In-depth analysis of Celestia's core mechanism: under the trend of modularization, what should be the TIA estimate?

撰文:Poopman

编译：BlockBeats

Editor’s note: In this article, crypto researcher Poopman provides an in-depth look at Celestia’s core mechanics and future potential. The article mainly focuses on Celestia as a modular data availability (DA) layer, and introduces in detail its working principle, data availability sampling (DAS), namespace Merkle tree (NMT) and other key technologies, emphasizing the advantages of Celestia in solving the processing cost problem that increases with the growth of on-chain activity in a monolithic blockchain. In addition, the article’s future directions for Celestia, including the quantum gravitational bridge and Cevmos, shed light on why Poopman believes that TIA, as its native token, has a market cap target of more than $2 billion is reasonable.

In monolithic blockchains, as on-chain activity increases, so does the cost of processing. Celestia, on the other hand, solves scalability issues with a modular data availability (DA) network, keeping the cost of verification relatively stable.

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

1. What exactly is Celestia?

2. Monolithic VS modular

3. What is Data Availability (DA)?

4. Data Availability Sampling (DAS)

5. Namespace Merkle Tree (NMT)

6. Celestia’s three major working designs

7. Uses of TIA and the Future of Celestia

What exactly is Celestia?

Celestia is a modular DA layer that allows applications/rollups to be deployed on top of Celestia’s ready-made DA and consensus layer. As a result, the application can focus on the execution itself while leaving the DA and consensus work to Celestia. For a better understanding, it is necessary to understand the basics of data availability (DA), monolithic and modular networks.

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Monolithic VS modular

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

However, as network traffic increases, so does the burden on the network and makes transaction fees more expensive.

! [In-depth analysis of Celestia’s core mechanism: under the trend of modularization, what should be the TIA estimate?] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-fe3ffc0e43-dd1a6f-cd5cc0.webp)

To solve this problem, modular blockchains decompose the network into several independent modules, while providing different modules with the flexibility to upgrade and process tasks independently. For example, Celestia only handles the DA and consensus layer, while Dapps handle execution, etc.

! [In-depth analysis of Celestia’s core mechanism: under the trend of modularization, what should be the TIA estimate?] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-7693d9f40b-dd1a6f-cd5cc0.webp)

What is Data Availability (DA)?

Data availability (DA) refers to the accessibility of nodes in the network to view or download transaction data. DAs also need to ensure that transaction data is protected from malicious attacks, which can happen if the block proposer only publishes the block header but not the transaction data in the block.

To prevent malicious transactions, blockchains typically require full nodes to download, verify, and store all data from the network. However, there are 3 challenges to this design:

1. Dramatically reduce throughput

2. Sacrifice efficiency

3. The threshold for running a full node has been raised

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

1. Data Availability Committee (DAC);

2. Data Availability Network (DAN).

Out of all the DANs, Celestia is the most popular choice. Celestia is a modular DA layer that consists of two important features:

1. Data Availability Sampling (DAS);

2. Namespace Merkle Tree (NMT).

Data Availability Sampling (DAS)

First, the light client only downloads the block header (similar to a digest of the block data). To prevent light clients from accepting malicious transactions, DAS allows light clients to perform multiple rounds of random sampling of different parts of the block data.

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The more sampling is conducted, the greater the confidence in the availability of the data. When a 99% confidence level is reached, the data is considered “valid” and usable. To make DAS in Celestia possible, they employs a 2D Reed-Solomon encoding scheme.

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What is the 2D Reed-Solomon encoding scheme?

To put it simply, if you think of all chunks of data as one big puzzle of K x K chunks, Celestia uses 2K x 2K chunks and a “Reed-Solomon encoding” scheme to rearrange the data into a larger puzzle.

! [In-depth analysis of Celestia’s core mechanism: under the trend of modularization, what should be the TIA estimate?] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-f6085033ee-dd1a6f-cd5cc0.webp)

After that, the light node randomly picks a few pieces of the puzzle and queries the full node for the corresponding data. If full nodes are able to provide answers consistently, the likelihood that the data will be “valid” increases.

In addition, as long as the light client on Celestia samples enough data, the full node can reconstruct the 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 process.

Namespace Merkle Tree (NMT)

At the same time, the data in Celestia is divided into different parts (i.e., namespaces). Each namespace corresponds to a specific application that uses the DA layer. This helps the app download its own data and ignore the data of other apps.

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Next, to organize and validate the data, Celestia uses NMT to sort the data by namespace identifiers. Each node in the Merkle tree now has a series of namespaces unique to that node, enabling Celestia to provide proof of data integrity.

Celestia’s three major working designs

Combined with DAS and NMT, the main working design of Celestia can be summarized as:

1. Celestia only provides services for data availability and consensus layer, and does not handle settlement and execution

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

2. Security improves with the number of light clients

The more light clients there are in Celestia, the more likely it is that a full node will reconstruct the original block data. At the same time, more light clients equals larger blocks without sacrificing decentralization.

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As a result, the growth of nodes on Celestia is an important performance metric for Celestia.

3. Interoperability

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

Celestia’s future outlook

Celestia has two exciting directions:

1. Quantum gravitational bridges

2. Cevmos

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

! [In-depth analysis of Celestia’s core mechanism: under the trend of modularization, what should be the TIA estimate?] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-382e7baff5-dd1a6f-cd5cc0.webp)

Cevmos: Cevmos is a Cosmos SDK chain made specifically for rollup settlement. The function of this EVM-integrated chain is to allow ETH Rollups to upload their data to Cevmos and then pass it to Celestia, improving the connection between the EVM and the Celestia ecosystem.

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LOVE

TIA is the native token of Celestia:

• Fully Diluted Valuation (FDV): $6.0 billion
• Circulating Supply: $846 million (4.1%)

The utility of the token includes:

1. Rollup/ Developers pay TIA for data publishing, and the fee is determined by a fixed fee and a variable fee

2. Use TIA as the native GAS token for Rollup

3. Jurisdiction

4. Staking

! [In-depth analysis of Celestia’s core mechanism: under the trend of modularization, what should be the TIA estimate?] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-cd5644eea2-dd1a6f-cd5cc0.webp)

The TIA investment means that users are betting that more rollups and applications will use Celestia as their DA and consensus layer in the future, and all of these require TIA to publish data.

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

With the development of the Quantum Gravitational Bridge and Cevmos, I think TIA is a target that can be held for a long time (HODL), and it seems reasonable for me to estimate that the market cap target is above $2 billion.