Original author: Poopman

Original translation: BlockBeats

Editor's note:

Crypto researcher Poopman deeply analyzes the core mechanism and future potential of Celestia in this article. The article mainly focuses on Celestia as a modular data availability (DA) layer, and details its working principle, data availability sampling (DAS), namespace Merkle tree (NMT) and other key technologies, emphasizing Celestia's advantages in solving the problem of processing costs that increase with the growth of on-chain activities in monolithic blockchains. In addition, the article's introduction to Celestia's future development direction, including the introduction of the quantum gravity bridge and Cevmos, explains why Poopman believes that TIA, as its native token, has a market value target of more than $2 billion.

In a monolithic blockchain, as on-chain activities increase, processing costs also increase. Celestia solves the scalability problem through a modular data availability (DA) network, maintaining a relatively stable verification cost.

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

1. What 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 work designs

7. The purpose of TIA and the future of Celestia

What 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 layers. As a result, applications can focus on execution while leaving 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.

Monolithic vs. Modular

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

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

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

What is Data Availability (DA)?

Data Availability (DA) refers to the accessibility of nodes in the network to view or download transaction data. DA also needs to ensure that transaction data is not maliciously attacked, which may happen if the block proposer only publishes the block header but not the transaction data in the block.

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

1. Significantly reduce throughput

2. Sacrifice efficiency

3. Raise the threshold for running a full node

To address these issues, some off-chain methods can "reduce the burden" on the network by storing transaction data elsewhere. Common off-chain solutions include:

1. Data Availability Committee (DAC);

2. Data Availability Network (DAN).

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

1. Data Availability Sampling (DAS);

2. Namespace Merkle Tree (NMT).

Data Availability Sampling (DAS)

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

As more sampling is performed, the confidence in the data availability increases. After reaching a confidence level of 99%, the data is considered "valid" and available. To make DAS possible in Celestia, they adopted a 2D Reed-Solomon encoding scheme.

What is the 2D Reed-Solomon encoding scheme?

In simple terms, if you imagine the data of all blocks as a large puzzle consisting of K x K blocks, Celestia uses 2K x 2K blocks and the "Reed-Solomon encoding" scheme to rearrange these data into a larger puzzle.

After that, the light node randomly picks a few puzzle pieces and queries the full node to obtain the corresponding data. If the full node can consistently provide answers, the probability that the data is "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)

Meanwhile, data in Celestia is divided into different parts, or namespaces. Each namespace corresponds to a specific application that uses the DA layer. This helps applications download their own data and ignore the data of other applications.

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

Celestia's three major work designs

Combining DAS and NMT, Celestia's main work designs can be summarized as follows:

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

Execution is handled by applications. This makes them more scalable compared to monolithic blockchains because 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 greater the possibility that a full node can reconstruct 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 indicator of Celestia.

3. Interoperability

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

Future Outlook of Celestia

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 beyond the universe, including ETH and AVAX, bringing more liquidity.

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

TIA

TIA is Celestia’s native token:

Fully Diluted Valuation (FDV): $6 billion

Circulating Supply: $846 million (4.1%)

Token utilities include:

1. Rollup/developers pay TIA for data publishing, fees determined by fixed and variable fees

2. Use TIA as the Rollup’s native GAS token

3. Governance

4. Staking

TIA Investing means that users are betting that more Rollups and applications will use Celestia as their DA and consensus layers in the future, and these will 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 gravity bridge and Cevmos, I think TIA is a long-term holding target (HODL), and I estimate that a market value target of more than $2 billion seems reasonable.

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