You are reading an excerpt from our free but shortened abridged report! While still packed with incredible research and data, for just $20/month you can upgrade to our FULL library of 50+ reports (including this one) and complete industry-leading analysis on the top crypto assets. 

Becoming a Premium member means enjoying all the perks of a Basic membership PLUS:

• Full-length CORE Reports: More technical, in-depth research, actionable insights, and potential market alpha for serious crypto users
• Early access to future CORE ratings: Being early is sometimes just as important as being right!
• Premium Member CORE+ Reports: Coverage on the top issues pertaining to crypto users like bridge security, layer two solutions, DeFi plays, and more
• CORE report Audio playback: Don’t want to read? No problem! Listen on the go.

Announcement

Celestia has officially unveiled its 'Genesis Drop', the much-awaited airdrop of its $TIA token. Criteria to see if you qualified can be here or here. In terms of the airdrop's distribution, the lion's share of the $TIA tokens is reserved for those who made meaningful contributions to the Celestia Github. Estimates suggest that such contributors could potentially earn $10,000+. On the other hand, regular on-chain Ethereum rollup users can expect a more modest payout, likely in the three-figure range.

Source: Messari

Celestia

Celestia is a new modular blockchain that primarily serves as a "data availability network." By separating execution from consensus, Celestia can offer cheap transaction verification costs regardless of demand. Celestia can maintain high decentralization and scalability because it will enable users to launch light nodes from a basic mobile device.

Importantly, Celestia does not execute any transactions like typical rollups (Arbitrum, Optimism, zkSync, etc.). Validators on Celestia guarantee data availability for verifiers to authenticate the veracity of off-chain executions so as to eliminate any need for a challenge period like in Optimistic rollups. Data availability is critical in this regard because as long as all the execution data is made available on the mainnet, the chain does not require every node to execute every transaction in order to validate transactions and reach consensus. 

It is a network that has the latest state of an L2 that can be leveraged by verifiers to assess whether or not data is available (and therefore can reconstruct the prior state to check if execution has been done appropriately in different intermediate states).

Previously known as LazyLedger, Celestia had successfully amassed a whopping $55 million in a joint Series A and B funding round just last year. This funding endeavor was spearheaded by firms Bain Capital and Polychain Capital. The project quickly garnered attention and became one of the modular blockchains to watch out for in recent times. With a clear vision, Celestia aspires to establish itself as a readily available consensus and data layer. Such an infrastructure would greatly simplify the process of deploying blockchains, minimizing the technical and financial barriers currently associated with it.

Celestia's Use Case

Monolithic refers to a blockchain in which every node performs all parts of the blockchain: execution, consensus, and data availability. Execution refers to the computation of transactions, while consensus refers to ordering transactions and nodes coming to an agreement on the state. Data availability guarantees blocks are fully published to the network. The consensus layer plus data availability guarantees all blockchain data is published and accessible to anyone.

Solana is a monolithic layer-one (L1) smart contract protocol developed to enhance network scalability and performance through its novel Proof-of-History technology. The Solana ecosystem is supported by its own native cryptocurrency, SOL, an SPL token that operates similarly to the well-known Ethereum ERC-20 tokens. Through the SOL token, Solana has the ability to host decentralized applications (dApps), marketplaces, and other protocols to support a growing decentralized financial (DeFi) ecosystem.

Whereas modular blockchains separate these layers, dividing the total work done among the different specialized layers/nodes so that, on net, more total throughput is produced compared to what any individual node could have processed, e.g., a divide-and-conquer approach.

Modular chains provide potential improvements over monolithic chains in terms of network fees. Within a monolithic chain, all transactions compete for the same blockspace independent of the rest of the chain’s activity. However, a modular approach can optimize for different applications and thus more efficiently price resources.

A rollup’s TPS is dependent on the data capacity of their L1 for throughput. The more data capacity on L1, the higher the (theoretical) throughput for rollups. Once an L1 runs out of data capacity for the rollup, the limit has been reached, and no additional transactions can be processed. Therefore, now the limiting factor for a blockchain’s scalability is its data availability. 

To address this issue, there are “Data Availability Layers” - chains built to serve solely as a DA/shared security layer for rollups by specializing in ordering transactions and maximizing the DA capacity. In most cases, they generate a proof for L1 clients that (essentially) guarantees confirmation that all block data has been published on-chain. Examples such as Celestia and Polygon Avail only provide high data capacity; the rollups simply optimize execution.