Cosmos ticks all the boxes in building the ultimate modular blockchain

Chorus One
Chorus One
March 19, 2023
5 min read
March 19, 2023
5 min read


Cosmos is steadily becoming the place to create the ultimate modular blockchain. Cosmos SDK allows developers to effortlessly roll out tailored blockchains, resulting in a flood of new projects that provide specialized settings for novel products. The goal of modular blockchains is to divide Execution, Settlement, Consensus, and Data Availability. Refer to page 19 of this report to learn more about modular vs. monolithic blockchain designs (Ethereum). As a result, we see various teams tackling the issues of each layer and creating optimal solutions and developer environments. Ultimately, developers could use these optimizations to create an application that is highly performant using such an ultimate modular blockchain. Not to mention the greater decentralization that comes with spreading your product across numerous ecosystems.

Let’s go over the problems that current ecosystems face in each layer of the modular stack, and how various quality teams are solving these issues. Please bear in mind that there are other teams that are solving these issues too, we are just exploring some.

Issues with Data Availability

It is important to explain that when a block is appended to the blockchain, each block contains a header and all the transaction data. Full nodes download and verify both, whilst light clients only download the header to optimize for speed and scalability.

Full nodes (validators) cannot be deceived because they download and validate the header as well as all transaction data, whereas light clients only download the block header and presume valid transactions (optimistic). If a block includes malicious transactions, light clients depend on full nodes to give them a fraud proof. This is because light nodes verify blocks against consensus rules, but not against transaction validity proofs. This means that a 51% attack where consensus is altered can easily trick light nodes. As node runners scale, secure methods to operate light clients would be preferable because of their reduced operational costs. If nodes are cheaper to run, decentralization also becomes easier to achieve.

The DA problem refers to how nodes can be certain that when a new block is generated, all of the data in that block is truly published to the network. The problem is that if a block producer does not disclose all of the data in a block, no one will be able to determine if a malicious transaction is concealed within that block. A reliable source of truth as a data layer is required that orders transactions as they come and checks their history. This is what Celestia does, solely optimizing the Consensus and the DA layer. This entails that Celestia is only responsible for ordering transactions and guaranteeing their data availability; this is similar to reducing consensus to atomic broadcast. This is the reason why Celestia was originally called ‘Lazy Ledger’, however, efficiently performing this job for a future with thousands of applications is no easy job. Celestia can also take care of consensus. See the different types of nodes in Celestia here.

​​Two key features of Celestia’s DA layer are data availability sampling (DAS) and Namespaced Merkle trees (NMTs). Both are innovative blockchain scalability solutions: DAS allows light nodes to validate data availability without downloading a complete block; NMTs allow Celestia’s execution and settlement layers to download transactions that are only meaningful to them. In a nutshell, Celestia allows light nodes to verify just a small set of data, that when combined with the work of other light nodes, provides a high-security guarantee that the transactions are valid. Hence, Celestia assumes that there is a minimum number of light nodes sampling the data availability layer.

“This assumption is necessary so that a full node can reconstruct an entire block from the portions of data light nodes sampled and stored.”

It is worth noting for later that these layers (DA & Consensus) are naturally decentralized and easier to have fully on-chain, as most of the work is taken on by the validators. Scaling here will ultimately depend on the consensus algorithm. ‘Rollapp’ developers will not need to assemble a validator set for their applications either.

Issues with Execution & Settlement layers

  • Execution refers to the computation needed for executing transactions that change the state machine accurately.
  • Settlement involves creating an environment in which execution levels can check evidence, settle fraud claims, and communicate with other execution layers.

The present web3 environment suffers from centralization in the execution and settlement layers. This is due to the fact that the on-chain tech stack severely limits an application’s functional capability. As a result, developers are forced to perform heavy computation off-chain, in a centralized manner. On-chain apps are not inherently interoperable with external systems, and they are also constrained by a particular blockchain’s storage and processing capability.

More than just a distributed blockchain database is required to create the ultimate decentralized apps. High-performance processing, data IO from/to IPFS, links to various blockchains, managed databases, and interaction with various Web2 and Web3 services are all common requirements for your application. Additionally, different types of applications require different types of execution environments that can optimize for their needs.

Blockless — Facilitating custom execution

Blockless can take advantage of Celestia’s data availability and focus to improve application development around the execution layer. Blockless provides a p2p execution framework for creating decentralized serverless apps. dApps are not limited by on-chain capacity and throughput by offloading operations from L1 to the performant, configurable execution layer offered by Blockless. With Blockless you can transfer intensive processing from a centralized cloud service platform or a blockchain to the Blockless decentralized node network using built-in functions. With the Blockless SDK, you can access any Web2 and Web3 applications as it currently supports IPFS, AWS3, Ethereum, BNB Chain, and Cosmos.

Developers using Blockless will only need to provide the serverless functions they want to implement (in any language!), as well as a manifest file that specifies the minimal number of nodes required, hardware specifications, geolocation, and node layout. In no time, their services will be operating with ultra-high uptime and hands-free horizontal scaling. To learn more about the architecture of the Blockless network go here, but yet again, its orchestration chain is a Cosmos-based blockchain responsible for function/app registration. The cherry on the cake is that you can use and incorporate or sell community functions and extensions into your own application design in a plug-and-play manner using Blockless Marketplace. In Cosmos, you can already do this through projects like Archway or Abstract.

SAGA — Rollups as a service and Settlement optimization

Popular L2s and Rollups today like Arbitrum, Optimism, and StarkNet use Ethereum for data availability and rely on single sequencers to execute their transactions. Such single sequencers are able to perform fast when submitting to Ethereum but evidently stand as a centralized point of failure. Saga has partnered with Celestia to provide roll-ups as a service to enable a decentralized sequencer set.

Saga’s original design is meant to provide critical infrastructure to the appchain vision, where the Saga protocol abstracts away the creation of a blockchain by leveraging IBC.”

Saga provides easy-to-deploy “chainlets” for any developer to roll out an application without having to care about L1 developments. Although their main focus is to support full appchain formation on top of the
Saga Mainnet, the technology can also support the modular thesis. This means that rollup developers can use Saga’s validators to act as sequencers and decentralize their set. In other words, Saga validators can also work in shifts submitting new blocks for Celestia rollups.

Saga offers a service that organizes validators into sequencers and punishes misconduct through shared security. Saga’s technology provides functionalities to detect invalid block productions with fraud proofs and to manage censoring or inactivity, challenges are made to process a set of transactions. This means that Saga can enhance the settlement layer whilst using Celestia for data to generate fraud proofs and offline censor challenges. This could also even be done for Ethereum, with the additional benefit of having shared security between chainlets and IBC out of the box. To further understand the difference between running a rollup or a chainlet, please refer to this fantastic article.


In such a modular world, developers finally have full customization power. One could choose to build sovereign rollup or settlement rollups, or even a hybrid. In our example, it could even be possible to use Saga’s consensus instead of Celestia’s. Referring to our example, we could have an application that decentralizes its execution computing through Blockless whilst programming in any language, decentralizes its sequencer set and is able to deploy unlimited Chainlets if more block space is required with Saga, and has a reliable and decentralized data availability layer with Celestia. What’s best, all these layers are built and optimized with Cosmos SDK chains, meaning they will have out-of-the-box compatibility with IBC and shared security of Chainlets.

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