How to Architect a Modular Blockchain Solution

A modular blockchain architecture separates core functions—execution, settlement, consensus, and data availability—into distinct, specialized layers. This contrasts with monolithic chains like Ethereum L1, which handle all functions in a single, tightly coupled stack. The primary goal is scalability: by decoupling execution, you can process transactions on a high-throughput layer while relying on a secure base layer for consensus and data. Key components include a data availability layer (e.g., Celestia, EigenDA), a settlement layer (e.g., Ethereum, Bitcoin), and one or more execution environments (e.g., Optimistic Rollups, ZK-Rollups, sovereign chains).

The first architectural decision is selecting a data availability (DA) solution. This layer guarantees that transaction data is published and accessible for verification. Using a dedicated DA layer like Celestia can significantly reduce costs compared to posting all data to Ethereum L1. For your architecture, you must decide between on-chain DA (data posted to a base layer) and off-chain DA with validity proofs. The choice impacts security, cost, and interoperability. For example, an Ethereum rollup using EigenDA for data availability maintains Ethereum's security while lowering L1 calldata expenses.

Next, define your execution environment. This is where smart contracts run and state updates are computed. You can implement this as a rollup (Optimistic or ZK) or a sovereign chain. Use a framework like OP Stack, Arbitrum Nitro, or zkSync's ZK Stack to bootstrap development. For an Optimistic Rollup, you'll need to design a fraud proof system and a challenge period. For a ZK-Rollup, you'll integrate a zero-knowledge proof system (e.g., zkEVM) to generate validity proofs for each state transition. The execution layer submits batches of transactions and their associated proofs or state roots to the settlement layer.

The settlement layer acts as the final arbiter of truth and handles bridge security. It verifies proofs from rollups or resolves disputes. If building an Ethereum L2, Ethereum is your implicit settlement layer. For a sovereign rollup or a chain built with Cosmos SDK, you might settle to Celestia and handle settlement logic within your own chain. This layer also facilitates trust-minimized bridging of assets between the modular chain and other ecosystems. Your architecture must specify how the execution layer interacts with the settlement layer's smart contracts or modules for batch submission and verification.

Finally, implement the consensus layer for ordering transactions. In many modular stacks, consensus is provided by the underlying data availability or settlement layer (e.g., Tendermint on Celestia). Your execution layer typically does not need its own consensus mechanism for transaction ordering; it simply processes ordered blocks of data from the DA layer. However, you must configure your node software to connect to these external layers. A complete node for your modular chain will include an execution client, a DA light client, and a consensus client, all communicating via defined APIs.

To deploy, use a modular stack like Rollkit (for rollups on Celestia) or Polygon CDK (for ZK L2s on Ethereum). Start by forking a template repository, configuring your chain ID, DA layer RPC endpoints, and sequencer keys. Test the flow: transactions are executed on your chain, data is posted to the DA layer, and state roots are settled. Monitor key metrics like DA cost per byte, time to finality, and bridge withdrawal delay. This architecture provides scalable execution while leveraging the security of established decentralized networks.

A modular blockchain architecture separates core functions—execution, settlement, consensus, and data availability—into distinct, specialized layers. This is a fundamental shift from monolithic blockchains like Ethereum L1 or Solana, where a single chain handles all tasks. Understanding this separation of concerns is the first prerequisite. You should be familiar with the data availability problem and why dedicated layers like Celestia or EigenDA are critical for scaling. Key concepts include rollups (optimistic and zero-knowledge), validiums, and sovereign rollups, each representing a different modular configuration.

Technical proficiency is required. You must understand smart contract development (Solidity, Cairo, Move) for execution layers and be comfortable with cryptographic primitives like digital signatures, hash functions, and Merkle trees. For zero-knowledge rollups, knowledge of zk-SNARKs or zk-STARKs is essential. You'll also need experience with RPC communication, as modular systems rely heavily on inter-layer messaging. Familiarity with developer tools for chains like Arbitrum, Optimism, Starknet, or zkSync provides practical insight into existing modular implementations.

Finally, you must define your application's specific requirements to choose the right stack. Ask: Does your dApp need low-latency finality or ultra-low fees? Is EVM equivalence necessary for developer onboarding, or can you use a new VM? What level of security and decentralization is required for the settlement and data availability layers? Answering these questions will guide your selection of components, whether it's using the OP Stack for an L2, Celestia for data, and Ethereum for settlement, or creating a sovereign rollup with a custom consensus layer.

A modular blockchain decomposes the core functions of a traditional, monolithic chain—execution, settlement, consensus, and data availability—into distinct, interoperable layers. This separation allows each layer to be optimized independently, enabling greater scalability, flexibility, and innovation. The primary architectural pattern involves a rollup-centric approach, where execution is handled off-chain (Layer 2), while settlement, consensus, and data availability are provided by a base layer (Layer 1) like Ethereum or Celestia. This design is fundamental to scaling solutions like Optimistic Rollups and ZK-Rollups.

The first step in architecture is defining the data availability (DA) layer. This layer is responsible for guaranteeing that transaction data is published and accessible, which is critical for security and state verification. Options include using a high-security L1 like Ethereum (expensive, high security), a dedicated DA layer like Celestia or Avail (cost-optimized), or an EigenDA (restaking-based) solution. The choice directly impacts cost, throughput, and trust assumptions. For example, a ZK-rollup using Celestia for DA can achieve sub-cent transaction fees while maintaining robust security through data availability sampling.

Next, you must select an execution environment. This is where smart contract logic runs and user transactions are processed. You can deploy a custom rollup using frameworks like OP Stack, Arbitrum Orbit, or ZK Stack. These frameworks provide the core software (sequencer, prover) to launch your chain. Alternatively, you can build a sovereign rollup or a validium, which uses an external DA layer and has its own settlement logic. The execution layer defines your virtual machine (EVM, SVM, MoveVM), gas token, and block time.

The settlement layer provides a canonical root for resolving disputes, verifying proofs, and enabling interoperability between rollups. For an L2 rollup, Ethereum often acts as the settlement layer, where validity proofs or fraud proofs are verified. A sovereign rollup may settle to its own consensus layer or use a shared settlement hub like Layer N. This layer ensures finality and serves as a trust anchor for bridging assets and messages. Architecting the connections between your execution layer and its settlement layer is critical for security and user experience.

Finally, you must implement the interoperability layer to connect your modular chain to the broader ecosystem. This involves deploying secure bridges for asset transfer and messaging protocols like LayerZero or Axelar for cross-chain smart contract calls. A well-architected solution also includes a decentralized sequencer set for censorship resistance, a robust RPC infrastructure, and block explorers. The end result is a scalable application chain that leverages the best attributes of multiple specialized layers rather than the constraints of a single monolithic system.

Start by articulating the primary use case your chain must serve. Is it a high-throughput DeFi hub, a privacy-preserving data marketplace, or a gaming-centric environment? This decision dictates fundamental architectural priorities. For a DeFi chain, execution speed and low latency for transaction finality are paramount, often prioritizing a monolithic execution layer. A gaming chain might prioritize custom virtual machines (like the Move VM for assets) and high-frequency state updates, making a modular execution layer attractive.

Next, define your non-functional requirements. These are the quality attributes that constrain your design:

• Throughput (TPS): Target transactions per second.
• Finality Time: Maximum acceptable delay for irreversible settlement.
• Decentralization: Minimum number of validators and hardware requirements.
• Data Availability: Guarantees for data publishing (e.g., 100% availability for high-security apps).
• Interoperability: Required connections to other ecosystems (Ethereum L2s, Cosmos, Solana).
• Upgradability: Need for frequent, frictionless upgrades versus stability.

For example, a protocol requiring EVM equivalence for developer onboarding has a hard constraint on its execution environment. One needing strong censorship resistance must design its consensus and block-building layers to prevent validator manipulation, potentially favoring a design like Ethereum's proposer-builder separation (PBS). Document these requirements as measurable benchmarks; "fast" is subjective, but "sub-2-second block time" is a technical spec.

This requirements phase also involves stakeholder analysis. Who are your users? Application developers need robust APIs and predictable gas costs. Validators require clear hardware specs and reward mechanisms. End-users demand low fees and wallet compatibility. Conflicting needs must be prioritized; you cannot optimize for maximal decentralization and ultra-low fees simultaneously—trade-offs are inherent.

Finally, translate these requirements into an initial architecture outline. If your use case demands specialized execution, a modular stack with a rollup framework (like OP Stack, Arbitrum Orbit, or a Cosmos SDK rollup) is a leading candidate. If you need unified security and simplicity, a monolithic chain (a standalone L1 or a dedicated Ethereum L2) may suffice. This outline is your blueprint for evaluating specific modular components in the next step.

An execution environment (EE) is the virtual machine or runtime that processes transactions and executes smart contract code on a blockchain. It defines the fundamental programming language, state transition logic, and gas metering system. The two primary categories are EVM-compatible environments and alternative virtual machines. Choosing an EE is a foundational decision that impacts developer accessibility, security, and the types of applications you can build.

EVM compatibility is the most common choice, offering immediate access to the largest ecosystem of developers, tools, and deployed smart contracts. Environments like the standard Ethereum Virtual Machine, the Arbitrum Nitro prover, or Polygon zkEVM allow you to run Solidity/Vyper contracts with minimal modification. This path reduces development time and leverages battle-tested code from protocols like Uniswap and Aave. However, it also inherits the EVM's design constraints, such as its 256-bit architecture and specific opcode limitations.

For applications requiring higher performance or different programming models, alternative virtual machines are essential. The Move VM, used by Aptos and Sui, provides built-in resource-oriented security for digital assets. CosmWasm brings WebAssembly (WASM) smart contracts to the Cosmos ecosystem, enabling development in Rust, Go, and other languages. Fuel's FuelVM is optimized for parallel transaction execution. These VMs can offer superior speed, safety, or fee efficiency but come with a smaller existing toolchain and developer pool.

Your choice should be guided by your application's needs. Ask: Do you need maximum ecosystem leverage or maximal performance? Must you support a specific language like Rust? Consider the developer experience provided by the EE's tooling—debuggers, local testnets, and framework support (like Foundry for EVM or the Move Prover for Move). Also evaluate the security audit landscape; newer VMs may have fewer audited code examples.

Finally, assess execution layer independence. In a modular stack, your chosen EE runs on a dedicated execution layer (like a rollup) that posts data and proofs to a separate settlement layer. Ensure your EE client (e.g., Geth, Move node) can integrate with your chosen data availability solution and proof system. For example, a zk-rollup requires an EE that can generate zero-knowledge proofs of its state transitions, which not all VMs support natively.

In summary, select an execution environment by weighing ecosystem size against technical requirements. For most DeFi or NFT projects, an EVM-compatible environment offers the fastest path to production. For novel use cases in gaming or high-frequency trading, a purpose-built VM like Move or FuelVM may provide the necessary advantages. Your decision here locks in the core logic of your blockchain application.

The Data Availability (DA) layer is responsible for guaranteeing that transaction data is published and accessible for verification. In a modular stack, execution layers (like rollups) post their transaction data here. Validators or provers must be able to download this data to verify state transitions and detect fraud. The security model of your entire application hinges on this guarantee; if data is withheld, the system cannot be challenged or verified correctly. The primary options are using the parent chain (e.g., Ethereum as a DA layer via calldata), a dedicated DA blockchain (like Celestia or Avail), or a validity-proof-based system (like EigenDA).

On-chain DA (e.g., Ethereum) offers the highest security by inheriting the full consensus security of a robust Layer 1. Data is posted as calldata or, post-EIP-4844, to blobs, which are cheaper, ephemeral data packets. This is the default for Ethereum rollups. The trade-off is cost, as you pay Ethereum's gas fees for data storage, though blobs have reduced this significantly. Off-chain DA layers (Celestia, Avail) are independent networks built specifically for cheap, high-throughput data publishing. They use Data Availability Sampling (DAS) to allow light nodes to verify data availability with minimal resources, offering scalability and lower fees but a separate security budget.

Your choice dictates economic and security assumptions. For a high-value DeFi rollup where security is paramount, paying for Ethereum blob space may be justified. For a high-throughput gaming or social application, a dedicated DA layer can reduce transaction costs by over 90%. You must also consider settlement and bridging: where will your rollup settle proofs, and how will assets bridge between chains? Using Ethereum for both DA and settlement simplifies the trust model. Using Celestia for DA and Ethereum for settlement is a common hybrid approach, as seen with rollups like Arbitrum Orbit chains.

Evaluate layers based on cost per byte, time to finality, node requirements for sampling, and ecosystem tooling. For example, posting 100 KB of data might cost ~0.001 ETH on Ethereum blobs, a fraction of a cent on Celestia, and require a 1 MB bandwidth sample from light nodes. Tools like the EigenDA SDK or Celestia's Rollkit provide frameworks to integrate these layers. Your decision here will be reflected in your chain's client configuration, where you define the DA endpoint and data posting logic.

To implement, you will configure your rollup's batch submitter or sequencer to post data to your chosen DA layer. For an Ethereum L2 using blobs, this involves sending batches to a BlobTransaction via an RPC. If using Celestia, you would submit data to the Celestia network using its gRPC API and pay fees in TIA. The verification side requires your rollup's full nodes or light clients to connect to the DA layer's RPC to fetch the data for processing or to perform data availability sampling checks, ensuring the sequencer is not withholding information.

In a modular blockchain, the sequencer is the component responsible for ordering transactions into blocks before they are posted to a data availability (DA) layer like Celestia or EigenDA. This role is distinct from the execution and settlement layers. Your architectural choice for sequencing directly impacts latency, user experience, and economic security. Centralized sequencers offer high performance but create a single point of failure, while decentralized sequencing networks like Espresso or Astria provide censorship resistance at the cost of increased complexity.

For a rollup, you typically have three sequencing models. A centralized sequencer is the simplest, where a single operator (often the rollup team) orders transactions. This is common in early-stage Optimistic and ZK rollups. A shared sequencer network allows multiple rollups to use a common, decentralized set of sequencers, improving interoperability and reducing costs. Finally, a based sequencing model defers ordering to the underlying L1 (like Ethereum), using its consensus for maximal security but sacrificing speed.

To implement a basic centralized sequencer, you need a service that receives transactions, validates them against the current state, orders them (often by gasPrice or first-seen), and batches them. A minimal Node.js service might use an in-memory queue. The sequencer then periodically creates a block, generates a state root, and posts the block data to the DA layer and the new state root to the settlement layer (e.g., Ethereum).

For production systems, consider using a framework like the Rollkit sequencer module or Sovereign SDK to handle peer-to-peer transaction gossip, mempool management, and DA layer interactions. These tools abstract the networking complexity, allowing you to focus on your chain's specific execution logic. Ensure your sequencer signs blocks and includes fraud or validity proofs where required by your settlement layer.

The sequencer is also responsible for economic incentives. It typically collects transaction fees and may earn MEV. In decentralized models, these rewards are distributed among sequencer nodes staking a bond. A critical security consideration is sequencer failure. Design your system so that if the sequencer halts, users can force-transact their transactions directly to the L1 via a escape hatch or force inclusion mechanism, preventing funds from being locked.

Finally, integrate sequencing with your chosen DA and settlement layers. After posting a batch to Celestia, you must submit the Data Availability Attestation to Ethereum. If using a shared sequencer, you'll need to implement the network's API for submitting transaction batches and reading ordered sequences. Test sequencing logic thoroughly in a local devnet before proceeding to testnet deployment, monitoring for block time consistency and resource usage under load.

In a modular blockchain architecture, the settlement layer serves as the foundational bedrock. Its primary functions are to provide data availability guarantees for rollups, finalize state transitions, and resolve any disputes that may arise from execution layers. Unlike a monolithic chain that bundles all functions, a dedicated settlement layer like Celestia or a Layer 1 like Ethereum (when used in this role) focuses solely on consensus and security, enabling other layers to specialize in execution and data publication. This separation is the core innovation of modular design.

Architecting this layer requires a deliberate choice between using an existing Layer 1 or building a custom chain. Using Ethereum provides immediate security and a vast ecosystem through its EVM, but incurs higher gas costs for settlement proofs. A purpose-built settlement chain, like a Cosmos SDK chain with the Celestia DA layer, offers sovereignty and lower costs but requires bootstrapping its own validator set and economic security. The decision hinges on your application's needs for trust minimization, developer tooling, and time-to-market.

The technical implementation revolves around defining the settlement contract or module. For an Ethereum-based rollup, this is the rollup contract—a smart contract that verifies zero-knowledge proofs or fraud proofs from the execution layer. It stores the canonical state root and processes deposits/withdrawals. The contract must define the proof system (e.g., zk-SNARKs, zk-STARKs, Optimistic), the data availability solution (like blobs or Celestia), and the rules for state updates. A critical function is the challenge period for optimistic rollups, typically lasting 7 days.

Here is a simplified skeleton of a basic optimistic rollup settlement contract on Ethereum, highlighting key state variables and functions:

solidityCopy
contract OptimisticRollup {
    bytes32 public canonicalStateRoot;
    address public sequencer;
    uint256 public constant CHALLENGE_PERIOD = 7 days;
    mapping(bytes32 => uint256) public stateRootTimestamps;

    function submitStateRoot(bytes32 _newStateRoot, bytes calldata _zkProof) external {
        require(msg.sender == sequencer, "Only sequencer");
        // In reality, would verify a ZK proof here for validity
        canonicalStateRoot = _newStateRoot;
        stateRootTimestamps[_newStateRoot] = block.timestamp;
    }

    function initiateChallenge(bytes32 _disputedStateRoot) external {
        require(block.timestamp < stateRootTimestamps[_disputedStateRoot] + CHALLENGE_PERIOD, "Challenge expired");
        // Logic to verify fraud proof and slash sequencer bond
    }
}

Finally, you must integrate the settlement layer with the other components. The execution layer (rollup) must be configured to post its transaction batches and state roots to the settlement contract. The data availability layer must be accessible so verifiers can reconstruct the rollup's state. Tools like the OP Stack or Arbitrum Nitro provide pre-built frameworks that handle much of this integration. The end goal is a system where users can trust that the state finalized on the settlement layer is correct and that their assets can be securely withdrawn to it.

Architecting a modular blockchain requires deliberate choices across the execution, settlement, consensus, and data availability layers. The primary benefit is specialization: you can optimize each layer for specific performance characteristics, such as using a high-throughput execution environment like an EVM rollup or a Cosmos SDK appchain, while leveraging a secure, decentralized settlement layer like Ethereum or Celestia for data availability. This separation of concerns is the foundation of scalable blockchain design, moving beyond the monolithic model where a single chain handles all functions.

Your next steps should involve prototyping and testing your architecture. Begin by selecting a modular stack like the OP Stack, Arbitrum Orbit, or Polygon CDK for rollups, or the Cosmos SDK with CometBFT for appchains. Deploy a testnet using tools like Foundry or Hardhat for EVM environments, or the local testnet commands provided by Cosmos chains. Key metrics to validate include transaction throughput, time-to-finality, and the cost of posting data to your chosen DA layer. This practical phase will reveal integration challenges and operational costs.

For deeper exploration, engage with the developer communities and documentation of the core technologies you're using. Essential resources include the Ethereum Rollup-centric roadmap, Celestia's modular docs, and the Cosmos Hub. Consider the long-term roadmap for your chain, including potential upgrades like verkle trees for state management or integration with shared sequencer networks like Espresso or Astria for enhanced interoperability and MEV management. The modular ecosystem evolves rapidly, so staying current with research from teams like EigenLayer (restaking) and Near (DA) is crucial for future-proofing your design.