject.org/introducing-avails-clash-of-nodes-incentivized-testnet/">testnet</a>, dubbed “Clash of Nodes,” which uses gamification to incentivize validators and light client operators with points and rewards, Anurag Arjun, Avail’s co-founder, told Blockworks.



According to Avail’s <a href="https://leaderboard.availproject.org/?ref=blog.availproject.org">blockchain explorer</a>, there are 56,000 accounts on its testnet, which has processed over 1.2 million transactions since it began. Its mainnet is expected to launch in the first half of 2024.



The two networks serve a similar purpose, but there are some key differences.



For one, Arjun notes that Avail uses <a href="https://blockworks.co/news/addresses-helping-ethereum-scale">KZG polynomial commitments</a> — a type of validity proof used to sample random parts of a block to verify it, without needing to access the full data.&nbsp;



These KZG commitments “are ideal for zero-knowledge-based blockchains, where efficiency, privacy and scalability are essential,” Arjun said.



Celestia instead uses secure hash functions, which Arjun notes “introduces potential delays in ensuring data availability guarantees.”&nbsp;



“The tradeoff here is that they have to rely on fraud proofs to confirm the accuracy of erasure coding,” Arjun said.



The choice between these two depends on the specific requirements and priorities of a blockchain system.



Read more: <a href="https://blockworks.co/news/sovereign-rollups-blockchain-scaling">Sovereign rollups carve a path for blockchain scaling</a>



Aside from Celestia and Avail, re-staking protocol EigenLayer has also recently revealed its plans to launch <a href="https://www.blog.eigenlayer.xyz/intro-to-eigenda-hyperscale-data-availability-for-rollups/">EigenDA</a>.



Ethereum core developers are also not standing still; the core piece of <a href="https://blockworks.co/news/ethereum-cancun-upgrade-blobs">Ethereum’s next major upgrade Dencun</a> will introduce “proto-danksharding,” or EIP-4844, a process where costs of transactions are reduced by storing them in temporary data blobs.



Data availability and storage remains a significant cost driver on Ethereum. Solutions under development are still in their early stages. While its roadmap calls for an eventual transition to “<a href="https://dankradfeist.de/ethereum/2021/02/14/why-stateless.html">stateless</a>” Ethereum, the current data bloat puts the full Ethereum chain at nearly 1.4 <a href="https://ycharts.com/indicators/ethereum_chain_full_sync_data_size">terabytes</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

For Ethereum rollups, dealing with data remains a bottleneck

Darren Kleine

Anyone who has ever enjoyed playing with LEGO inherently understands the key advantage of modular systems.&nbsp;



Limited only by imagination, rearranging simple blocks transforms a car into an airplane… or a submarine… or a spaceship…or whatever you like.



Rather than just creating a single-purpose static object, the modular nature of building blocks allows for a world of infinite possibilities. 



Solutions to blockchain technology’s current scaling limitations might be found in the same building block concept.



Nick White, chief operating officer at Celestia Labs, spoke to Blockworks on the <a href="https://www.youtube.com/watch?v=tGEYrSjEz6A">0xResearch podcast</a> about the current scalability problem of blockchains: “Originally with Harmony, we were trying to solve that using sharding,” White says, “but I ended up realizing that sharding was not the right approach when I read this white paper called Lazy Ledger back in 2020.” 



The paper, White explains, gave him a new vision for building blockchains “in a modular way,” which he suggests could solve the core problems of blockchain infrastructure and provide a foundation for building scalable and decentralized solutions.



Modular blockchain design allows for a much greater quantity of transactions to be verified, White says, “so you preserve the core value proposition of what a blockchain is while still being able to increase the capacity of the network.”



In a monolithic, one-size-fits-all blockchain, all transactions are packaged into a block and then committed to a new state of the chain, White explains. In the future, when billions of users are sending billions of transactions, this would require enormous quantities of data to be verified one by one by downloading the block, re-executing every transaction, and comparing it to the state of the block to which it commits. It’s pretty impractical on a large scale.



Modular blockchain systems break this into separate, more manageable tasks. Instead of re-executing and verifying every transaction individually, rollups, for example, can perform verifications with off-chain computations and simply prove they are correct.&nbsp;



“But…for that whole construction to be secure, you still have to know that the block data was available.” So instead of downloading all transactions on a monolithic chain, White says, “you just have to make sure that they&#8217;re there, that they were published on the internet.”&nbsp;



“Nodes can check that in a very, very light way.” Celestia’s modular solution, White says, allows the verification of block data by downloading less than 1% of the block.&nbsp;



<h2 class="wp-block-heading">A different approach to modularity</h2>



Andrew Levine, CEO of Koinos Group, explains that his company takes a different approach to the building block solution. “When we talk about modularity,” Levine says, “we mean more of the classical, computer science meaning.”&nbsp;



The Koinos node is highly modular, he explains, with all of the system logic of the blockchain such as the consensus algorithm, resource management and decentralized governance implemented as separate smart contracts. Each component can therefore be upgraded without the need for a hard fork.



“In other words,” Levine says, “the system is implemented as distinct modules each of which can be independently updated without impacting the overall system.”



In this case, the blockchain itself may technically be “monolithic” in nature because the ordering of transactions and execution are completed together, but it’s much easier to perform upgrades due to its modular design. This, Levine argues, delivers a general purpose layer-1 protocol that is easy to use and capable of scaling to the masses.



<h2 class="wp-block-heading">Looking ahead</h2>



Like an assembly of building blocks, modular blockchain networks will plug into data layers as part of one unified ecosystem, White says, with light nodes making the experience accessible and easy to use.



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG1506259150" width="100%"></iframe>







Looking ahead, White imagines everyone in the world with a smartphone will easily connect to a verifiable network of applications for payments, DeFi, or any other Web3 activities they desire. 



“Modular blockchains,” White believes, “are actually paving a way to get there.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

The Future Is Light: Blockchain Goes Modular

Modular blockchain startup Astria has secured $5.5 million in its latest seed funding round led by Maven 11.



The project aims to alleviate censorship concerns commonly faced by budding blockchain networks with what’s known as “shared sequencing.” Other investors who participated in the round include 1kx, Delphi Ventures and Lemniscap.



There’s two dominant blockchain architectures in crypto today: monolithic and modular. Astria wants to help decentralize the latter.



Popular networks <a href="https://blockworks.co/tag/bitcoin" target="_blank" rel="noreferrer noopener">Bitcoin</a>, <a href="https://blockworks.co/tag/ethereum" target="_blank" rel="noreferrer noopener">Ethereum</a> and <a href="https://blockworks.co/tag/solana" target="_blank" rel="noreferrer noopener">Solana</a> are monolithic blockchains. This means one blockchain is designed to handle all services, including executing transactions, ordering data and verifying information.



Modular architecture is designed so that different tasks are split between multiple blockchains with specific areas of functionality. This process is commonly known as sharding.&nbsp;



Each architecture has pros and cons. Monolithic blockchains are often optimized for speed or decentralization but lack scalability. On the other hand, <a href="https://blockworks.co/tag/modular-blockchains" target="_blank" rel="noreferrer noopener">modular blockchains</a> can take a long time to build but are flexible and upgradable.



<h2 class="wp-block-heading">Sharing sequencers to avoid centralization</h2>



Astria hopes to resolve a big problem that modular blockchains face: dependency on network participants known as sequencers — who process and order transactions in blocks ready to be added to the chain.



Unlike monolithic blockchains such as Ethereum, where smart contract developers can rely on the blockchain’s validators to remain censorship-resistant, modular blockchains require their own sequencers (as do rollups).



Existing modular blockchains and rollups often are only able to utilize a single sequencer to process transactions, putting them at risk of centralization.&nbsp;



“There are optimizations by batching transactions at the sequencer layer to the base layer, but the fundamental tradeoff is running it as a centralized entity and we fundamentally view that as antithetical to the point of crypto,” Josh Bowen, the CEO and founder at Astria, told Blockworks.



As a shared sequencer network, Astria aims to help developers deploy censorship-resistant rollups.&nbsp;



“The key innovation is the idea that the sequencing task, this ordering of transactions, can be separated from the task of executing transactions,” Bowen said.&nbsp;



<h2 class="wp-block-heading">Different to Cosmos’ interchain security</h2>



Astria’s network is not to be confused with shared security solutions implemented on <a href="https://blockworks.co/tag/cosmos" target="_blank" rel="noreferrer noopener">Cosmos</a>.



Cosmos’ “interchain security” (also known as “replicated security”) differs in that shared validators have the power to execute transactions. Astria’s shared sequencers only orders the transactions ready to be processed.



“This means that Astria’s sequencers don’t store the state of any rollups, allowing the network to provide ordering for an arbitrarily large number of distinct rollups,” Bowen said.



“Cosmos Hub’s replicated security requires Hub validators to execute transactions for consumer chains, so every new consumer chain increases the resource requirements for the validators.”&nbsp;



Astria is currently developing “Astria EVM,” a rollup backed by its shared sequencer network. Astria EVM — or Ethereum virutal machine — will be the main EVM within Celestia’s data availability cluster, bringing liquidity into the hub, the company said.



&#8220;We are seeing more and more traction on rollups, which is clearly in line with the modular thesis that we are advocates of, &#8221; Balder Bomans, general partner at Maven 11, said in a statement.&nbsp;



“The shared network will have strong censorship resistance and provide easy deployment of rollups on a shared liquidity layer — while retaining native interoperability between the rollups.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

‘Shared Sequencing’ Could Help Unite Blockchain Rollups

Casey Wagner

<div id="highlights-block_701d97433c6cee46627c6e551335c8c7" class="highlights">
 <ul>
 <li>Celestia has raised $55 million to put toward its modular blockchain network development</li>
 <li>Investors include Bain Capital Crypto, FTX Ventures and Jump Crypto</li>
 </ul>
 
</div>



Blockchain scaling startup Celestia has raised $55 million in a push to bolster its Web3 development aims.



The round is earmarked for creating a modular blockchain network, Celestia said Wednesday. The round was led by Bain Capital Crypto and Polychain Capital, and participants include Spartan Group, FTX Ventures and Jump Crypto.&nbsp;



Modular blockchains — opposed to monolithic blockchains — are, in theory, highly scalable and segmented. They are made up of specialized chains, which “are less constrained and break the rigidity of monolithic chains into flexible components, promising greater scale, security, and decentralization,” Celestia wrote in a <a href="https://blog.celestia.org/celestia-raises-55m-to-launch-modular-blockchain-network/" target="_blank" rel="noreferrer noopener">blog</a>.&nbsp;



“Modular blockchains will define the next decade of Web3 innovation,” Mustafa Al-Bassam, a Celestia co-founder, said.



For the past decade, crypto has been dominated by relatively monolithic layer-1 smart contract platforms, which have sacrificed decentralization and security to make room for cheaper transactions, according to Al-Bassam.&nbsp;



“Unlike what is seen in sharding, with Celestia, non-consensus nodes will still enhance throughput and security,” Blockworks research wrote in a report. “The network prioritizes scaling block verification instead of block production.”&nbsp;



Modular blockchain projects Eclipse, Constellation and Dymension already use Celestia for their data availability layer, the company said, one illustration of demand.



“Modular designs are unlocking rapid experimentation across the decentralized application stack,” Alex Evans, a partner at Bain Capital Crypto, said. “By minimizing base-layer complexity, Celestia offers cleaner abstractions for developers and greater sovereignty for communities of users.”



The capital raise comes as venture dollars continue to hold strong — even amid turbulent market conditions. Last month, <a href="https://cms.blockworks.co/startup-focused-on-no-fraud-crypto-payments-raises-50m/" target="_blank" rel="noreferrer noopener">Sardine</a>, a blockchain transaction security company, finalized a $51.5 million venture raise for product development. Also in September, North Island Ventures closed a $125 million fund to back promising crypto and Web3 projects.&nbsp;



Venture funding is likely only just starting to pick up again after the market downturn, though, Cathie Wood, CEO of Ark Invest, said during a recent panel discussion in New York. 



“I think venture has been taking cues from public markets lately,” Wood said. “I think when the public market starts turning around, venture funding will turn around furiously. The private markets are pricing innovation more correctly than the public markets are right now.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.