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April 4, 2023

Name Games: What About Modularity Matters…And What Doesn’t | SKALE

Jack O'Holleran
Co-Founder & CEO

The term ‘modular’ is a proven descriptor with historical meaning in technology, similar to other established descriptors like elastic, embedded, and extensible. It has existed as a tech design principle as far back as 1940, when the earliest computers incorporated CPUs and memory as separate, self-contained components that could be replaced and upgraded independently. Elements of modularity exist in nearly every technology today, from solar batteries and synthesizers to 3D printers and smartphones.

Given that storied history, it’s not surprising that modularity has emerged as a key concept in modern blockchain technology as well — both today, and also back in 2018, when my cofounder and I started working on SKALE, using modular architecture to build an elastic network of configurable chains that were more agile than L1s while keeping a large foundational staking/security base across the entire network.  

More surprising is the attempts by some to now claim ‘modularity’ as theirs alone, applying a narrow and historic definition to the term in an attempt to crowd out others. By making up arbitrary rules about what is and isn’t modular, they believe they can monopolize the wide-ranging principles of modularity as a category that only their chain fits.

The truth is that modular blockchains are a broad category, with numerous sub-categories based on how modularity is utilized, to achieve the greater benefits of blockchain technology. 

As such, modularity’s utility doesn’t lie in narrow views of what is possible, enforced by self-serving gatekeepers. Rather, its value lies in its historic roots as a design principle that can enhance efficiency, flexibility, and scalability of novel technologies, amplifying the benefits of the blockchain across the entire web3 ecosystem.

Accepting a limited definition of modularity means settling for a more limited web3 future. In this piece, I will outline the architecture of SKALE and other Modular Blockchains, while asserting that any differentiation between such chains should be rooted in a simple question:

To what extent does the chain use modularity, in the classical sense, to create greater efficiency, security, resilience, or performance?

The Modular Architecture of SKALE

SKALE was intentionally built with modularity at its core. Its modularity is achieved via chain creation and node reassignments. Modular design allows for nodes to be combined to create chains and for individual subnodes to be removed and reallocated to new chains, creating greater security and collusion resistance. It also creates greater resiliency by allowing dead or malicious nodes to be removed and healed. 

SKALE chains are the end result of this logical partitioning which makes managing and utilizing the partition more effective and efficient than managing the whole as an operating unit. Each node runs 9 core modules. 1 is an operations module that supports network operations, such as staking, rewards, rotation, and slashing. 8 are blockchain modules that allow the node to act as 8 unique consensus participating nodes in sub-blockchains, called SKALE Chains. 

Through this structure, each SKALE Chain is effectively a shard, not a sidechain. In addition to enabling sharding, SKALE’s modular structure is valuable for two reasons: 

1) Pooled Security Across Chains

Validators are randomly assigned and rotated across numerous chains. This pools security and creates collusion resistance. Also, each validator is running on multiple chains at once but is slashed in full (not proportional to the chain they are on). This further pools security across chains as incentives are pooled across chains, not isolated 1 to 1 per each chain. 

2) Redundancy

As long as one chain in the 16 is up and running, the chain can regain liveliness. This contrasts with sidechains, where if greater than a third of chains go down, data can be lost forever. 

SKALE Node management happens on Ethereum via smart contracts called SKALE Manager. If a node is down in the network, the chain talks to Ethereum, which will randomly select a new sub-node in the network and will then assign that node to the network. A catchup protocol is automatically implemented, which gets the node back to the state of other nodes in less than 15 minutes. 

Comparing the Functional Success of Various Modular Blockchains

Modularity presents a potential solution to the “Blockchain trilemma” by relying on a simple premise: That blockchains can achieve greater decentralization, greater security, and greater scalability by optimizing individualized chains for each of those L1 core functions. That premise is currently driving powerful innovations for blockchains.

If we determine that modular blockchains should be judged primarily on their ability to provide value to users in serving those three core functions, then it’s worth looking at the performance of various modular blockchains.

Horizontal Modularity on the SKALE Network

The benefits of SKALE’s modular architecture is that it is especially decentralized and scalable, while also offering low latency and eliminating gas fees. SKALE uses modularity to empower users, allowing for faster transactions per second, lower latency, connectivity to API-based wallets, better cost-effectiveness, and inter-chain messaging. 

In essence, SKALE chooses not to decouple consensus and computation on app chains.  As a result, it is able to optimize key aspects of the on-chain experience while still responsibly managing risk. 

Vertical Modularity on Other Modular Chains

Other modular chains are similar to SKALE in that they use a network of nodes to handle computation. However, rather than referring back to the Ethereum base layer for consensus, these chains require that each node send every single consensus decision back to the chain’s separate, shared “bottom” layer.

That decision is supposed to improve security, guarding against that a large majority of validators — over two-thirds — decide to vote in a way that compromises the network. The trade-off is that it comes at significant gas fees and slower transaction speeds, making those chains slower and costlier than SKALE.

That trade-off may well be worth it, if it added security in a significant fashion. However, that claim is far from proven. Validators on SKALE don’t just validate on one chain: Many of them provide validation for multiple chains, including other L2s beyond Ethereum and beyond the SKALE network. That means they are majorly incentivized to act as good actors: If that validator is proven bad on one node, the network prevents it from working as a validator on others.

It’s difficult enough to imagine one validator knowingly compromising their reputation on one node, when doing so could cause them to lose their business across all nodes on the SKALE Network and other chains. It’s even harder to imagine two-thirds of validators going that route, and network security history bears this out, with bad validators rarely (if ever) causing security breaches on chains.

Conclusion

Tech people, and especially crypto tech people, love categorization. Creating segments, bucketing items, drawing dividing lines, and making rules about what’s what — it’s all part of the tech culture. And, yes, technology categorization can be positive: categories help people understand functionality, similarities, and differences of solutions. 

However, category definition can also be a tactic to push out competition or to grab market share. And when category definition transforms into an effort to diminish the true potential of blockchains simply to get a business advantage, it’s critical to call it out. 

Modularity continues to be a valuable design principle for web3 technologies, as it has been for a number of groundbreaking innovations. However, its value is limited, not expanded, when biased actors insist on narrowing modularity to carve out category dominance rather than true performance enhancement. 

If we let such word games pass without sufficient scrutiny, we don’t just do a disservice to ourselves, but to the entire ecosystem of developers and investors working to build a better web.

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