Monolithic architectures are hitting a wall. A single chain cannot simultaneously optimize for security, scalability, and sovereignty without crippling trade-offs, a reality proven by Ethereum's gas wars and Solana's downtime.
venture-capital-trends-in-web3
Blog
Why Modular Stacks Will Make Monolithic Blockchains Obsolete
The monolithic blockchain model is a legacy architecture. This analysis explains why modular stacks, combining specialized execution layers with shared data availability, offer superior cost, sovereignty, and innovation—rendering integrated chains a relic.
introduction
THE INEVITABLE UNBUNDLING
Introduction
Monolithic blockchains are collapsing under their own complexity, forcing a fundamental architectural shift to specialized, interoperable layers.
Modular stacks unbundle the trilemma. Dedicated layers like Celestia for data availability, Arbitrum for execution, and EigenLayer for security enable each component to scale independently, creating a superior system.
The market is voting with its capital. Developer and user activity is rapidly migrating to rollups and appchains, with networks like Optimism and Polygon CDK demonstrating that specialization beats general-purpose monoliths.
key-trends
WHY MONOLITHIC IS DEAD
Executive Summary: The Modular Mandate
The monolithic blockchain model is a relic, forcing every application to compete for the same scarce, expensive resources. Modularity is the inevitable architectural evolution.
01
The Scalability Trilemma Was a Design Flaw
Monolithic chains like Ethereum historically forced a trade-off between decentralization, security, and scalability. Modular architectures decouple these concerns into specialized layers.
- Execution handled by rollups (Arbitrum, Optimism).
- Settlement & Consensus secured by a base layer (Ethereum, Celestia).
- Data Availability scaled via dedicated layers (Celestia, EigenDA, Avail).
100x
Throughput Gain
-99%
Avg. User Cost
02
Specialization Drives Hyper-Optimization
A one-size-fits-all virtual machine is inefficient. Modular stacks enable purpose-built execution environments.
- App-Specific Rollups (dYdX, Lyra) tailor state transitions for maximal performance.
- Parallel Execution via Solana Virtual Machine (SVM) or MoveVM rollups (Eclipse, Movement).
- Custom Data Availability slashes costs for high-throughput games and social apps.
~500ms
Finality
$0.001
Tx Cost Target
03
The Interoperability Imperative
Monolithic chains are siloed. A modular ecosystem demands seamless, trust-minimized communication between specialized layers.
- Shared Security from base layers (Ethereum restaking, Cosmos Interchain Security).
- Universal Interoperability protocols (LayerZero, Axelar, Wormhole) become critical infrastructure.
- Intent-Based cross-chain flows (Across, Socket) abstract complexity from users.
$10B+
Bridge TVL
1-Click
Cross-Chain UX
04
Economic Sustainability Through Fee Markets
Monolithic chains have a single, congestible fee market. Modularity creates layered, competitive markets that optimize resource pricing.
- Execution Layer fees compete on speed and cost (Arbitrum vs. zkSync).
- Data Availability fees are decoupled, enabling ~$0.01 blob costs vs. ~$10 calldata.
- Settlement Layer captures value from all attached rollups via restaking and proving fees.
10x
More Fee Markets
>50%
Efficiency Gain
05
Celestia & The Data Availability Breakthrough
The highest cost in L2 scaling is data availability. Celestia pioneered modular DA, proving data availability separately from execution.
- Enables light nodes to verify data with minimal trust, enhancing decentralization.
- Orders of magnitude cheaper than Ethereum calldata, the core bottleneck.
- Spawned an ecosystem of rollups (Manta, Caldera) and alt-DA competitors (EigenDA, Avail).
-99%
DA Cost
1000+
Rollups Supported
06
The Inevitable Commoditization of Execution
In a modular world, execution becomes a commodity. Value accrues to the base settlement/consensus layer and the interoperability fabric.
- Rollups are interchangeable; users follow liquidity and UX, not chain loyalty.
- Aggregators & Super Apps (Rainbow, Phantom) abstract the underlying chain.
- Long-term moats are security (Ethereum), liquidity (interop layers), and developer UX.
0
Chain Loyalty
$100B+
Base Layer Value
thesis-statement
THE ARCHITECTURAL IMPERATIVE
The Core Argument: Specialization Always Wins
Monolithic blockchains are collapsing under the weight of their own complexity, creating an unassailable market for specialized modular layers.
Monolithic designs hit a wall. A single chain executing, settling, and storing data creates an impossible trilemma; optimizing for one function degrades the others, as seen in Solana's downtime or Ethereum's pre-rollup gas fees.
Specialization unlocks hyper-optimization. Dedicated layers like Celestia for data availability, EigenLayer for decentralized trust, and Arbitrum for execution achieve orders-of-magnitude better performance and cost by focusing on a single task.
The market votes with capital. Over 90% of Ethereum's L2 TVL resides on specialized rollups (Arbitrum, Optimism, zkSync), not general-purpose sidechains, proving developers choose best-in-class components over integrated monoliths.
Modularity is the endgame. The future stack uses Celestia for cheap blobs, Espresso for shared sequencing, and AltLayer for elastic rollups—a composition no monolithic chain can match on cost, speed, or sovereignty.
MODULAR VS. MONOLITHIC
Cost & Sovereignty: The Hard Numbers
Direct comparison of key economic and control metrics between a modular stack (e.g., Celestia DA, Arbitrum Nitro, OP Stack) and a monolithic blockchain (e.g., Solana, Ethereum, BNB Chain).
| Feature / Metric | Modular Stack (e.g., Rollup) | Monolithic L1 (e.g., Solana) | Monolithic L1 (e.g., Ethereum) |
|---|---|---|---|
Data Availability Cost (per MB) | $0.10 - $0.50 (Celestia Blobstream) | $8 - $15 (On-chain storage) | $800 - $1,200 (Calldata) |
Sovereignty (Upgrade Control) | |||
State Execution Cost (per 1M gas) | $0.01 - $0.05 (Arbitrum Nitro) | $0.10 - $0.30 | $5 - $15 |
Sequencer Revenue Capture | |||
Time-to-Finality (L1 Settlement) | ~20 min (Ethereum) | ~400 ms | ~12 min |
Validator/Prover Hardware Cost | < $1k/month (Light Node) |
|
|
Protocol-Specific Token Utility |
deep-dive
THE UNBUNDLING
The Execution Layer Gold Rush
Monolithic blockchains are collapsing under their own complexity, creating a trillion-dollar market for specialized execution layers.
Monolithic design is a tax. Ethereum and Solana bundle consensus, data availability, and execution, forcing every node to process every transaction. This creates a scalability ceiling that no single-layer optimization can overcome.
Modular stacks unlock specialization. Separating execution into dedicated layers like Arbitrum Orbit or zkSync Hyperchains lets developers optimize for specific use cases. A gaming chain uses cheap, fast execution; a DeFi chain prioritizes security.
The market demands choice. Developers will not tolerate monolithic constraints. The success of EigenLayer AVS and Celestia rollups proves that teams prefer to assemble best-in-class components over accepting a one-size-fits-all platform.
Evidence: Ethereum's mainnet handles ~15 TPS, while its rollup ecosystem processes over 200 TPS. This 13x multiplier is the execution layer premium that makes monolithic designs obsolete.
protocol-spotlight
WHY MONOLITHS CAN'T SCALE
Protocol Spotlight: The Modular Stack in Action
Monolithic blockchains force consensus, execution, and data availability into a single, congested layer. Here's how modular architectures like Celestia, EigenDA, and Fuel are breaking the trilemma.
01
The Data Availability Bottleneck
Monolithic chains like Ethereum historically forced every node to store all transaction data, creating a ~50 GB/year bloat and a single point of congestion.\n- Solution: Separate Data Availability (DA) layers like Celestia and EigenDA provide ~$0.001 per MB data posting, verified by light clients.\n- Impact: Rollups (e.g., Arbitrum, Optimism) can post data off-chain, slashing L1 fees by >90% while maintaining security.
>90%
Fee Reduction
$0.001/MB
DA Cost
02
The Execution Wall
Single-threaded EVM execution caps throughput at ~15-30 TPS, creating network-wide congestion during memecoin frenzies.\n- Solution: Hyper-parallelized execution layers like Fuel and Monad use state access lists and parallel transaction processing.\n- Impact: Enables >10,000 TPS for applications, unlocking complex DeFi and on-chain gaming without L1 gas auctions.
>10k
TPS Target
Parallel
Execution
03
Sovereignty vs. Security Trade-Off
App-chains face a brutal choice: bootstrap a costly validator set (low security) or rent security from Ethereum (high cost, low sovereignty).\n- Solution: Shared Sequencers (e.g., Espresso, Astria) and Restaking (e.g., EigenLayer) decouple these functions.\n- Impact: Chains like dYmension RollApps get Ethereum-level security for consensus while maintaining sovereign execution forks and MEV capture.
$30B+
Restaked TVL
Sovereign
Execution
04
Interoperability Fragmentation
Hundreds of modular chains create a fragmented liquidity and user experience nightmare, worse than the multi-chain L1 era.\n- Solution: Universal Interoperability Layers like Polymer (IBC) and LayerZero provide standardized cross-rollup communication.\n- Impact: Enables native asset transfers and composable smart contracts across the modular stack, turning fragmentation into a unified "Internet of Rollups".
100+
Chains Connected
Native
Composability
05
The Verifier's Dilemma
Optimistic Rollups require a 7-day challenge window, locking capital and delaying finality. ZK-Rollups require specialized, expensive hardware for proof generation.\n- Solution: Proof Aggregation Networks like Espresso and Succinct batch proofs across chains. Parallel Provers like Risc Zero and SP1 reduce hardware costs.\n- Impact: Drives ZK proof costs toward <$0.01 and reduces finality from days to ~10 minutes, making ZK-Rollups economically viable for all chains.
<$0.01
Proof Cost
~10 min
Finality
06
The Modular Endgame: Specialized Chains
General-purpose monoliths force all apps (DeFi, Gaming, Social) to compete for the same, suboptimal block space.\n- Solution: App-Specific Rollups (e.g., dYdX, Sorare) and Execution Environments (e.g., Fuel, Eclipse) let developers choose a VM (WASM, SVM, Move) and data layer optimized for their use case.\n- Impact: Gaming chains can have zero-gas fees for users, while DeFi chains run high-frequency auctions, each with custom economic security.
Zero-Gas
User Experience
Custom VM
Optimized Stack
counter-argument
THE TRILEMMA TRAP
The Monolithic Rebuttal (And Why It Fails)
Monolithic architectures fail because they force a single execution layer to solve scalability, security, and decentralization simultaneously, a proven impossibility.
The Scalability Ceiling is Physical. A single node must process every transaction, creating a hard throughput limit. Solana's 5,000 TPS is the practical peak for a performant monolithic chain, requiring specialized hardware that centralizes validation.
Upgrade Inertia Cripples Innovation. Changing a core component like a VM requires a hard fork, a politically fraught process. Ethereum's multi-year rollup pivot contrasts with Celestia's data availability layer enabling instant, permissionless rollup deployment.
Resource Contention Guarantees Inefficiency. Execution, consensus, and data compete for the same block space. This creates the high, volatile fees seen on Ethereum L1 and Solana during congestion, which modular designs like Arbitrum explicitly avoid.
Evidence: The market has voted. Over 75% of Ethereum's transaction volume now occurs on its modular Layer 2 rollups, not its monolithic L1. Monolithic chains become expensive settlement layers or niche app-chains.
investment-thesis
THE ARCHITECTURAL SHIFT
Investment Thesis: Bet on the Primitives, Not the Cathedrals
Monolithic blockchains are collapsing under their own complexity, creating a generational opportunity in specialized modular components.
Monolithic architectures are failing because they force consensus, execution, and data availability into a single, rigid layer. This creates a scalability trilemma where optimizing for one attribute degrades the others. Ethereum's high fees and Solana's downtime prove this model is unsustainable for global-scale adoption.
Modular stacks unlock specialization, allowing each layer to be optimized independently. Celestia handles data availability, EigenDA provides restaking security, and Arbitrum/OP Stack chains focus solely on execution. This separation creates a competitive market for each primitive, driving innovation and efficiency that a single chain cannot match.
The value accrual flips from the monolithic L1 to the critical primitives beneath it. The data availability layer becomes the new foundation, with blob fees and restaking yields capturing value previously locked in base-layer security. Investors betting on Ethereum L2s are misallocating capital; the real leverage is in the shared sequencers and DA layers they all depend on.
Evidence: The Ethereum Dencun upgrade and its blob transactions catalyzed this shift, reducing L2 transaction costs by over 90% overnight. This proved demand instantly migrates to the most efficient execution environment, making the underlying modular data layer the indispensable bottleneck.
takeaways
WHY MONOLITHS CAN'T SCALE
TL;DR: The Inevitable Shift
Monolithic blockchains are hitting fundamental physical limits; modular architectures are the only viable path to global adoption.
01
The Scalability Trilemma is a Physical Law
Monolithic chains like Ethereum and Solana must process execution, consensus, and data availability on the same nodes. This creates an unavoidable trade-off.\n- Throughput Ceiling: Bottlenecked by single-node hardware, capping at ~5k-50k TPS.\n- Centralization Pressure: To scale, validators require data center-grade hardware, reducing node count.
~5k TPS
Monolith Cap
99%
Node Dropoff
02
Celestia & Data Availability Layers
The core innovation is decoupling data availability (DA) from execution. This allows rollups to post cheap data commitments instead of full transactions.\n- Cost Reduction: DA is ~99% cheaper than Ethereum calldata, enabling micro-transactions.\n- Sovereignty: Rollups built on Celestia or Avail control their own execution and governance, unlike smart contract rollups.
-99%
DA Cost
16KB
Blob Size
03
Specialized Execution is Unbeatable
Monolithic VMs must be general-purpose, creating bloat. Modular stacks let each chain optimize for a specific use case.\n- Performance: A dedicated gaming rollup with a custom VM can achieve sub-second finality and near-zero fees.\n- Innovation: Teams can deploy new VMs (FuelVM, SVM, Move) without forking the entire monolithic stack.
<1s
Finality
$0.001
Avg. TX Cost
04
The Interoperability Mandate
A multi-chain future is inevitable, making secure cross-chain communication the critical infrastructure. Monolithic chains are isolated islands.\n- Composability: Modular stacks rely on shared security layers (Ethereum, EigenLayer) and messaging (LayerZero, Hyperlane, Wormhole).\n- User Experience: Unified liquidity and intent-based routing (Across, Socket) abstract away chain boundaries.
$10B+
Bridge TVL
50+
Chains Connected
05
Economic Flywheel of Shared Security
Monolithic security is expensive and non-transferable. Modular chains can rent security from established layers like Ethereum via restaking or light clients.\n- Capital Efficiency: A new rollup can bootstrap security for a fraction of the cost of securing its own validator set.\n- Ecosystem Value: Security becomes a liquid, tradable commodity (e.g., EigenLayer restaked ETH).
$15B+
Restaked TVL
10x
Capital Efficiency
06
The End-Game: App-Specific Superchains
The final form is not one chain to rule them all, but a constellation of purpose-built chains (OP Stack, Polygon CDK, Arbitrum Orbit) sharing security and communication layers.\n- Developer Sovereignty: Teams control their chain's economics, upgrade path, and feature set.\n- Market Reality: Major dApps (dYdX, ApeCoin) are already migrating to their own app-chains, proving the model.
40+
App-Chains Live
100%
Fee Capture
ENQUIRY
Get In Touch
today.
Our experts will offer a free quote and a 30min call to discuss your project.
NDA Protected
Confidentiality24h Response
Time to ValueDirectly to Engineering Team
No Sales Fluff10+
Protocols Shipped
$20M+
TVL Overall