In-depth analysis of the core mechanism of Celestia Under the modular trend, what should the estimated TIA be?

Exploring the Fundamental Mechanics of Celestia Under the Modular Trend Uncovering the Estimated TIA

Author: Poopman

Translator: BlockBeats

Editor’s Note: In this article, Cryptocurrency researcher Poopman delves deep into the core mechanism and future potential of Celestia. The article primarily focuses on Celestia as a modular data availability (DA) layer, providing a detailed explanation of its workings, data availability sampling (DAS), namespace Merkle trees (NMT), and other key technologies. It emphasizes Celestia’s advantages in addressing the increasing processing costs in holistic blockchain systems due to the growth of on-chain activities. Additionally, the article introduces Celestia’s future development direction, including quantum gravity bridges and Cevmos, and explains why Poopman believes that TIA, as its native token, has a reasonable market cap target of over $2 billion.

In holistic blockchain systems, as on-chain activities increase, so do processing costs. However, Celestia solves scalability issues by utilizing a modular data availability (DA) network, thus maintaining relatively stable validation costs.

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In this article, I will discuss the following 7 aspects:

1. What is Celestia exactly?

2. Holistic vs Modular

3. What is Data Availability (DA)?

4. Data Availability Sampling (DAS)

5. Namespace Merkle Trees (NMT)

6. Celestia’s Three Design Features

7. Uses of TIA and the Future of Celestia

What is Celestia exactly?

Celestia is a modular DA layer that allows applications/Rollups to be deployed on top of Celestia’s existing DA and consensus layers. Thus, applications can focus on their own execution while leaving the DA and consensus work to Celestia. To better understand this, it is necessary to grasp the basics of data availability (DA), holistic, and modular networks.

Holistic vs Modular

Holistic: In blockchain networks like Solana or Avalanche, a full node must perform all four responsibilities of a blockchain, including execution, settlement, data availability (DA), and consensus.

However, as network traffic increases, the network’s burden also increases, making transaction fees more expensive.

To solve this problem, modular blockchain breaks the network into several independent modules, providing flexibility for upgrading and independently handling tasks for different modules. For example, Celestia only handles the DA and consensus layer, while Dapp is responsible for handling execution, etc.

What is Data Availability (DA)? Data Availability (DA) refers to the accessibility of transaction data for nodes in the network to view or download. DA also needs to ensure that transaction data is not subject to malicious attacks, which could happen if block proposers only publish block headers without the transaction data in the block.

To prevent malicious transactions, blockchain typically requires full nodes to download, verify, and store all data from the network. However, this design poses three challenges:

1. Significant reduction in throughput
2. Sacrificing efficiency
3. Increased barrier to running full nodes

To address these issues, some off-chain methods can “offload” transaction data by storing it elsewhere in the network. Common off-chain solutions include:

1. Data Availability Committee (DAC)
2. Data Availability Network (DAN)

Among all the DANs, Celestia is the most popular choice. Celestia is a modular DA layer consisting of two important functionalities:

1. Data Availability Sampling (DAS)
2. Namespace Merkle Tree (NMT)

Firstly, lightweight clients only download block headers (similar to a summary of block data). To prevent lightweight clients from accepting malicious transactions, DAS allows lightweight clients to perform multi-round random sampling on different parts of the block data.

As the number of sampling rounds increases, confidence in data availability grows. Once a confidence level of 99% is reached, the data is considered “valid” and available. To make DAS in Celestia possible, they adopted a 2D Reed-Solomon encoding scheme.

So, what is the 2D Reed-Solomon encoding scheme? Simply put, if we imagine all the block data as a large puzzle composed of K x K blocks, Celestia uses a 2K x 2K blocks and the “Reed-Solomon encoding” scheme to rearrange this data into a larger puzzle.

Afterward, the light nodes randomly select several puzzle pieces and query the full nodes for the respective data. If the full nodes can consistently provide answers, the likelihood of the data being “valid” increases.

In addition, as long as Celestia’s light clients sample enough data, full nodes can reconstruct complete block data. In other words, the more light clients Celestia has, the more transactions they can process, and the larger the blocks they can handle.

Namespace Merkle Tree (NMT)

At the same time, the data in Celestia is divided into different sections (namely namespaces). Each namespace corresponds to a specific application that uses the DA layer. This helps applications download their own data while ignoring the data of other apps.

Next, to organize and verify data, Celestia uses NMT to sort the data by namespace identifier. Now, each node in the Merkle tree has a series of namespaces exclusive to that node, allowing Celestia to provide proofs of data integrity.

Three Key Design Principles of Celestia

Combining DAS and NMT, the main design principles of Celestia can be summarized as:

1. Celestia only provides data availability and consensus layer services, without handling settlement and execution

Execution is handled by applications. This makes them more scalable compared to monolithic blockchains, as they delegate DA to Celestia and leverage DAS for enhanced scalability.

2. Security increases with the number of light clients

The more light clients there are in Celestia, the higher the likelihood of full nodes reconstructing the original block data. At the same time, more light clients equal larger blocks without sacrificing decentralization.

Therefore, the growth of nodes on Celestia is an important performance metric for Celestia.

3. Interoperability

Finally, Cosmos allows Celestia to connect to networks that support IBC, enabling interoperability between all chains built on top of Celestia.

Celestia’s Future Outlook

Celestia has two exciting development directions:

1. Quantum Gravity Bridge

2. Cevmos

Quantum Gravity Bridge: QGB will enable Celestia to connect with any EVM compatible chain that goes beyond the universe, including ETH and AVAX, bringing in more liquidity.

Cevmos: Cevmos is a Cosmos SDK chain designed specifically for Rollup settlement. The integration of an EVM-enabled chain allows ETH Rollups to upload their data to Cevmos and then pass it on to Celestia, improving the connection between the EVM and Celestia ecosystem.

TIA

TIA is the native token of Celestia:

• Fully Diluted Valuation (FDV): $6 billion
• Circulating Supply: $846 million (4.1%)

The utility of the token includes:

1. Rollup/developer pays TIA for data publication, fees determined by fixed and variable costs

2. Using TIA as the native GAS token for Rollups

3. Governance

4. Staking

Investing in TIA means users are betting that more Rollups and applications will use Celestia as their data availability and consensus layer, which require TIA for data publication.

Optimistically, with the growing demand for the DA layer, more validators will be attracted to stake TIA and participate in data processing, forming a stronger and more secure network.

With the development of the Quantum Gravity Bridge and Cevmos, I believe holding TIA for the long term (HODL) is reasonable, and I estimate a market cap target of over $2 billion seems plausible.

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