While DeFi promises to revolutionize financial systems, it has also garnered a reputation for its affinity for complex terms and technical jargon that often overwhelm newcomers and veterans alike. This is because many terms used in DeFi discussions are rooted in blockchain protocols, cryptography, smart contract functionality, and the many innovations coming out of the industry.
We’ve all heard about terms like MEV, ePBS, SUAVE, Sequencers, Intents, and more. These intricate elements comprise the dazzling Modular Stack. If you have never heard about it, then maybe it’s because it lies in a space that seems destined only for the domain of rollup security and scalability. However, diving into this stack can lead to a profound understanding of its potential to revolutionize application design and unlock unparalleled user experiences.
So, in this article, I’ll try to demystify the modular stack and shed light on its application-focused perspective.
Breaking down the transaction journey
A crypto transaction begins when a user wants to perform an action on a blockchain, such as transferring tokens or interacting with a dApp. The user specifies their intention, and this becomes the “transaction plan.” At this stage, the primary concern is user experience – ensuring transactions are customizable, quick, and efficient.
Before a transaction is confirmed, it goes through a series of steps that involve consensus mechanisms and validation. This is where scalability and security concerns come into play. Traditional blockchains face scalability challenges, as they can process only a limited number of transactions per second. High demand can lead to congestion and slower transaction times. Additionally, the security of these transactions depends on the underlying consensus protocol, which can impact the network’s vulnerability to attacks.
Rollups are a solution designed to address these scalability and security challenges. They work by aggregating multiple transactions into a single transaction, reducing the load on the main blockchain. There are two types of rollups:
- ZK-Rollups and
- Optimistic Rollups
ZK-Rollups use Zero Knowledge Proofs to bundle transactions into a succinct proof, while Optimistic Rollups use fraud proofs to ensure correctness. Both types significantly enhance scalability by offloading transaction processing to a separate chain while maintaining a strong connection to the main blockchain’s security.
Once transactions are processed on a rollup, they are settled and confirmed on the main blockchain. The rollup ensures the integrity of the transactions and provides a guarantee that they are valid. This settlement process is faster and requires fewer resources compared to traditional on-chain transactions. Rollup technology significantly improves the speed of transaction execution while maintaining a high level of security.
Embedded within the core desires of users and developers within the application layer is the yearning for transactions that are tailored, expedient, and capable of transferring data. Rollup technology directly addresses these desires by enabling developers to design applications that offer seamless and efficient transaction experiences. Leveraging the scalability endowed by rollups, decentralized applications (dApps) can accommodate an expanded user demographic without compromising on speed or incurring exorbitant gas charges. Furthermore, the capability to integrate additional data within transactions ensures that applications can communicate substantive information, enhancing their functionality.
This multifaceted process can be distilled into three main stages:
- Ordering, and
A modular stack encompasses a fusion of multiple modular blockchains. It is a structured arrangement of distinct and interconnected technologies, protocols, and components that collectively form the foundation for blockchain networks and applications.
The modular stack concept shows the separation of functionalities into individual layers, each with its specific purpose and role. The stack aims to transform these stages and empower developers to sculpt the user experience without compromising on trust and composability.
Here’s how it does it:
- Plan: The focus in this stage is on understanding and defining what the user wants to accomplish. The user’s intention or action is translated into a set of operations or intents that need to be executed on the blockchain. Historically, users signed transactions using a seed-phrase wallet, specifying the contract being called and the action taken. This process has evolved, and the concept of a “smart account” has emerged. Smart accounts abstract the traditional wallet concept and allow for more flexibility in user experiences and transaction flows. Additionally, different verification methods can be applied to transactions, making the process more secure and tailored to the user’s needs.
- Ordering: Once the user’s intentions are defined, the challenge is to determine the order in which transactions should be executed, especially when there are multiple user actions and varying preferences. This stage involves the use of “predicate networks” which are intermediary networks responsible for ordering and bundling transactions or intents before they are executed on the blockchain. These networks consist of relayers (who receive and send transactions), predicates (which determine transaction preferences), and solvers (who optimize the ordering of transactions based on given preferences). Predicate networks ensure efficient and fair execution of transactions by considering various factors and preferences, potentially leading to new ways of prioritizing transactions beyond simple gas fees.
- Execution: In the execution stage, the finalized ordered transactions or intents are executed on the blockchain. This stage involves the actual implementation of the intended actions, such as transferring tokens, minting NFTs, or interacting with smart contracts. That in itself, is the importance of maximizing composability, where applications carry state and actions across different accounts, contracts, and even chains. In this final stage, Data Availability (DA) and Zero Knowledge Proofs (ZKPs) comes to mind as efficient on-chain execution solutions that provide ways to handle and validate data and complex computations without overwhelming the blockchain. DA redefines on-chain data storage, allowing historical data to be pruned over time while maintaining blockchain validation. ZKPs, far more than just a tool for ZK-rollups, empower applications with powerful capabilities, including identity proofs, retroactive funding, and seamless multichain transactions.
A world of application-centric possibilities
While the process of designing transactions in this multifaceted ecosystem involves defining user intentions, determining the order of execution through predicate networks, and executing actions on the blockchain while maximizing composability and efficiency using technologies like DA and ZKPs, the true potential of the “Modular Stack” lies in its ability to transform application development, making it more user-centric, efficient, and flexible.
- Smart Accounts & Verified Experiences where smart accounts usher in new verification methods beyond seed-phrases, transforming user onboarding. Multi-signature verification coupled with MPC wallets and biometrics enhances security and user experience, as demonstrated by Visa + Gnosis Pay integration.
- Intent-centric networks with application-specific predicate networks where users and applications can express preferences for actions and transactions. Ever thought of minting NFT collections with prioritization? Doesn’t that reshape user interactions and application mechanics?
- ZK-Powered Composability where ZKPs unlock realms of possibilities, from fitting large models on-chain to seamless multichain transactions.
The concept of the “Modular Stack” illuminates a profound shift in the blockchain landscape. It amplifies the significance of a more holistic perspective that transcends traditional notions of infrastructure. It champions an ecosystem where developers are not just architects of blockchains, but also conductors of seamless user experiences.
With platforms like Caldera and solutions like Celestia paving the way, it’s an exciting time to be at the forefront of blockchain innovation. As the layers of the stack interweave, applications are no longer confined to the chains – they extend across networks, preferences, and experiences, unlocking a new era of decentralized possibilities.