In the evolving landscape of blockchain technology, a significant shift is underway highlighting the difference between monolithic and modular network designs. In this post we introduce the concept of "Composable Modularity", and argue that the future of both monolithic and modular designs relies on Web3's transition to composable modularity. This transition marks a new era in blockchain's potential, introducing specialized networks tailored for specific functions within the broader ecosystem.
The Emergence of Modular Blockchains
Traditional blockchain networks, often described as monolithic, typically encompass all necessary functions — consensus, execution, data storage, and more — within a single layer. This all-encompassing approach, while foundational, has its limitations, particularly in scalability and flexibility.
Modular blockchain networks represent a paradigm shift. By decomposing the blockchain stack into specialized layers, each focusing on a specific function, they offer enhanced performance, scalability, and adaptability. This modular approach allows for more efficient processing, as each network can optimize for its specific role.
Ethereum L2s and Data Availability
The emergence of execution networks in blockchain, particularly Ethereum L2 optimistic rollups like Arbitrum and Optimism or ZK rollups like Starknet and zkSync, represents a significant leap in enhancing blockchain efficiency and usability. They effectively handle transaction processing and smart contract execution, offloading these tasks from the main L1 Ethereum chain to achieve higher scalability and efficiency, offering faster transaction processing and reduced gas costs. This advancement allows for a wider array of complex and resource-intensive applications to be developed and run more efficiently.
The introduction of such execution layers significantly contributes to solving the scalability issues inherent in traditional blockchain systems. By handling the execution of transactions and smart contracts more efficiently, these networks free up resources on the main chain, leading to a more robust and versatile blockchain ecosystem.
The success of Ethereum L2s led to another basic blockchain function to "go modular" - in the form of Data Availability (DA) networks. Exemplified by platforms like Celestia and Avail, DA networks removes another barrier to spin up rollups by employing techniques such as data availability sampling that allows light nodes to verify large data sets without downloading the entire block.
The debate between monolithic and modular designs is yet to be settled, with the Solana ecosystem leading the former and the Ethereum ecosystem leading the latter - however right now it's safe to assume that both have room in Web3.
Introducing Composable Modularity
With Web3's vision of blockchains serving as the backbone of the future internet, modularity must be expanded beyond the basic functions of a network. There are many powerful capabilities that can be added to networks - whether their design is monolithic or modular - that allow blockchains to live up to their full potential. In order to add such capabilities in a decentralized way, specialized networks are required that are designed to enable a specific capability on other L1s and L2s. We call that "Composable Modularity" and those networks are "Composable Modular" networks.
The first, and possible the most obvious example, of composable modularity is oracle functionality, with the most prominent example of Chainlink, a widely adopted composable modular oracle network. Composable modular oracle network, particularly Chainlink, play a foundational role in the Web3 ecosystem by connecting blockchains to external data sources and events. They offer a solution to the blockchain oracle problem by securely connecting siloed blockchains to offchain systems, a crucial functionality for executing smart contracts based on real-world inputs and outputs. Chainlink, for instance, can be used on many L1s and L2s, both monolithic and modular, and enable smart contracts to interact with external data sources, enhancing their utility in various applications, from finance and insurance to gaming and supply chain management.
Another major avenue for examples of composable modular functionality come from the world of privacy, a key component that public blockchains on Web3 require to gain real world adoption. There are some very early example with projects like Aztec and Aleo, employing Zero Knowledge technology to bring privacy to smart contracts, and projects like Fhenix and Inco bringing confidential computing to the EVM ecosystem with Fully Homomorphic Encryption technology.
There are other composable modular capabilities beyond oracles and privacy such as distributed storage and distributed compute, but there is one fundamental capability that lies in the heart of one of the biggest problems in Web3 today, which is the problem of access control. In order for Web3 to gain mass adoption, blockchains need to have a secure and decentralized way to offer granular access control and to operate outside of their silo. And the best way to do that in Web3, is using signatures.
dWallet Network - the Composable Modular Signature Network
At the forefront of the composable modularity evolution is the dWallet Network, which is the first composable modular signature network. The dWallet Network introduces the dWallet primitive, an innovative signing mechanism that is built using noncollusive and massively decentralized MPC. Before we delve into the composability and modularity of the dWallet Network, let's take a moment to understand the fundamental problem it solves.
Blockchains are based on public key cryptography, which means the default access control is determined by a private key and therefore binary. Builders who want to build in Web3 face a tough problem - If they wish to uphold the core Web3 principles of user ownership and decentralization, they can't use centralized solutions to operate across chains, or turn to collusive Interoperability hacks like bridges or cross-chain messaging, which means they must remain confined to a siloed network and it's limited UX. We call that the Silo Problem, and it is one of the major hurdles for mass adoption of Web3.
The dWallet Network provides a solution for the Silo Problem, without compromising on user ownership or decentralization, in a natively multi-chain approach that preserves each network's security - and it does so by generating signatures in a noncollusive and massively decentralized way. There are many use cases for dWallets, including decentralized custody, natively interoperable DeFi and universal "restaking". Imagine holding BTC on Bitcoin and ETH on Ethereum through a Solana smart contract wallet, or using BTC as collateral for a loan without bridging or wrapping or even securing a protocol using BTC (similar to "Ethereum Restaking").
But that's not all, as mentioned the dWallet Network isn't just a signature network, it's a composable modular signature network. Builders on L1s and L2s, whether they are monolithic or modular themselves, can control a dWallet and natively manage assets and logic across all of Web3. This composable modularity on the dWallet Network is made possible through light clients, and builders on any network with a light client implemented on the dWallet Network will be able to control dWallets. The dWallet Network is planning on implementing light clients from many L1s and L2s, Starting with Ethereum, leading Web3 to a more secure and interoperable future.
Conclusion
The emergence of composable modular networks is a testament to the ongoing maturation and diversification of the blockchain space. As part of that maturity, composability and modularity are key to unlocking Web3's full potential, with purposefully-built specialized networks bringing together a fragmented ecosystem of siloed blockchains into a vibrant, versatile and robust digital infrastructure.
As we witness composable modular networks like the dWallet Network each carving out their niche, we're not just seeing the evolution of technology, but the formation of a more versatile and interconnected blockchain universe, as it builds up towards real world use cases and mass adoption.
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