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Modularization of Blockchain Could Become New Paradigm: Huobi Research Institu


London, UK - May 6, 2022 ( Newswire) Modularized blockchains may offer higher performance and lower costs over time, which could spur other public chains to implement the same strategy, according to a new report by Huobi Research Institute titled "How the Data Availability Layer can Shape the Future of Blockchain".

With the blockchain ecosystem - especially for Ethereum - becoming more developed in the past two years, scaling has become a critical priority for a network buckling under an increasing volume of transactions. One approach is off-chain scaling, which reduces the workload of the main Ethereum network and enables more transactions to be processed at the same time.

The most popular solution, Rollup, requires uploading compressed transaction data to the Ethereum mainnet for data availability (DA). The latter refers to the demand for transaction data in a blockchain network to be viewed and downloaded by nodes. However, this incurs on-chain storage costs which remain above ideal levels.

To meet the demand for Rollup data availability and cost reduction, there have been attempts to build an independent DA network. This is to ensure that Rollup's transaction data is consistent with the data in its network, under the surveillance of the Ethereum verifier and its own full nodes. It also confirms that this data is published in its network through light node sampling verification, and uses data availability attestation to convince Ethereum that the DA network has stored and published the data.

In the short term, the DA layer faces competition from the Ethereum Improvement Proposal (EIP) 4488 and EIP-4844 - both upgrades by Ethereum that promise to lower transaction costs. However, its adoption and ability to generate relatively stable cash flow look promising in the long term due to its strong scalability. From a broader perspective, the data availability layer is the latest step in the modularization process of blockchain, which forms a structure of "consensus-execution-data availability" separated from each other.

Due to the blockchain trilemma, the best way to improve scalability - while ensuring a high degree of decentralization and security - is to reduce the tasks of the mainnet and access additional execution layers, followed by a separate DA layer. This has the advantage of making the performance of the whole greater than the sum of the parts by dividing the work. Modularized blockchains may hence better meet expectations in terms of performance and cost over time, and in turn lead other public chains to embrace modularity.

The report's author, Huobi Research Institute researcher Barry Jiang, said: "We are likely to see public chains like Ethereum, which have high decentralization but low performance, embrace modularization. Other public chains will also learn from Ethereum's success and try to implement external modules. After finding success with the division of labor, the modularization of blockchain may become a new paradigm."

To download the full report, click here.

About Huobi Research Institute

Huobi Blockchain Application Research Institute (referred to as "Huobi Research Institute") was established in April 2016. It is committed to researching and exploring new developments in the global blockchain industry. Its goal is to accelerate the research and development of blockchain technology, promote its applications, and improve the global blockchain industry ecosystem. Huobi Research Institute covers industry trends, emerging technologies, innovative applications, new business models, and more. Huobi Research Institute partners with governments, enterprises, universities and other institutions to build a research platform that covers the entire blockchain industry. Its professionals provide a solid theoretical basis and analyze new trends to promote the development of the industry.

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