Monolithic vs. Modular Blockchains: A Comparison Guide

A monolithic blockchain executes all its tasks on a single layer, while a modular chain delegates tasks to specialized layers for execution. These tasks include guaranteeing data availability, providing consensus, ensuring security, and processing transactions. 

Understanding the trade-offs between monolithic vs. modular architecture is essential for builders, developers, and stakeholders who want to implement blockchain solutions effectively.

Read on to learn about monolithic and modular blockchains in this comparison guide. 

Understanding Blockchain Architecture

Every blockchain has four core layers: the execution layer, consensus layer, data availability layer, and settlement layer.

• The execution layer takes instructions from smart contracts and transactions, goes on to process them, and finally implements the changes to the blockchain state. 
• The consensus layer takes into account network participants who must agree on the blockchain state.
• The data availability layer ensures transaction data is available, accessible, and verifiable by all network participants. 
• The settlement layer finalizes every transaction and ensures all state changes are permanently recorded on-chain.

Let’s use an example to explain how these components work together:

A user initiates a transaction (execution), which is then broadcast across all nodes (data availability). The network reaches consensus on the transaction’s validity (consensus), and once approved, the transaction is permanently recorded (settlement).

Now, let’s explore the two approaches to blockchain architecture.

Introduction to Monolithic and Modular Blockchains

Modular blockchain architectures gained momentum around 2021-2022 as the scalability limits of traditional monolithic systems became evident. 

Ethereum, in particular, spearheaded this movement and evolved its architecture to accommodate scaling solutions like sharding.

Projects like Polkadot and Cosmos, which had long embraced modular designs through parachains and zones, began to shine. New entrants like Celestia and zkSync further pushed the boundaries with innovative approaches. 

This begged the question and intensified the debate — is modularity the future of blockchain?

What Are Monolithic Blockchains?

Monolithic blockchains consolidate all four essential blockchain components— execution, consensus, data availability, and settlement — into a single layer. 

Simply put, in a monolithic blockchain, all the nodes perform the blockchain’s four core functions simultaneously on the same layer. 

This architecture simplifies deployment and ensures strong composability among applications. However, the design may encounter scalability challenges and heightened resource demands.

The scaling of a monolithic blockchain often depends on increasing block size or reducing block time. This is ineffective because it demands higher resource requirements from validators.

For instance, to maintain Solana’s high throughput—exceeding 50,000 transactions per second—a validator would need a CPU clocked above 2.5 GHz, 128 GB of memory and 500 GB of storage at the time of writing.

Having optimum resources and speed may boost the network’s throughput but limits who can effectively participate as a validator due to the need for powerful computing resources.

Examples of Monolithic Blockchains

Now, let’s look at some real-world examples of monolithic blockchains to understand how they operate:

• Bitcoin: Bitcoin is the original monolithic blockchain that excels at decentralization and security, but its throughput is limited to around 5-7 transactions per second.

• Ethereum (pre-sharding): Ethereum is gradually transitioning from a monolithic to a modular chain. As a monolithic chain, it had a 12-second block time and a gas limit of 15 million per block. This led to scalability challenges and high fees during periods of heavy demand. However, as it transitions to a modular blockchain, most of the execution processes are being handled by rollups.

• Solana: Optimized for scalability, Solana can handle up to 65,000 transactions per second. However, it sacrifices decentralization due to high hardware requirements for validators.

Advantages of Monolithic Blockchains

Now that we’ve explored what monolithic chains are and how they operate, what makes them attractive?

• Security: Monolithic blockchains enforce security at every level. Since all nodes perform all tasks, they are less prone to security lapses across the system. Nodes can easily validate transactions directly on-chain.

• Simplicity: Monolithic chains are easier to design and implement. Their straightforward, unified architecture makes them less prone to bugs and vulnerabilities.

• Composability: All dApps on a monolithic blockchain exist on the same layer to support seamless interactions. For example, an automated market maker such as Raydium on Solana can easily share liquidity with another protocol like Serum, thanks to this unified structure.

• Decentralization: In systems like Bitcoin, where decentralization is paramount, the monolithic design helps maintain high security and resistance to attacks.

Drawbacks of Monolithic Blockchains

While monolithic blockchains have their strengths, they aren’t without flaws. Let’s look at the trade-offs.

• Scalability issues: Since every node processes every transaction, the system becomes less efficient as the network grows. This makes it difficult to scale without increasing hardware demands, as seen with Bitcoin and Ethereum before sharding.

• Inflexibility: Adjusting one aspect of the blockchain can require extensive changes across the entire network, complicating updates and optimizations.
• Congestion: In monolithic blockchains, dApps constantly compete for a limited supply of block space, which can lead to significant congestion even on high-performance chains. In 2017, the popular dApp CryptoKitties single-handedly consumed 13.5% of all transactions on Ethereum, which created several bottlenecks.

• Resource intensiveness: Nodes on monolithic blockchains require substantial computational power and storage. As the blockchain grows, so does the demand for resource-intensive computing equipment. This could easily create centralization risks as only entities with powerful resources can participate.

• Security vulnerabilities: While monolithic chains are generally secure, bu relying on a single consensus mechanism can expose the network to attacks. For instance, Ethereum Classic faced multiple 51% attacks.

• High transaction fees: Monolithic blockchains, especially during high demand, can experience skyrocketing fees due to limited transaction throughput.

What Are Modular Blockchains?

Modular blockchains separate core functions — execution, consensus, data availability, and settlement — into distinct layers. Each layer is a “pluggable module” that can be replaced, swapped, or merged depending on the use case.

This approach allows each layer to be optimized for specific tasks, which brings more flexibility and scalability.

Think of modular blockchains like individual Lego blocks. Each block is a specialized chain, and by stacking these blocks together, developers can build highly scalable blockchain networks tailored to specific needs.

Examples of Modular Blockchains

To understand how modular blockchains work, let’s look at some examples.

• Ethereum 2.0: Ethereum has become modular by introducing sharding and rollups. Its Danksharding upgrade focuses on separating data availability from execution which significantly improves throughput.

• Celestia: Specializes in decentralized data availability so as to enable other blockchains to plug into its system for secure data ordering.

• StarkEx and Polygon’s Avail: Makes use of off-chain data availability to improve scalability while maintaining strong guarantees.

• Cosmos: Utilizes zones to allow separate blockchains to connect and share information via the Tendermint consensus engine to create a modular ecosystem with strong interoperability.

• Avalanche: Another modular system with subnets where each subnet can have different consensus rules and optimizations.

Advantages of Modular Blockchains

So, why consider modular blockchains? Here’s what they offer:

• Scalability: Modular blockchains handle higher transaction volumes without overloading the system by delegating tasks to specific layers.

• Flexibility: Businesses and developers can customize each layer to suit their specific needs. For example, you can optimize one layer for fast execution while another focuses on powerful security so that they can excel in different use cases.

• Cost Efficiency: Offloading certain operations to external layers reduces the resource burden on individual nodes.

• Interoperability: Modular blockchains often come with built-in mechanisms for connecting and interacting with other chains. Cosmos and Polkadot are good examples of how modularity enhances cross-chain functionality to better collaborate between ecosystems.

• Upgradability: Since each layer operates independently, updates can be rolled out to individual layers without disrupting the entire network.

Drawbacks of Modular Blockchains

Let’s discuss the limitations of modular blockchains:

• Security risks: Bridges between layers present vulnerabilities as a compromised bridge could impact multiple layers. For instance, vulnerabilities in cross-chain bridges have been exploited multiple times in the crypto space.

• Complexity: Modular systems are more intricate and require specialized skills to develop and maintain. Additionally, managing the interactions between layers can increase development time. For businesses, this could mean higher initial costs and longer development timelines.

• Centralization risks during execution: While the settlement and consensus layers can remain decentralized, execution layers in modular systems can be centralized if one entity dominates.

• Composability issues: In monolithic blockchains, dApps can interact with each other easily since everything operates on the same layer. In modular blockchains, achieving the same level of interaction can be challenging, though protocols like Layer Zero aim to solve this by improving on-chain interoperability.

Monolithic vs. Modular Blockchains: A Side-by-Side Comparison

Let’s sum up. Here’s a comprehensive comparison of monolithic and modular blockchains:

Final Take

Modular blockchains solve the scaling challenges of monolithic blockchains, which makes them an incredibly exciting technology to follow in the blockchain space. 

But, as with any technology, modular blockchains come with their own set of challenges that need to be addressed before they can fulfill their full potential as an infrastructure for builders looking to create new decentralized solutions.

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