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What is Celestia (TIA) : A Comprehensive Overview

Discover Injective: a Layer 1 blockchain providing fast, zero-fee transactions, cross-chain interoperability, and a powerful DeFi ecosystem

Author

Imperator

Date

20 sept. 2024

Celestia is a project introducing a modular approach to blockchain technology. In this Celestia blockchain presentation, we will explore how Celestia separates the consensus and data availability layers, providing a more flexible and scalable solution.

Key aspects like Celestia staking help secure the network while offering rewards to participants. This model enables the creation of customized blockchains, all supported by a robust and decentralized infrastructure.

What is Celestia (TIA) ?

Celestia is a modular data availability (DA) protocol that provides the foundational layer for a concept known as “modular blockchains”.

It is fundamentally a minimalistic layer-1 blockchain focused solely on providing the consensus and data availability layers to support other blockchains and applications that run their settlement and execution layers on top of Celestia.

At the time of Celestia’s conception in early 2019, the idea of a modular blockchain was novel. Most blockchains that existed at the time were “monolithic blockchains” like Ethereum and Solana that have their data availability, consensus, settlement, and execution layers all bundled within one stack.

However, Celestia chose to challenge this idea and the limitations of a monolithic blockchain by breaking the blockchain stack down into different components.

Celestia modular blockchain

In the challenge against monolithic blockchains, Celestia (TIA) became a trailblazer in the broader modular blockchain ecosystem as the first modular data availability protocol to launch in the blockchain space.

It captured a first mover advantage and sparked the launch of multiple settlement and execution layers that all planned to launch on top of Celestia. However, such a paradigm shift quickly led to many competitors.

Celestia Blockchain Technical Analysis

Some of Celestia’s primary competitors as of writing are EigenDA of Eigenlayer and Avail, formerly of Polygon. However, before taking a deeper look at Celestia’s competitors, let's first understand the nuances of Celestia and its technical specifications so we can better compare it to its competitors.

Celestia Blockchain is built using the Cosmos SDK and uses a fork of CometBFT, formerly known as Tendermint, as its consensus mechanism. As a result, it inherits a similar infrastructure to other Cosmos-based chains like Osmosis, Injective, and Sei. It is also a Proof-of-Stake chain that relies on its native token, TIA, for economic security.

Some of the key technical features of Celestia are:

Two-Dimensional Reed-Solomon Erasure Coding Scheme

This scheme protects Celestia from bad actors who may attempt to insert an invalid transaction by adding “erasure code” to Celestia's block data.

Erasure code refers to a second copy of block data that is stored for verification; for example, a block containing one megabyte of data would be duplicated, turning it into a block with two megabytes of data. The second megabyte of data that is copied is called erasure code.

This is important because it acts as a safety mechanism against a malicious block producer that may be attempting to sneak fraudulent transactions onto a blockchain by omitting block data.

By implementing erasure coding, Celestia can ensure that the malicious block producer must omit over 50% of the block data to successfully insert an invalid transaction.

This scheme also facilitates Celestia’s data availability sampling process by only requiring a small sample of data to verify with statistical certainty that the entire block has been published. If data is incorrectly encoded, the network is notified via a data availability fraud proof.

Namespaced Merkle Trees (NMT)

Namespaced Merkle Trees are a key component to how Celestia operates its data availability layer by organizing data into namespaces that are only associated with a single rollup.

By doing so, it essentially isolates rollup nodes from each other, forcing them to only download the data relevant to their specific rollup for execution. This better organizes the data being posted on Celestia.

Namespaced Merkle Trees also facilitates Celestia’s Data Availability Sampling process by enabling more compact and efficient proofs for verification of data availability.

Data Availability Sampling (DAS)

This is a new primitive that specifically allows Celestia light nodes to verify data availability more efficiently by only requiring them to download a small portion of an erasure-coded block in order to verify the entire block.

This is crucial because it allows for a greater number of users to spin up network participating nodes with less upfront hardware costs while simultaneously scaling the data throughput needed for millions of rollups without compromising on security for end users.

Light Node Clients

A device that requires comparatively less expensive hardware to a traditional node that primarily downloads and verifies block headers and executes data availability sampling.

Additionally, Celestia's light node clients do not make an honest majority assumption, meaning they can verify data availability with a high probability even if a majority of consensus nodes are malicious. For cross-chain interactions, this reduces the trust required in the source chain.

Fraud Proofs

Fraud Proofs is a system used by Celestia and other Optimistic Roll Ups like Optimism and Arbitrum that rely on honesty and assume that blocks are valid unless proven otherwise. In Celestia’s case, if a full node detects an invalid block, they can challenge the validity of said block by generating cryptographic evidence against it.

This will initiate a challenge period and verification process by comparing Merkle roots and confirming initial and final state roots through a computational process.

Competitive Analysis of Celestia Blockchain

As stated above, Celestia has two primary competitors that come to mind, EigenDA of Eigenlayer and Avail, formerly of Polygon. However, Celestia is also competing with another protocol as a data availability layer, Ethereum, and specifically, Ethereum Blobs.

Celestia vs. EigenDA & Eigenlayer

EigenDA is a project being built alongside and on top of Eigenlayer. Eigenlayer restaking is a protocol built on top of Ethereum that allows users to restake their ETH-based liquid staking tokens (LSTs) to provide economic security for protocols outside of Ethereum.

Eigenlayer essentially allows protocols looking to bootstrap their own economic security model to borrow it from Ethereum instead, creating a shared security model between Ethereum and the protocol.

EigenDA is an actively validated services (AVS) built on top of Eigenlayer that uses the restaked ETH-LST from Eigenlayer to secure its data availability solution. In this function as a data availability solution, EigenDA is extremely similar to Celestia. EigenDA and Celestia even both employ a Two-Dimensional Reed-Solomon Erasure Coding Scheme to enable data availability sampling for light nodes to verify large blocks efficiently.

However, EigenDA and Celestia have a number of differences that separate the two competitors:

  • EigenDA is not a blockchain like Celestia is but rather a data availability service built on top of Ethereum using Eigenlayer’s restaking protocol. As a result, it uses Eigenlayer for consensus about the state of operators and as a callback for consensus about the availability of data. This also makes it so that EigenDA can be easier to implement as it doesn’t need to build its own chain or consensus protocol like Celestia did, rather it just uses Eigenlayer at its core.


  • EigenDA uses KZG (Kate-Zaverucha-Goldberg) commitment and KZG multi-reveal proofs during the data availability sampling process as validity proofs instead of fraud proofs. Rather than relying on optimistic fraud proofs, EigenDA uses KZG commitments, a type of polynomial commitment scheme that allows for committing to a polynomial in a way that later allows for efficient proofs about the polynomial's evaluations.
    They are a type of zero-knowledge proof that generally provides a higher level of security because they verify immediately. This also implies a shorter finality time compared to fraud proofs because fraud proofs always have to wait for the challenge period to elapse before finalization. However, zero-knowledge proofs may require more upfront computation to generate proofs while fraud proofs only require computation when fraud is suspected.


  • EigenDA incorporates a feature called Proof of Custody, a mechanism designed to protect against a key mode of operator failure in EigenDA when nodes sign off on data items without actually storing them for the required period of time. Proof of Custody makes sure that node operators must routinely compute and commit to the value of a function that can only be calculated if they have stored the data correctly.


  • EigenDA uses a Disperser to disperse the data blob after the rollup sequencer creates a block with transactions. The Disperser is responsible for erasure encoding data blobs into chunks, generating a KZG commitment and KZG multi-reveal proofs, and sending the commitment, chunks, and proofs to the operator nodes of the EigenDA network.
    EigenDA also uses a Retriever that queries EigenDA Operators for blob chunks, verifies the blobs are accurate, and reconstructs the original blob. In comparison, Celestia relies on its network of full nodes and light nodes for data distribution and retrieval.


  • EigenDA has a feature called Dual Quorum where two separate quorums (one quorum composed of ETH restakers and one quorum composed of stakers of the rollup’s native token) can be required to attest to the availability of data. This ensures that even if one quorum fails, EigenDA is not compromised unless both quorums fail.


  • EigenDA maintains a high level of censorship resistance because its rollup nodes can directly disperse and receive signatures from a majority of EigenDA nodes, rather than rely on a single block proposer to order data blobs.

Celestia Blockchain vs Avail Network

Avail was originally a project that began in Polygon Labs in 2020 but separated from Polygon Labs in March 2023 to become its own project. It launched mainnet in July 2023 as its own data availability layer. While this is similar to Celestia, it also has its stark differences.


  • Avail was built using a modified Substrate framework that uses the Polkadot SDK. It uses a Nominated Proof-of-Stake (NPoS) mechanism with Substrate's BABE/GRANDPA mechanism for consensus.


  • Avail, like EigenDA, uses KZG commitment and KZG multi-reveal proofs for validity proofs, thus relying on zero-knowledge proofs to verify its data availability. As stated before, this generally provides a higher level of security and a shorter finality time compared to fraud proofs because fraud proofs always have to wait for the challenge period to elapse before finalization. However, zero-knowledge proofs also come with the possibility of requiring more upfront computation.


  • Avail uses application-specific ordering with unique appIDs to identify individual transitions. The unique appIDs refer to each transaction's origin and purpose within the ecosystem. This differs from Celestia’s use of Namespaced Merkle Trees to organize data within its blockchain.


  • The Avail tech stack includes Avail Nexus, a custom zero-knowledge coordination rollup on top of Avail that consists of a proof aggregation and verification layer and a sequencer selection/slot auction mechanism. Avail Nexus is a verification and unification hub that is a bridge between each of the rollups built on top of Avail.


  • Avail is incorporating a new security mechanism called Avail Fusion that allows users to stake foreign assets outside of Avail’s native token to secure the network and contribute to Avail consensus. This includes established assets like BTC, ETH, and SOL and emerging rollup tokens created on Avail. This differs from Celestia’s economic security model that relies solely on its native token TIA to secure the network and generate consensus.

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Celestia Network vs Ethereum Blobs

Ethereum is more commonly known as a monolithic layer-1 blockchain but on March 13, 2024, EIP-4844 was launched on Ethereum mainnet. EIP-4844 is known as Proto-Danksharding, an upgrade to the Ethereum network that introduced various mechanisms to significantly reduce the cost of posting layer-2 rollup data to Ethereum as a data availability layer.

This included Blobs (Binary Large Objects) which are temporary storage data mechanisms that can store up to 128 kilobytes and blob transactions as a new and more efficient way to handle data. Proto-Danksharing also introduced a new blob gas market separate from the existing Ethereum gas market that has a base blob fee dependent on supply and demand of blob transaction space.

Although this was a big step forward in growing the Ethereum layer-2 ecosystem, it continues to have its drawbacks compared to a dedicated data availability layer like Celestia. Ethereum’s blobs have initially been limited to minimize network strain and continue to be much more expensive compared to posting data to Celestia.

Additionally, users who post data to Ethereum using a blob have to pay for the cost of the entire blob, even if only a small portion of it is used, introducing significant inefficiencies.

However, with everything being said, it should be noted that the Proto-Danksharding upgrade is only preliminary with regards to Ethereum’s path towards scaling with Dankingsharding as the ultimate goal for Ethereum. Danksharding is another upgrade that is planned to allow Ethereum to process over 100,000 transactions per second while also allowing for millions of layer-2 rollup transactions per second.

The only caveat to this is that there is currently no planned data for launch, only that it is several years away.

Celestia vs its Blockchain rivals

Celestia blockchain technical comparison

Despite the numbers presented in the table above, it should be noted that the data availability market and its participants are still in its very early stages.

Celestia and Ethereum Blobs (EIP-4844) only went live to mainnet in 2023 while EigenDA and Avail only went live to mainnet in 2024. As a result, a lot of statistics and metrics are not fully reliable or even available quite yet, specifically EigenDA’s numbers, which recently came out on September 12, 2024.

Even though the market is young, Celestia is continuing to grow in market share against Ethereum Blobs according to Blockworks Research. Celestia had a first mover advantage against Ethereum Blobs but lost some market share beginning in April 2024 when Ethereum Blobs were introduced.

However, since then, Celestia has been continuing to gain market share from Ethereum Blobs, peaking at 44% of where data has been posted. This has been a significantly positive trend against Ethereum Blobs and makes sense when simply taking a look at the cost of posting a megabyte of data.

evolution of DA provider marketshare

Celestia also now has 20 different roll ups posting data to its chain including Eclipse, Manta Network, Lyra, Aevo, and Karak. In total, these roll ups have posted over 73 GB of data to Celestia and continue to add to that figure with every block.

TIA Tokenomics

Celestia has its native token, TIA, which is a utility and governance token used to pay for transactions fees on the Celestia Network, economic security in the Proof-of-Stake network, and for posting data. The supply of TIA at genesis was one billion but it was initially launched with a circulating supply of 250 million tokens.

The initial allocation of TIA was distributed as follows:

  • 26.8% for Research and Development (R&D) and Ecosystem

  • 20% for Public allocation

  • 19.7% for Early Backers (Series A&B)

  • 17.6% for Initial Core Contributors

  • 15.9% for Early Backers (Seed)

The initial inflation rate of tokens was set at 8% but this inflation rate decreases at a rate of 10% a year before eventually flattening out to a 1.5% annual inflation rate.

As of writing, TIA has a circulating supply of 209,427,089 tokens and at a current price of ~$4, the market capitalization of TIA is $837,708,356 with a fully diluted valuation of $4,273,534,244.

However, Celestia has a major TIA token unlock event occurring on October 31, 2024. On this date, 175.74M TIA tokens will be unlocked, a third of which is going to seed investors, initial core contributors, and series A and B investors, respectively.

The 175.74M TIA tokens being unlocked represents 83.7% of the total circulating supply and current market capitalization figure, which means it will almost double the circulating supply of tokens. This will be the most significant token unlock event for TIA in terms of percentage of token supply being unlocked in a single event.

celestia tia token supply distribution

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Celestia’s Future

On August 8, 2024, Celestia announced the Lemongrass upgrade, its first consensus layer breaking change, also known as a hardfork, since Celestia's Mainnet Beta genesis block.

Celestia Lemongrass

Lemongrass is known as Celestia Improvement Protocol (CIP) 17, which was created on February 16, 2024, by Evan Forbes, a core developer for Celestia. It includes five separate CIPs that have been previously discussed and agreed upon by network developers and validators:


  • Minimum Gas Price Enforcement (CIP-6): CIP-6 was introduced on November 30, 2023, by Callum Waters, a developer for Celestia. The goal of CIP-6 is to implement a global, consensus-enforced minimum gas price of 0.000001 utia on all Celestia transactions.
    The point of this is to ensure that all transactions can be decoded and have a valid signer with sufficient balance to cover the cost of the gas allocated in the transaction. Additionally, it prevents the payment system for data availability from migrating off-chain and manifesting in secondary markets.
    As an example, validators could currently earn more revenue if they convinced users to pay them out of band and set the transaction fee to 0 such that all revenue went to the proposer and none to the rest of the validators/delegators. The implementation of CIP-6 removes the viability of this scenario occurring.


  • Packet Forward Middleware (CIP-9): CIP-9 was introduced on December 1, 2023, by Alex Cheng, a product manager at Rollchains. The goal of CIP-9 is to integrate Packet Forward Middleware, IBC middleware that enables multi-hop IBC and path unwinding to preserve fungibility for IBC-transferred tokens. This allows users funds to be returned after 28 days if the transaction has timed out and the transfer is incomplete.


  • Coordinated Network Upgrades (CIP-10): CIP-10 was introduced on December 7, 2023, by Callum Waters. The goal of CIP-10 is to increase the necessary threshold of ⅔ of voting validators to upgrade the network and agree upon the next block to ⅚. As a result, the Celestia network will have a pre-programmed height in preparation for major upgrades and have a reduced risk that the network halts due to validator non-consensus.


  • ICS-27 Interchain Accounts (CIP-14): CIP-14 was introduced on January 4, 2024, by Susannah Evans of Interchain, Aidan Salzmann of Stride Labs, and Sam Pochyly of Stride Labs. The goal of CIP-14 is to integrate ICS-27 Interchain Accounts, a cross-chain account management system built on IBC. This is a permissionless system that would enhance interoperability with external chains, specifically in the context of liquid staking and other DeFi applications.


  • Disable Blobstream Module (CIP-20): CIP-20 was introduced on April 16, 2024, by Rootul Patel, a developer for Celestia. The goal of CIP-20 is to disable the Blobstream module since the original architecture has been deprecated in favor of Blobstream X, an implementation of zero-knowledge proof circuits for Blobstream, Celestia’s data availability solution for Ethereum.

Future Outlook for Celestia Ecosystem

The world of modular blockchains has only just emerged starting in 2023 and 2024 with the introduction of Celestia, Blobs, EigenDA, and Avail. However, despite its infancy, it has introduced a new paradigm into the blockchain space and proved itself to be more than just an idea.

The launch of dedicated data availability layers has also sparked the investment and growth of numerous execution layers that now have cheap and easy access to a data availability and consensus layer.

It is actively changing the world of blockchain and lowering the barriers of entry to launching one’s own execution layer, much like how Ethereum changed the world of blockchain by introducing an agnostic blockchain with smart contracts and lowering the barriers of entry to launching one’s dApp.

As we march forward in the development of these data availability layers, protocols like Celestia and EigenDA have publicly announced the goal towards increasing their chain capacity to 1 GB per block, multiplying capacity exponentially.

As these solutions are able to scale at greater and greater lengths while simultaneously keeping the cost of posting data cheap, it will commoditize block space and may even open up a path where data availability solutions like Celestia can begin hosting highly functional on-chain games or data-heavy applications.

It may even spawn a world more similar to web2 where instead of users paying for gas fees, data availability layers could sponsor gas fees themselves, similar to how in web2, developers, not users, pay for data hosting fees to companies like Amazon Web Services (AWS).

But no matter how this pans out, Celestia marked the beginning of the modular blockchain paradigm shift in 2019 and 2023 and it continues to lead at the forefront of development in the modular blockchain stack. It has cemented itself as a trailblazer, setting the stage for a faster, cheaper, and ultimately better web3 future.

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