If you had to choose between security, scalability, and decentralisation, which of two would you choose? Well, Celestia is a modular masterpiece that aims to eliminate the infamous blockchain trilemma.
Celestia, also known by the market ticker, TIA is a layer-1 modular blockchain network that provides developers with the infrastructure to build or maintain their own blockchains by allowing these blockchains to use Celestia as a Data Availability and Consensus layer.
At its core, Celestia aims to eliminate the blockchain trilemma and to do this has broken down its core architecture from a monolithic design to a modular one.
But how does it all work? Today we find out!
What is Celestia?
The foundations of Celestia were created by Mustafa in 2019 while studying at the University College London, with the Celestia mainnet going live in 2023.
Mustafa now serves as the CEO of Celestia Labs, the company behind Celestia. Mustafa was previously a co-founder of Chainspace, which would eventually be acquired by Facebook.
Celestia aims to eliminate the blockchain trilemma, which states a blockchain can only have two of the three following variables: security, scalability, and decentralisation.
How Celestia plans to eliminate this is by breaking down the blockchain into separate component layers, hence the name modular blockchain.
This is in contrast to monolithic blockchains which try to tackle several components at once.
But, to break it down, most monolithic blockchains look to tackle all four of the following components.
Executions, which deals with processing transactions.
Settlement, which deals with dispute resolution, the validity of blocks, and as a bridging layer to other networks.
Consensus, which orders the transactions.
And finally, Data Availability.
Data Availability refers to the accessibility and presence of the necessary information for validating transactions and blocks across the entire network, ensuring that all participants have access to the data needed to reach consensus and maintain the integrity of the blockchain.
This layer is also responsible for publishing the data on-chain. Although, perhaps more important to note is that all three of the other components require Data Availability to function.
But, how does this all work?
How does Celestia work?
As I was just describing, in a regular, monolithic blockchain, the blockchain will perform all of these functions in a single layer.
For reference, this is how cryptocurrencies like Bitcoin and Ethereum are set up.
However, it is this monolithic setup which Celestia believes is causing the blockchain trilemma to begin with.
Typically, as blockchains are unwilling to compromise on security, developers are currently forced to choose between sacrificing scalability or decentralisation when trying to grow their network.
However, under a modular blockchain like Celestia, these four core blockchain functions are split into individual, exchangeable, and replaceable layers which grants developers more flexible and customisable designs.
Ultimately, when compared against monolithic blockchains which must do everything in one layer and therefore come at the cost of efficiency, modular blockchains allow developers to optimise or specialise on only a few specific functions instead.
In this case, Celestia only focuses on the Consensus and Data Availability layers, which translates to the order of the blocks, and ensures the data is published on-chain.
The Celestia mainnet runs a Proof-of-Stake consensus mechanism.
To quickly summarise, Proof-of-Stake is a type of consensus mechanism that does not require mining to update its ledger, as made famous by Bitcoin’s Proof-of-Work consensus mechanism.
Instead, Proof-of-Stake based networks semi-randomly pick validators and verifiers based on how much they have staked, meaning deposited to the network as collateral which ultimately is a quicker and more energy-efficient way for processing large volumes of blockchain data when compared with Proof-of-Work.
What makes Celestia unique?
What makes Celestia unique is a new feature they have implemented known as Data Availability Sampling, or DAS, with DAS being a concept first formalised by Mustafa back in 2018.
Typically, the problem with increasing blocksize on a blockchain, with blocksize referring to how many transactions can fit on each block, is that increasing the blocksize also increases the computational power required to run the network.
In short, the more it costs to operate a node, the less people can afford to operate one which reduces decentralisation due to more expensive hardware requirements.
However, utilising a data protection technical known as Erasure coding allows Celestia to utilise light-nodes, meaning nodes that do not require the entire blockchain transaction history to participate in confirming transactions.
For clarity, Erasure coding is a data protection and error recovery technique that involves breaking down data into smaller fragments, adding redundant pieces, and distributing them across different locations or storage devices.
The benefit is if any fragment is lost or damaged, the original data can still be reconstructed using the redundant information.
Through Erasure coding techniques, this allows light-nodes to randomly sample small amounts of block data to verify Data Availability.
These light nodes repeatedly sample block data to increase the confidence that data is available, and once a certain confidence threshold has been hit, confirms the availability of the block data.
As light-nodes do not require as much resources to operate or maintain, they can be easily deployed and ultimately allow for increased scalability without an increased cost in hardware to maintain the network’s integrity.
But how about the Tokenomics?
TIA Tokenomics
As is common for Proof-of-Stake networks, TIA can be used for all the classics like paying transaction fees, staking, and governance.
In total, there will only ever be 1 billion TIA tokens.
Of the initial supply, 20% went to the Public. 26.8% was allocated to the Ecosystem growth and for Research and Development.
A further 35.6% went to early backers and the final 17.6% went to Initial Core Contributors.
The inflation rate, meaning the rate at which new tokens are released, is designed to inflate at 8% in the first year and then decrease by 10% each year until its floor of 1.5% annual inflation is achieved.
Celestia is certainly one of the more interesting projects to go live in 2023.
With its novel approach to blockchain architecture, it has certainly caught investors’ interest, as can be seen by recent price increases.
But, as always, nothing is guaranteed in crypto, and this can be especially true for networks who try to innovate as these innovations have yet to be tested to the same levels as already established techniques.