Modular Vs Monolithic: Decoding the Blockchain Dilemma

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When Bitcoin introduced blockchain technology to the public in 2008, the nascency of the tech and its inability to preempt the adoption made it very hard to contemplate that monolithic stacks would choke at the hours of massive adoption.  As a result, we witnessed that some of the monolithic successors of Bitcoin, like the Ethereum blockchain, succumbed to the network effect during the cryptokitty event. Fast forward to now, modular chains have provided near infinite scalability and customisation never dreamt of in the crypto space. 

Despite that fact, it doesn’t make the monolithic blockchain stack any less significant. In this piece, we shall see why modular and monolithic blockchains are an intrinsic part of the decentralised space.

What are Monolithic Blockchains?

In a monolithic blockchain, all necessary functions are carried out within a single ecosystem that is extensively connected. As a result, the processing time is very slow on a monolithic blockchain, which makes it unsuitable for hosting applications that need higher scalability with time.

Layers of Monolithic Chains

What are Modular Blockchains?

Modular, on the other hand, has the provision to outsource the functions to different ecosystems to sustain the need for scalability and throughput. For example, they might use a separate blockchain for a DA layer like Celestia and inherit the security. They might use L1 like Ethereum, which can also be used for settlement. While the roll-up environments will be responsible for bundling the  transaction as one and publishing the final state of the bundled transaction as a single transaction with a validity or a fraud proof depending on the nature of the rollup solution.

Layers of Modular Chains

Why Do We Need Monolithic Blockchains?

Monolithic blockchains are extremely suited for those applications that can easily run on top of a public network. Why so? Because unlike a modular stack where you will have to manage separate stacks like using Celestia for DA, a roll-up environment for sequencing and separate L1 chains for settlement and consensus, a monolithic stack can do all of that in the same layer.

Now, you may ask what’s the problem here? To put that into perspective, a modular stack of the above proportion might cost you $$$$$ dollars, while the monolithic stack might cost you just $$$ dollars. So, ideally, it is optimally suited to go for a monolithic stack when you have such a requirement.

Why Do We Need Modular Blockchains?

If you are launching your own application and you want to extract maximum value from the same. To put that into perspective, if you want that your own token should have a network effect so that it can attract investment and private funding. In that case, you should have the discretion to diversify your revenue potential in the directions that can better serve your project purpose. In such a case, if you are using a monolithic chain, you cannot define your own rules and regulations; rather, you have to be stuck with the community guidelines. At this point, the modular stacks have proven their competence because they prevent the supporting blockchains from sabotaging the network effect of the partner chain. For example, in the case of Friend.Tech, even though Base was the supporting blockchain of Friend.Tech, yet it was Friend.Tech that supercharged the demand for the Base blockchain. Hence, you have to be definite about your requirements and accordingly you can plan for both modular and monolithic blockchains.

Which is the Best Way?

There’s nothing like a best way when choosing a modular or a monolithic blockchain; rather, it is entirely dependent on the use-cases that require the blockchain stack. For example, if you have a general purpose app specific function where you do not need massive scaling as time passes. In that case, you can settle for a monolithic chain. Bitcoin has been going strong and steady despite a very small block size of 1 MB with 7 to 10 TPS. Whereas, there are other gaming applications like Guild of Guardians and Gods Unchained that cannot settle with traditional monolithic chains like Ethereum or Solana because they are in need of infinite scalability, better UX, robust security and enhanced developments. For such applications, if they are settling for a monolithic chain, they will not be able to achieve those objectives. While the same modular stacks are indefinitely relying on the monolithic chains like Ethereum and Bitcoin for security.

When are both the stacks relevant?

Monolithic

It entirely depends on the use -cases that you are preparing. For example, if you are looking forward to deploying an application which needs a simpler interface and faster development experience.  For such a requirement, it is highly suitable to go for a monolithic stack because components of the monolithic stacks are centralized and they can be easily developed and deployed.

Microservices/Modular

For microservices, there might be the need where your application might need upgrades time and again. The trade-off of a modular stack is that it is a self-contained service. As a result, it is possible to debug, deploy and manage the chain independently of the ecosystem. So, if you have an application that requires different layers of operations, they should remain independent of each other. For such a requirement, the modular or microservice stack is best because you can experience horizontal scaling and enchanted flexibility, which is not possible with a monolithic stack. So, it will entirely depend on the use cases you are developing and intend to use a solution. 

Conclusion

The modular and monolithic war is not binary in 0s and 1s but quantum. Because there are objectives like scalability with time, network sabotage threat, and increasing the value of their blockchains over time that  Uniswap, Lido, and MakerDAO have achieved, these applications have even outsmarted their base chains in terms of the value proposition by extracting fees which have even dwarfed the base chains earning. Such applications cannot stick with the monolithic stack because they are not responsive to changing trends. Monolithic stacks have demonstrated composability and interoperability, which modular stacks have failed to achieve. Hence, it has equalled the power sum game of the great modular and monolithic stack protocol wars.

Here VE3 emerges as a potential game-changer. With our innovative approach, we seek to bridge the gap between modular and monolithic stacks, offering a versatile solution that combines the best of both worlds. By providing a framework that enables interoperability and composability, we aim to empower blockchain applications to adapt to changing trends while maintaining a robust and scalable foundation. In doing so, VE3 stands as a key player in shaping the future of blockchain technology, contributing to the ongoing narrative of the great modular and monolithic stack protocol wars. To know more, explore our innovative digital solutions or contact us directly.

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