Introduction

The overall architecture of traditional blockchains has many limitations, including slow innovation speed, limited scalability, and lack of flexibility in development at the application layer. To address these limitations, modular blockchains have emerged, which decompose blockchains into different and interchangeable components.

Previously, modular blockchains were mainly categorized as layer 1 and layer 2 protocols until the co-founder of Celestia first proposed this concept in his article “Proof of Fraud and Data Availability.” Since then, there has been a flow of discussions about modularity and layering. Along with the emergence of the public chain Celestia, the concept of modularity is officially brought into the public eye.

What is Celestia?

Focused on Data Availability (DA), the modular network Celestia can securely scale as the number of users grows, enabling anyone to start their blockchain project easily.

Celestia is called a streamlined blockchain because it separates the consensus layer from the application execution layer. The consensus layer requires Celestia only to be responsible for sequencing transactions and ensuring data availability, while the execution layer provides an effective solution to solve the data availability issue. It only needs lightweight nodes to sample a small amount of random data from each block to verify data availability. The more light nodes that participate in data sampling, the greater the data the network can safely process, thereby increasing the block size and maintaining the same cost of the verification chain.

Technical Characteristics of Celestia

Modular DA network

Separating execution, consensus, settlement, and data availability, Celestia’s modular design allows developers to specialize and optimize at each layer, thereby increasing the overall efficiency and scalability of the network.

Source: Celestia Docs

Data Availability Sampling (DAS)

DAS is a way that enables lightweight nodes to verify data availability without downloading entire blocks. Light nodes randomly sample data blocks. If the data is successfully retrieved and verified, it will indicate that the data of the entire block is available.

Source: Celestia Docs

Scalability

With DAS technology, Celestia can scale its data availability layer, and light nodes with limited resources can verify data availability because they only need to sample a small portion of the block data. The more light nodes participating in DAS in the network, the greater the data they can collectively download and store.

Fraud proof of incorrectly extended data

To address the issue of possible data expansion errors by block producers, the fraud-proof mechanism allows blocks with invalid data to be verified and rejected, thus improving the network’s security.

Namespace Merkle Trees (NMTs)

With NMTs, block data can be divided into separate namespaces based on different applications. This means that applications only need to download and process the data relevant to them, significantly reducing the data processing demands.

Source: Celestia Docs

Building a PoS blockchain for data availability

Celestia adopts a PoS blockchain, called celestia-app, to facilitate transactions and data availability. This layer is built on Celestia-core, an improved version of the Tendermint consensus algorithm designed to meet the unique needs of the DA layer.

Celestia is designed to provide consensus and data availability without involving transaction execution. Light nodes in this design play a role in reviewing each block for consensus and verifying the availability of block data rather than verifying transactions. This means that light nodes no longer rely on a consensus majority of honest nodes to verify the state validity. Usually, full nodes can enjoy this feature.

With a carefully designed block encoding scheme, light nodes can verify the rest of the block with high probability by only sampling a small amount of random fast data. If any full node detects something suspicious, they can notify the light client via a data availability fraud-proof.

Celestia On-Chain Data Analysis

Data Cost

A report titled “The impact of Celestia’s modular DA layer on Ethereum L2s: a first look” and released by Numia Data compares how much it would cost different L2s to release callData to Ethereum in the second half of 2023 and the money they might spend using Celestia as the DA layer (assuming 1 TIA = $12). As can be seen from this difference, using a dedicated DA layer like Celestia can significantly save L2 Gas costs.

Source: @numia.data/the-impact-of-celestias-modular-da-layer-on-ethereum-l2s-a-first-look-8321bd41ff25">Medium.com

According to the data below, as of January 9, 2024, users have published data to 56 namespaces. Typically, users publish 30 to 50MB of data to 3 to 6 namespaces daily.

87% of all data received by Celestia is published to 3 namespaces, which are:

• Astroglyph: Provides inscription services, allowing users to publish arbitrary data to Celestia.
• MantaNetwork: OP Stack Rollup launched with Caldera.
• 808080808080808: An unknown namespace but looks similar to a Rollup.

Source: X

Operational data

Celestia currently has a staking ratio of 52.8% with 14.44% APR.

Source: Staking Explorer

Currently, the main network is running stably, with a total of 905,000 blocks produced and a total staked token amount of approximately 543.27M TIA. There are 100 initial validator nodes, of which the top 10 nodes account for 49.94% of the network share, demonstrating a relatively high degree of centralization in the network.

Source: Celestia explorers

Source: Celestia Explorers

TIA Token Economics

Supply & Distribution

The total creation supply of TIA is 1 billion and is distributed as follows:

• Public distribution accounts for 20% of the total, of which 7.4% is used for the genesis airdrop, and incentives for testnet, and the other 12.6% is used for future incentive distribution. This portion of tokens will be completely unlocked at launch.
• 26.8% of tokens are allocated to the Celestia Foundation and core developers for research, development, and ecosystem initiatives. Of this, 25% is unlocked at launch, and the remaining 75% is unlocked progressively from years 1 to 4.
• 19.7% of tokens were allocated to early backers in Series A and B rounds. Of these, 33% are unlocked in the first year, and the remaining 67% are unlocked progressively from years 1 to 2.
• 15.9% of tokens are allocated to early investors in the seed round. Of these, 33% are unlocked in the first year, and the remaining 67% are unlocked progressively from years 1 to 2.
• 17.6% of tokens are allocated to initial core contributors. Of this, 33% is unlocked in the first year, and the remaining 67% is unlocked progressively from years 1 to 3.

Source: Celestia Docs

Source: Celestia Docs

Regarding token release and supply changes, the total supply of Celestia’s TIA tokens is 1 billion, which will be bound according to different unlocking schedules. All locked or unlocked tokens are available for staking, and staking rewards will be unlocked immediately upon receipt.

The annual inflation rate is shown below:

The TIA inflation rate starts at 8% per year and decreases by 10% annually until it reaches the long-term issuance rate of 1.5%.

Source: Celestia Docs

Token utility

• Pay for data storage: Developers can use TIA to pay for the availability of their data on the network by submitting a PayForBlobs transaction on Celestia.
• New Rollup Solution: Developers can launch new blockchains using TIA as a Gas token, similar to ETH used in Ethereum-based Rollup. This helps them focus on application or execution layer development without issuing new tokens.
• Proof-of-stake mechanism: Celestia is built based on the Cosmos SDK and uses a proof-of-stake mechanism to ensure the security of the consensus. Users can delegate TIA to validators and receive some staking rewards.
• Decentralized governance: TIA holders can participate in the governance of the network, vote to determine network parameters, and manage the community fund pool, of which the community fund pool will receive 2% of the block reward.

The Team

With an impressive background, the Celestia team comprises outstanding scholars, researchers, and engineers in the blockchain scalability field. They all have extensive work or entrepreneurial experience in this field.

Celestia Labs CEO Mustafa Al-Bassam holds a PhD in blockchain scalability from the University of London. He previously co-founded Chainspace, a shard smart contract platform that Facebook has since acquired.

CTO Ismail is the chief technology officer of Celestia Labs. With rich experience in blockchain technology, he has worked as a software engineer in Tendermint (the parent company of Cosmos), Interchain Foundation, Google, and other companies. CRO John has a PhD in computer engineering from the University of Toronto. He worked as a researcher and engineer at ConsenSys and later co-founded the Optimistic Rollup solution Fuel Labs. COO Nick holds a master’s degree from Stanford University and was previously the co-founder of the public chain Harmony.

Investment Agency

In March 2021, Celestia completed a US$1.5 million seed round of financing led by Binance Labs. Interchain Foundation, Maven 11, KR1, Signature Ventures, Divergence Ventures, Dokia Capital, P2P Capital, Tokonomy, Cryptium Labs, Michael Ng, Simon Johnson, Michael Youssefmir and Ramsey Khoury all participated in this financing.

On October 20, 2022, Celestia Labs announced the completion of Series A and Series B financing of US$55 million, led by Bain Capital Crypto and Polychain Capital, with participants including Placeholder, Galaxy, Delphi Digital, Blockchain Capital, NFX, Protocol Labs, Figment, Maven 11, Spartan Group, FTX Ventures, Jump Crypto, W3. Hitchhiker and a host of angel investors. An insider told Coindesk that the fundraising, which made Celestia a unicorn with a valuation of $1 billion, was four times oversubscribed.

Conclusion

Modular blockchain is considered one of the main trends in developing future blockchain architecture in which Celestia plays an important role. Celestia’s success benefits from Rollup’s successful practices and Ethereum’s technological advancements. The future development not only relies on the development process of the Celestia project but also the Cancun upgrade of Ethereum and the development of upstream and downstream tracks. As blockchain technology and modular public chains gain popularity, Celestia will showcase greater potential and value.