Celestia is the first modular blockchain network that is optimized for ordering transaction data and making it available. It solves the scalability problem of a blockchain without sacrificing decentralization, and accomplishes this by separating execution from consensus and addressing data availability challenges through a technology called data availability sampling.
To simplify Celestia's purpose and the essential aspects of its modular design, our Research Expert, Kam Benbrik, delves into the topic by answering ten crucial questions. Dive in below!
In a monolithic blockchain, tasks are concentrated within a single stack, where nodes handle four core functions, including consensus, data availability, settlement and execution.
On the other hand, modular blockchains specialize by delegating tasks to separate layers, forming part of a broader "modular stack" for customized objectives. This modular approach enhances scalability and offers developers more control and sovereignty to tailor their execution environments to their project's needs.
Celestia's data availability layer introduces innovative features like data availability sampling (DAS) and Namespaced Merkle trees (NMTs). DAS allows light nodes to verify data without downloading entire blocks, reducing costs compared to monolithic chains, while NMTs enable execution and settlement layers on Celestia to download transactions that are only relevant to them. Celestia offers its data availability layer to other chains for publishing data by paying for blobspace. Backed by Tendermint Consensus and a sovereign validator set, Celestia ensures further scalability and decentralization of the network.
A significant challenge that monolithic blockchains, like Ethereum, face in terms of data availability is the high cost of publishing data. For instance, Arbitrum One pays approximately $112,000 per day to Ethereum for its data availability requirements, translating to an average cost of $0.15 per transaction. In contrast, Celestia offers a cost-effective solution for publishing data. It provides an alternative security model and economic advantage by allowing costs to scale with the number of nodes, avoiding the capacity limitations of Ethereum. This makes Celestia an appealing option for both data availability and serving as a foundational layer within an ecosystem.
Data availability sampling allows light nodes to confirm data availability without the need to download an entire block, resulting in efficient and cost-effective verification of large blocks. It works by randomly selecting portions of a block for users to download and check, ensuring that data is available with a high level of confidence. This approach not only reduces the resource requirements. However, The number of light nodes needed also depends on the block size, larger blocks require more light nodes. One important assumption is that light nodes should be connected to at least one honest full node for DAS to work effectively
Celestia ensures decentralization through its permissionless Proof-of-Stake structure using the Cosmos SDK and Tendermint consensus.. Much like other networks within the Cosmos ecosystem, Celestia allows users to actively participate in securing the network by delegating their tokens (TIA) to validators, such as Chorus One. This PoS mechanism empowers users to play a crucial role in the network's security, governance decisions and decentralization, making it a collaborative and community-driven ecosystem.
Celestia's modular design makes it easier for users to confirm that all the data in a block is available without downloading the entire block. Instead, it uses a technique called data availability sampling, where light nodes only check small, random parts of the block. This way, it's much more efficient than traditional monolithic blockchains where everyone has to download the entire block. The more nodes do this sampling, the better the network can handle data, leading to faster and more secure data verification. This approach improves scalability compared to monolithic blockchains.
Two standout applications that utilize Celestia's data availability layer include:
8. What are the complexities of modular blockchains like Celestia, and what developments or improvements can we anticipate in the near future?
Modular blockchains like Celestia come with added complexity due to the need for advanced mechanisms such as data availability sampling and fraud proofs to ensure the security of the network. These complexities are essential for maintaining the flexibility and scalability that modular blockchains offer. Additionally, the success of Celestia and similar projects depends on attracting projects and rollups to build on top of them.
9. What is the role of $TIA, Celestia’s native token?
The native token of Celestia, known as TIA, plays a multifaceted role within the ecosystem.
Staking: Firstly, TIA is used for staking, allowing users to actively participate in securing the network through delegation to validators like Chorus One. This proof-of-stake (PoS) mechanism enhances network security and decentralization, fostering a collaborative and community-driven environment.
Governance: Secondly, TIA is utilized for governance purposes, enabling users to create, engage in, and vote on proposals that shape network design and functionality.
Paying for blobspace: Lastly, Layer 1 and Layer 2 networks can use TIA to pay for Celestia blockspace, facilitating the publication of their data on Celestia's data availability layer. This comprehensive utility makes TIA a vital component of the Celestia ecosystem. (For detailed information, refer to https://docs.celestia.org/learn/tia)
10. What is the difference between sovereign roll ups and smart contract roll ups?
Sovereign rollups, such as those on Celestia, differ from smart contract rollups like Ethereum in how they handle settlement and their relationship with the underlying blockchain. Smart contract rollups post their blocks to Ethereum through an enshrined smart contract, effectively creating a bridge between the rollup and Ethereum. Ethereum acts as a 'baby chain' for the rollup, and the bridge contract interprets and processes the rollup's data. In contrast, sovereign rollups, like those on Celestia, directly submit their blocks as raw data to the chain without relying on smart contracts. The Celestia consensus and data availability layer don't interpret rollup data, and the rollup's blocks are independently managed by its nodes. This approach provides autonomy to rollup chains, and they determine their canonical chain without a bridge to the settlement layer, allowing for greater flexibility and independence.
Wrapping Up
Celestia is a modular network that makes it easy for builders to launch their own blockchain by focusing solely on data availability and allows developers to easily deploy blockchains on top of Celestia, as easily as deploying smart contracts.
Users can get involved with TIA by securing the network through delegation to validators like Chorus One and enhancing the collaborative and community-driven environment of the network. Check out our comprehensive guide on how you can stake your TIA with Chorus One!
About Chorus One
Chorus One is one of the biggest institutional staking providers globally operating infrastructure for 45+ Proof-of-Stake networks including Ethereum, Cosmos, Solana, Avalanche, and Near amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures.
We've developed a unique bridging solution that makes it possible for users to move their dYdX tokens to Cosmos, AND stake the tokens - all in just one go! To bridge and stake your DYDX, visit our novel bridging page
Who is this guide for: Users who wish to move their DYDX tokens from Ethereum to Cosmos + stake their tokens with Chorus One.
If you already have your DYDX tokens in the Cosmos ecosystem, you can stake them directly using your Keplr wallet, as explained here.
Step 1: Connect your Ethereum and Cosmos Wallets on Chorus One’s bridging page
Step 2: Enter the amount you want to Bridge and Stake
Step 3: Approve the Chorus One Bridge to interact with your wallet in order to stake your DYDX tokens
Step 4: Pre-Sign the transaction on your Cosmos/Keplr Wallet
Step 5: After 48 hours, your staking transaction will be completed through Chorus One!
Introducing Chorus One's Bridge and Stake solution for DYDX
The DYDX token, part of dYdX v4, serves a multi-faceted role. It empowers users to actively engage in governance decisions while also playing a crucial role in maintaining the network's operations and enhancing its security by staking their tokens.
To use and stake dYdX v4 tokens, the dYdX Chain needs to onboard users from various platforms, including rollups, Ethereum L1, other app-chains, and centralized exchanges, to its Cosmos version. Traditionally, bridging tokens from Ethereum to the Cosmos ecosystem has been a cumbersome activity.
To simplify the process and make staking on Cosmos a breeze for our customers, we have developed a novel solution, using dYdX's original bridging smart contract, that enables you to move your DYDX tokens from Ethereum to Cosmos in a swift, seamless transaction. Not only that, our bridging solution also allows you to stake your DYDX in the same flow, providing added convenience and efficiency!
To recap, dYdX v4 is the latest iteration of dYdX, one of the most prominent decentralized exchanges and premier trading platform for cryptocurrency. The DEX initially launched as an Ethereum-based Layer 2 solution and has now made a significant move by transitioning to its dedicated blockchain, known as the dYdX Chain (or dYdX v4), built using the Cosmos SDK. We've compiled all the essential information about the chain, complete with an in-depth exploration of their move to Cosmos and Chorus One's ongoing involvement with dYdX since the very outset. Check it out here.
1- Bridge & Stake in just 1 transaction: Our bridge offers a remarkably streamlined process for transferring DYDX tokens from Ethereum to Cosmos, setting a new standard in the industry. But it doesn't end here. You can take it a step further by staking your DYDX within the same transaction, allowing you to bridge and stake your DYDX simultaneously in one smooth action.
2- Simplified Onboarding: Our solution enables users from diverse platforms, including rollups, Ethereum L1, other app-chains, and centralized exchanges, to seamlessly join the dYdX Chain on Cosmos.
3- Security Assurance: Our bridging solution is underpinned by a meticulously audited smart contract, ensuring a straightforward and secure staking experience for users. The bridge contract underwent a thorough audit during its development by dYdX. Additionally, when it comes to our frontend and backend, we've adhered to strict secure software development practices as outlined by ISO requirements.
With an understanding of why we developed this bridging solution and how it enhances your staking experience, let’s proceed to a step-by-step walkthrough of utilizing our bridge.
*Since DYDX inflation goes to traders, dYdX stakers, in contrast, will receive 100% of the trading fees that are paid out in USDC.
2. To begin staking DYDX tokens with Chorus One, visit Chorus One’s bridging page and connect a) the Ethereum wallet that has DYDX tokens and b) the target Cosmos wallet where you wish to transfer the tokens to.
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The next step helps you to pre-sign the staking transaction so that the tokens will be staked as soon as they reach the dYdX Chain, and you will be notified by us when the process has been completed if you choose to submit your email address.
We’re happy to answer any questions you may have! For any support queries, please visit here. Alternatively, if you’d like to learn more about staking with Chorus One, get started with staking, or anything else, please reach out to us at staking@chorus.one
About Chorus One
Chorus One is one of the biggest institutional staking providers globally operating infrastructure for 45+ Proof-of-Stake networks including Ethereum, Cosmos, Solana, Avalanche, and Near amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures.
The latest and fourth iteration of dYdX, the dYdX Chain is officially live! This new version, built using the Cosmos SDK is the latest addition to the bolstering Cosmos ecosystem and marks a momentous event in the future of DeFi. Chorus One is immensely proud to be a genesis validator for dYdX v4, overseeing the unique off-chain, in-memory order book trading system within the network.
Since 2017, dYdX has emerged as a leading cryptocurrency trading platform. It has facilitated the trading of over $1 trillion in assets via Ethereum's smart contracts. With dYdX v4, the platform has transitioned into a standalone chain within the Cosmos ecosystem. By embracing the Cosmos SDK, dYdX gains the advantages of enhanced decentralization, scalability, and unrivaled customizability.
In 2017, dYdX ventured as an Ethereum Layer 1 application. However, it faced challenges, particularly concerning scalability and high gas fees. In response, they shifted to an Ethereum-based Layer 2 solution, a move that successfully alleviated the fee issue but introduced elements of centralization.
Now, with v4, dYdX introduces a fully open-sourced, off-chain order book primed for seamless scalability. By aligning with the Cosmos ecosystem, dYdX positions itself to harness the full spectrum of decentralization, customizability, and scalability.
Our comprehensive explainer covers all things dYdX, including an in-depth look at their transition to Cosmos and Chorus One's continuous engagement with dYdX since its inception. Check it out, here.
The dYdX v4 token, DYDX, serves a variety of purposes. Most significantly, users can not only participate in governance proposals but also contribute to the network's overall operation and security by staking their dYdX v4 tokens and earning rewards for their work.
However, to use and stake dYdX v4 tokens, the dYdX Chain needs to onboard users from various platforms, including rollups, Ethereum L1, other app-chains, and centralized exchanges, to its Cosmos version.
To simplify this, we have developed a unique bridging solution which lets you swiftly move your DYDX tokens from Ethereum to Cosmos, and even stake them simultaneously in the same transaction. To bridge your DYDX from Ethereum to Cosmos, check out our detailed guide here.
Alternatively, if you already have DYDX tokens in the Cosmos ecosystem, you can directly stake them with Chorus One using your Keplr wallet, as explained here.
*Since DYDX inflation goes to traders, dYdX stakers, in contrast, will receive 100% of the trading fees that are paid out in USDC.
To learn more about how you can get started with staking DYDX with Chorus One, don’t hesitate to reach out to us at staking@chorus.one.
About Chorus One
Chorus One is one of the biggest institutional staking providers globally operating infrastructure for 45+ Proof-of-Stake networks including Ethereum, Cosmos, Solana, Avalanche, and Near amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures.
After rigorous testing and numerous iterations, dYdX is soon making its transformational shift to the Cosmos ecosystem, unveiling its fourth and latest version as a standalone blockchain known as dYdX Chain, built using the Cosmos SDK. We’re proud to be joining the network as a genesis validator, enabling staking for dYdX's token, DYDX.
Since its inception, dYdX has been instrumental in facilitating over $1 billion in daily trading volume, achieving a remarkable milestone by surpassing $1 trillion in total trading volume through smart contracts on the Ethereum blockchain. Looking ahead, the exchange will implement a unique off-chain, in-memory order book trading system that will be overseen by a network of validators.
This article delves deeper into what this entails for stakers and offers insights into the workings of dYdX v4.
dYdX stands out as the leading decentralized exchange (DEX), specializing in the trading of derivative products known as "perpetuals." Perpetuals allow users to take leveraged long or short positions on crypto assets. In contrast to Uniswap and other DEXs, dYdX distinguishes itself by not relying on an automated market maker (AMM) to facilitate trading. Instead, it employs a traditional orderbook and matching model to cater to the needs and expectations of sophisticated traders and institutions. We've explored the key distinctions between AMMs and order book trading here.
In its initial launch in 2017, dYdX was introduced as an Ethereum Layer 1 application. However, the chain's limited scalability became evident, with users facing exorbitant gas fees for even simple trades.
To enhance scalability, dYdX transitioned to an Ethereum-based Layer 2 solution employing StarkX/StarkNet technology. This shift significantly reduced gas fees, vastly improving the user experience. Yet, it led to a higher degree of centralization within dYdX.
To address this centralization concern and advance decentralization, dYdX made the strategic choice to transition to its blockchain, built using the Cosmos SDK. This imminent transition, on the verge of completion and soon to go live, represents the DEX’s fourth and latest version, known as the dYdX Chain and will feature a decentralized, off-chain order book capable of seamlessly scaling with the platform’s growth.
As part of the Cosmos ecosystem, dYdX stands to gain the full advantage of decentralization, along with an array of unique features such as extensive customizability and scalability. We’ve delved into the specific reasons behind dYdX’s choice of Cosmos in the following section.
dYdX's decision to migrate from Ethereum to Cosmos stems from a strategic choice to utilize the unique capabilities of Cosmos technology, which offers a distinct advantage in building new layer-1 blockchains. Cosmos' Tendermint proof-of-stake consensus engine provides the foundation to develop a standalone, application specific blockchain with cross-chain capabilities, and makes it possible to fully customize how the chain functions.
Unlike Ethereum, where network congestion can be a concern, Cosmos’ app-specific chains function independently, and each Cosmos chain operates with its network of validators and token. This move permits blockchains to have faster transaction processing while maintaining decentralization, thus positioning Cosmos as the ideal choice for dYdX’s requirements, which demand high throughput - roughly, 10 operations per second and 1,000 orders/cancellations per second. Currently, Cosmos can process up to 10,000 transactions per second, or TPS, compared to Ethereum's 15-25 TPS.
A recent twitter thread by dYdX succinctly described the key separators between Layer 2s/Roll ups and standalone app-chains, and reiterated their decision to choose the latter. Read it here.
While on-chain orderbook DEXs offers a high level of transparency and decentralization, it comes at the cost of potentially higher transaction fees and slower transaction speeds. With each transaction requiring on-chain validation, the underlying network’s throughput can become a bottleneck, thus affecting the overall network efficiency.
In contrast, on dYdX v4, each validator will maintain an off-chain in-memory order book. When a new order is placed, it is initially routed to a validator that is randomly chosen. Subsequently, this validator disseminates the transaction to other validators to ensure the order book remains up to date. This alleviates the pressure on the network, allowing the chain to achieve significantly higher throughput for the order book while retaining decentralization.
The transaction flow roughly looks this -
Total supply: 1,000,000,000 DYDX tokens
50% of tokens go to the dYdX community which will comprise liquidity providers, traders, stakeholders, and users who complete trading milestones. A portion of this share goes to the community treasury.
27.73% of the tokens go to investors.
15.27% of tokens are allocated to the official team members of dYdX including founders, advisors, employees, and others.
7% of the tokens are reserved for consultants and employees who will join the platform in the future.
We’ve had extensive involvement with dydX v4 since inception as well as the Cosmos ecosystem in general. We received a grant from dYdX to write an in-depth research report (available here) that examines the implications of Maximum Extractable Value (MEV) within the context of dYdX v4 from a validator's perspective. Additionally, we were on all three testnets and actively contributed through debugging and sharing validator best practices.
dYdX occupies a unique position as a decentralized solution that directly competes with centralized exchanges in terms of its order book model, trading volume, and user experience aligns with our vision for the future of decentralized finance. Furthermore, we share dYdX's philosophy of prioritizing the creation of the best possible product, making our support for their forward-looking vision a natural choice.
Chorus One has been more than just a player in the Cosmos space. With our $30M venture arm, Chorus Ventures, we have actively invested in promising projects such as Celestia, Osmosis, Agoric and more, which keeps us well-connected to the ecosystem. We're also deeply engaged with the community, publish research reports, and extensively cover Cosmos in our blog.
Chorus One is the only node operator with a dedicated in-house quant team focussing on MEV. MEV refers to the maximum value that can be extracted from block production in excess of the standard block reward and gas fees by including, excluding, and changing the order of transactions in a block.
Because of our MEV expertise, we were provided a grant by dYdX to work on a research paper that goes into the territories of cross-chain arbitrage and also explores the subject of negating MEV externalities in a fully decentralized, validator-driven order book.
The report entails comprehensive insights on MEV’s impact on the new chain and trading, cross-chain MEV opportunities, user welfare, and centralization risks, ultimately providing practical solutions for mitigating validator-driven MEV risks. Read the report here.
Chorus One is the most active node operator on Cosmos where on-chain governance is enabled.
We have published a detailed research report last year on Cosmos’ governance, which elaborates on Cosmos’ validator participation, voting trends, controversial proposals, and why Chorus One is one of the most active node operators in the Cosmos ecosystem.
In the report, we conducted a governance performance comparison against the top 5 validators by stake on 13 chains from April 2022 to November 2022, which includes Akash, Axelar, Cosmos Hub, Evmos, injective, Juno, Kava, Osmosis, Persistence, Regen, Secret, Sommelier, Stargaze.
As illustrated in the chart below, our voting activity exceeded that of the average top 5 validators by 30%. However, it's crucial to note that the top 5 validators can vary significantly on each chain.
Out of the 13 networks studied, we achieved a 100% voting record in two networks, and in one network, Kava, we surpassed the average by approximately 90%, as demonstrated in the graph below. We consistently exceeded the average participation rates of the Top 5 validators on 11 out of 13 networks
*Since DYDX inflation goes to traders, dYdX stakers, in contrast, will receive 100% of the trading fees that are paid out in USDC.
To learn more about staking DYDX with Chorus One, don’t hesitate to reach out to us at staking@chorus.one. For any support queries, visit here.
About Chorus One
Chorus One is one of the biggest institutional staking providers globally operating infrastructure for 45+ Proof-of-Stake networks including Ethereum, Cosmos, Solana, Avalanche, and Near amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures.
