Celestia’s Building the Multi-Chain Universe with Nick White | Alpha Leak

Nick White is the COO of Celestia Labs. Celestia is the first modular blockchain network. If you have no idea what that is, you’re in luck! Celestia wants it to be as easy to deploy blockchains as it is smart contracts. Nick and David cover all things modular blockchains, the network effect that happens as a result of this multi-chain universe, what the far away distant future might look like, and so much more! ------ 📣 ZERION | Trade Across 7 Networks and 500+ protocols https://bankless.cc/Zerion ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: 👀 POLYGON | LAYER 2 DEFI https://bankless.cc/Polygon ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🦊 METAMASK | THE CRYPTO WALLET https://bankless.cc/metamask 💳 LEDGER | THE CRYPTO LIFE CARD https://bankless.cc/Ledger 🧙‍♂️ ALCHEMIX | SELF REPAYING LOANS https://bankless.cc/Alchemix 🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants ------ Topics Covered: 0:00 Intro 4:00 What is Celestia 5:30 Types of Blockchains 9:30 How Celestia Modularizes 16:15 Rule Checking 19:40 How Rollups Work 21:10 Different Kinds of Layers 27:31 Prices & Data Availability Sampling 40:00 Celestia’s Blockspace 42:01 Fees & Nodes 45:35 Goals of Celestia 51:43 Celestia Vampire Attack?! 53:20 The Future of Modular Blockchains ------ Resources: Nick’s Twitter https://twitter.com/nickwh8te Celestia’s Website https://t.co/oaUV9NvYwH Celestia’s Twitter https://twitter.com/CelestiaOrg John Adler Delphi Podcast https://podcasts.apple.com/au/podcast/celestia-the-worlds-first-modular-blockchain-network/id1438148082?i=1000552936346 Celestia’s Discord & Telegram https://discord.com/invite/YsnTPcSfWQ https://t.me/CelestiaCommunity ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  What Celestia enables, again, is more experimentation. It'll increase the speed at which people can spin up new blockchains and try new things and experiment, which I think will overall increase the round of innovation in the space.

• 0:17David Hoffman?

  Hey, Bankless Nation, welcome to this edition of Alpha Leak. Alpha Leak is actually just Meet the Nation rebranded into a little bit more of an exciting name. So this is where we go and dive deep into various projects that catch my attention around in the cryptosphere. Today, we are talking to Nick White from Celestia. And Celestia is a Layer 1 blockchain that's living inside of the modular blockchain paradigm. So Celestia and all the people behind it, I think, are just very committed to this whole modular blockchain thesis, which both me and Ryan are definitely aligned on. We think that the long-term conclusion of this cryptocurrency space, however it may be, will be modular, Ethereum or a different chain, like perhaps Celestia.

• 1:01David Hoffman?

  So let it be known that we are not ETH maxies, we're actually modular blockchain maxies, which is why we're talking to Nick from the Celestia team here today. I've already kind of given the pitch for Celestia. It's even more modular than Ethereum is in its current shape. And so Nick does a fantastic job walking us all the way through the design, architecture of Celestia, its differences and similarities to Ethereum, what it's optimized for, how it's going to do cross-chain, multi-chain stuff, how consensus works, all of that deals. So it's relatively technical of a show, but if you are here to learn about Celestia, this is going to be the perfect show for you. And so let's go ahead and get right into this Alpha Leak episode with Nick White of

• 1:45David Hoffman?

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• 2:29David Hoffman?

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• 3:11David Hoffman?

  MetaMask also has a fantastic mobile wallet that I use when I'm out and about, which I use to collect PoApps, NFTs and do all my DeFi things while I'm away from home. If you haven't downloaded MetaMask, you gotta try it out. Web3 wouldn't be the same without it. Download MetaMask for desktop and mobile at metamask.io and load up your Trezor, Ledger, Lattice or Keystone hardware wallets so that they too can get into the world of Web3. Polygon is Ethereum's largest and most vibrant scaling solution to date. With millions of monthly users and all of the biggest DeFi apps, the Polygon ecosystem has turned into a blossoming metropolis of DeFi activity. Transactions on Polygon are quick and cheap, allowing users the freedom to achieve their DeFi goals, all while being economically anchored to Ethereum. But Polygon isn't just the proof of stake sidechain.

• 3:55David Hoffman?

  The Polygon team is building a suite of scaling solutions, including Polygon Hermes, Midan, Nightfall and Zero, all with different design choices in order to be optimized for all possible crypto use cases. If you're a developer who wants to build on the Polygon ecosystem, go to the link in the show notes to check out their fantastic documentation. And if you're a user who just wants to experience fast and cheap DeFi, you can bridge over your ETH or other tokens and start playing around with any of the thousands of applications that are available on Polygon. All right, Bankless Nation, I'm here with Nick White, who is the COO of Celestia Labs. Nick, welcome to the show. I'm excited to get into everything about Celestia today.

• 4:32Speaker 00

  Thanks David, excited to be here.

• 4:35David Hoffman?

  So let's go ahead and dive right in. I think Bankless listeners will already be familiar with the modular blockchain thesis. And so this is kind of where that conversation starts. Nick, what is Celestia at the highest level?

• 4:47Speaker 00

  Celestia is the first modular blockchain network. So it kind of was the the origin of this modular blockchain paradigm in which you separate the two core functions of what typical monolithic blockchains, that's Bitcoin, Ethereum, well, the original Ethereum and Solana and all the other L1s do, which is consensus and execution. So basically, Celestia's core insight is that you can split those two functions apart into separate layers. And so Celestia focuses on the consensus part, so it's the consensus and data availability layer. So data availability is another topic that we can dive into, but basically it's another core primitive that is crucial for building decentralized applications.

• 5:31David Hoffman?

  Okay, so I think we should probably start with definitions and mental models and just to allow the listeners to get up to speed. Splitting the blockchain between execution and consensus. Let's dive into each one of those and we'll take them apart separately. Consensus, what are we talking about? Is this proof of work, proof of mistake? What are we talking about with the consensus side of a blockchain?

• 5:51Speaker 00

  Yeah, so consensus is basically the mechanism by which you, all the participants in the network, agree on the order of transactions. So when like a block, for example, has consensus on it, that means that it's now placed in a certain order among all the other blocks. So once a block has consensus, in theory, it should never be reorganized, like it should always be in that place, like that that that block height essentially, and all the transactions in that block are now ordered. So with that, like, once you have consensus, everyone in the network has the same view of reality. Everyone has the same view of history of events. So that's that's like how you prevent things like double spend. Like, that's how you know, basically, what has happened.

• 6:35David Hoffman?

  One single shared source of truth that doesn't have

• 6:38Speaker 00

  Exactly.

• 6:39David Hoffman?

  The blockchain is not forked. There are two competing versions of the truth. There's everyone

• 6:43Speaker 00

  Exactly.

• 6:43David Hoffman?

  Come to terms on the same protocol, the same data, and everyone has strong assurances that they are on the same page as everyone else.

• 6:52Speaker 00

  Exactly. Everyone's looking at the same thing. Everyone's in agreement. This is the reality. This is the canonical chain.

• 6:58David Hoffman?

  Cool. Alright, okay, so that's consensus and then execution. Let's, if you could just divine execution for the listeners.

• 7:04Speaker 00

  Yeah, so execution is perhaps the more interesting part of it, right? Execution is where those transactions, that history gets interpreted, right? So there's, there's something that you call a state transition function, which basically defines, you know, this is like how you interpret a transaction and this is like how, what the effect of that transaction is. So, for example, in Bitcoin, you know, the state machine is pretty simple. It's just basically like, okay, well, this, is this person, this, that's signing this, actually have the right to spend this UTXO? And if so, then like, we'll move the balance to this new address essentially. But in Ethereum, obviously got more, way more interesting,

• 7:45Speaker 00

  where we have a full, you know, Turing complete, sort of like VM as the state transition function. So that's like how applications are born. It's basically like, okay, now this transaction interacts with a smart contract and executes this trade, or, you know, it votes on this like governance proposal, or whatever it is, basically. Execution is where, you know, the, the activity is. Like, without execution, there's really no point. You just basically have this ledger, but there's no like, you know, effect of that ledger. So, execution is, is like applications, smart contracts, and all the stuff that end users end up interacting with.

• 8:24David Hoffman?

  Correct me if I'm wrong, but execution, another way to explain execution is just like, execution is what goes from like block one to block one plus, or block N, as in any number, to N plus one, right? It's the plus, it's the plus side of that part, because we have to actually make changes. And when we say we're making changes to those ledgers, we actually Have to execute changes and kind of like how you said with Bitcoin, the math, the math for Bitcoin is very simple. It's just basically checks the balance of the sending address. And then if the balance is larger than the amount that's being sent, then it says yes, execute that. And then like you said with Ethereum, we're getting into code. The VM is a virtual machine, but basically it's just computation at this point.

• 9:07David Hoffman?

  And it's just like a bunch of smart contracts or just a bunch of rules to execute upon. And that's, and then if you follow the rules and it gets verified by all the node operators, you're allowed to go from block N to N plus one and that's execution. And so previously and mostly still actually, we're in this paradigm where both consensus and execution are done by the same parties. And I think the modular blockchain thesis is that we actually can separate out those two parties into two different, into two different groups and allow these resources to be managed separately. How does, where does the conversation with Celestia begin? How, how, what, how does Celestia actually modularize these things?

• 9:50Speaker 00

  Yeah, that's a really good question, but I, I want to, I guess, like double tap into this concept of separating, like the execution and the state being updated. Because in a typical blockchain, what happens is every time there's a new block, right? It doesn't just contain the transactions in that block. There's also what you call a state root, which is basically a commitment to these transactions that I'm including. This is the new state that they create. And so the, both of those things, every time a new block is mined in a monolithic chain, both the transactions and the new state are included in that block. So in Celestia, like basically all it is, it's, well, the original paper that kind of inspired the project was called Lazy Ledger.

• 10:31Speaker 00

  And the reason it was called Lazy Ledger is because Celestia is a lazy blockchain. So it does less, it actually doesn't even interpret, it doesn't even look at the transaction data that people are dumping into it. It just Merkleizes it and it has a special kind of scheme of, of building the block that enables something called data availability sampling, which makes it really, really Scalable because one of the, one of the reasons that you, there are a few different reasons why you want to separate consensus from execution. So the first one is that, you know, in a blockchain where it's monolithic, there is only really one state transition function that you can implement.

• 11:11Speaker 00

  So you can either, you know, stuck with Bitcoin, like you can't run like the EVM on the Bitcoin blockchain, right? But also like, you know, on Ethereum, you can only really interact with Ethereum through the EVM, right? Ethereum blockchain doesn't run other forms of execution. So by separating those two things, you can actually have a blockchain where the execution, like you can define different kinds of execution environments. So you're not just locked into the EVM or let's say Solana C level. Like you can define that after the fact on layer two. So that's, that's one of the big ones. The other big one is that you get more scalability and that's kind of where this whole data availability problem comes in.

• 11:54David Hoffman?

  Okay. Yeah. So we'll take those one at, one at a time. We'll, we'll get into the data availability, availability part later. I want to go back to the execution side. So the EVM is Ethereum's execution environment, right? Right? So like that, that's the execution environment is like, this is where the execution happens. It's all the transactions are contained inside the EVM. And what you're saying is that Celestia allows that part to be swapped in or out for any other execution environment. Would it be fair to say that every single blockchain has to have an execution environment in it somewhere? Like it has to have a execution. And so Celestia allows you to pick and choose what your execution environment is. Is this, am I using the right words?

• 12:35Speaker 00

  Yeah, exactly. So, I mean, you could even think of, you know, I mean, I guess I wouldn't call, I wouldn't call Bitcoin's state transition function necessarily an execution environment because that execution environment kind of implies that there's sort of like. Computation sort of like rich, stateful, kind of like, like, like the EVM, like a, like a turn and complete, like, programming environment. But yeah, basically, the execution environment is exactly what you said. And so, yeah, Celestia frees up developers and makes it more flexible, right? Because now, let's say, either, it could be as simple as like, actually, I do want to build in the EVM, but I actually want to add in a new pre-compile, or I want to remove this one function, like, for example, like self-destruct, which can, can cause a lot of problems and, and, and make things more difficult.

• 13:20Speaker 00

  You could, you could actually use the EVM, but just, you know, make some small modifications for your application, so it could be better for DeFi or NFTs. Or you can just completely experiment. Like, I, I actually believe, and the Celestia team believes, that innovation in execution environments has been held back in blockchain artificially because of this sort of monolithic paradigm. The fact that if I wanted to build a new, experiment with a new execution environment, I had to build an entirely new blockchain, right? And that, the bootstrapping cost of doing that is so high that it's kind of prevented people from trying things out. So in the same way, like, before Ethereum, there's actually a lot of parallels here. So before Ethereum, you know, Bitcoin proved that you could build a decentralized application for the first time.

• 14:03Speaker 00

  So people were like, oh, this is so cool, we could do lots of stuff. But because there was no general purpose blockchain, every time you wanted to build a new decentralized application, you had to spin up an entirely new blockchain. But then, when Ethereum came along and said, hey, we're going to build a general purpose blockchain on which you can build a decentralized application without building a new blockchain. So Celestia takes that one step further and makes it so that you can do the same thing, but for the execution environment itself. So I can build a new blockchain, for all intents and purposes, without actually building a new consensus network. So that's, that's really like the, the key part there.

• 14:41David Hoffman?

  Okay, I really like that. That tells a great story. So first we have Bitcoin and we have the first decentralized application on the internet and then like, oh, cool, we have the, the, it's like, on the, on the spectrum of dimensions, we're at like 1D, right? Like we're a dot. It's like we, we can, we have like this one thing we can do, which is send, yeah, hello world, we can send Bitcoins around. That's all we got. And then Ethereum was like, all right, well, we can either make more blockchains and make more dots. Or we can, or we can have a, a grow in a whole entire different dimension and just allow any blockchain to have any application. And that is the, what, and so we added a, an EVM to Bitcoin, right? And created Ethereum, right? We added an execution environment to Bitcoin.

• 15:25David Hoffman?

  And then instead of having to make many, many, many dots, we go from a dot to a line. And so what you're saying with Celestia is that you buy, but then, but then Ethereum's constraint is the EVM. So where Bitcoin's constraint was that it can only move the Bitcoins around, Ethereum is constrained, is constrained by it can only do stuff in DeFi inside of the EVM. And then Celestia is saying like, okay, we can go from a line to a three dimensional shape, 3D. And by saying like, well, we can remove the constraint of the EVM and allow for any execution environment to come and exist on Celestia. Is this right?

• 16:03Speaker 00

  Exactly. Yeah, exactly. It's almost like, you know, the EVM, it only speaks one language. And then a modular chain like Celestia is multilingual, like you can, you can load any language and speak any language that you choose. I love that metaphor.

• 16:18David Hoffman?

  So how, you said, okay, you said load any language. My, my next question was, so Ethereum uses the EVM because like, that's just the language that it uses and it enforces, it checks all of the rules of the blocks using the EVM. And it's like, the EVM is the police. It's the enforcement of the chain, checks all the rules. How does, if, if Celestia is completely modular with this execution environment, how does it know what rules to check?

• 16:43Speaker 00

  That's a really, really good question. And that is where layer two constructions like rollups come in. So basically what, what rollups are and what L2s are, is a way in which you enforce, so like, let's, let's take a step, step back, like whenever in a monolithic chain,

• 17:02Speaker 00

  Whenever transactions are a new block or mined, they are made sure that they're valid first and foremost by the miners or the validators, like the proof of stake validators, right? So that's one way. In theory, everyone wants a full node and they re-verify for themselves, but also the miners are the ones enforcing the validity, right? Now, in Celestia, anyone can submit a transaction, and the transaction doesn't even need to be valid, because in Celestia's eyes, there's no such thing as a valid or invalid transaction. It's all just data. So, but then that, of course, leads to your question. So how do you determine what a valid transaction is? Or who is enforcing the execution, the validity, of the state transitions that are happening on Celestia?

• 17:46Speaker 00

  And so the answer to that is L2 construction. So rollups are a really new and interesting technology that basically make it possible for someone to trust, not without having to re-execute transactions or re-execute a block, to know that that block is valid. So in short, it's either a validity proof, which is where zero knowledge rollups, sort of how they enforce validity, or it's a fraud proof, which is basically how optimistic rollups enforce the validity of blocks and transactions.

• 18:22David Hoffman?

  So when we say that Celestia is modular in terms of it's like execution, like you can put any execution environment on top of Celestia, are we really talking about like the layer twos are the actual modular component of the execution environment? As in like this layer two uses the EVM, and this layer two uses Starkware's Cairo or whatever? And so that's the actual part that is modular?

• 18:45Speaker 00

  Yeah, exactly. So you can kind of think, you know, what we're doing is we're decomposing the typical monolithic blockchain into components. So Celestia is the sort of base level component, sort of like the L1 component, which is consensus, which orders the data, and data availability.

• 19:06Speaker 00

  And then the other component, the execution layer component is the rollups. So when I say any execution, you can run any execution environment. What I mean is that there is no, like, the rollups themselves define their own execution that they run on top of Celestia.

• 19:23David Hoffman?

  Okay. And then when you said that Celestia doesn't, isn't aware of anything like an invalid or invalid transaction, that's because it just is a place for the data of the rollup to be deposited into. Like the data, Celestia just receives the data from the rollup.

• 19:39Speaker 00

  Yeah, exactly. So maybe we should go a little bit deeper into how rollups work. So basically, a rollup is, for most intensive purposes, just like actually a blockchain. So it's this almost analogous to a normal blockchain where, but instead of having a validator set, and instead of like doing their own consensus, there are rollup operators. And they, so they collect transactions from all the users. They put, roll them up into a block. They basically create a block and they, they, they compute what the next state is. So they do the, like, the validation of that block. And then they post that block onto another blockchain that is actually doing the consensus and also data availability.

• 20:24Speaker 00

  So I guess, like, the, the, the, the rollup data is, is itself like its own block within a block. Does that make sense? And so, but Celestia just allows anyone to post data there. So we don't, you know, we don't, we're not aware. I mean, we're aware of the fact that there, that people are putting data there, but we don't actually interpret it or look at it. We don't say like, okay, this, you know, in a monolithic chain, if I, if I try to send an invalid transaction to Ethereum, it never ends up on the chain because it's, it's, the miners discard it. They're like, oh, well, you don't have the right to, you know, withdraw this money or to spend this money or whatever. So it never goes into the chain. And what I'm saying is that in Celestia's case, there is no interpretation. There is no valid or invalid.

• 21:08Speaker 00

  So any, all transactions get posted there.

• 21:12David Hoffman?

  So how do all the rollups then have shared state and assets, right? So like with Ethereum, because you do have like the invalid or valid transactions, right? Like it also has like native tokens, the ETH native token, native tokens on the layer one, and it goes from one execution environment on a rollup down to the L1 and then across the L1 and then up to a different rollup. How can you, how does Celestia manage that if it doesn't have any rules at the L1? How do you have shared state between all the rollups?

• 21:44Speaker 00

  Really, really good question. So actually, so this gets into, so we already talked about the consensus and data availability layer, which is, let's say, Celestia, and the execution layer, which is a rollup. There's also another component that I think will be very important in the modular blockchain stack, and that is what we call a settlement layer. So in the model of Ethereum, right, an Ethereum-based rollup, Ethereum acts as the consensus layer, the data availability layer, and a settlement layer, and then the Ethereum rollups act as execution layers. And so to explain a bit more about what a settlement layer is, it's basically a coordination mechanism between different rollups.

• 22:27Speaker 00

  So like the, it's like a bridge essentially. So the, when you, when you deposit an asset from Ethereum into a rollup, and you're bonding it into like a contract at the L1, and then that contract listens for the state updates from the rollup. But I guess like the, the good, the good thing about a settlement layer is that if, it's kind of like in a multi-chain world, right? Like, let's talk about like Cosmos as an example. There is no, you know, people talked about Cosmos hub being sort of the central spoke, right, in which all liquidity can pass. So rather than having all, every chain talk to every other chain in a very, very like, you know, chaotic kind of like topology, there would be like this ordered system where

• 23:11Speaker 00

  there's like one canonical spot that everyone kind of relays to, to get between each other. So that's kind of what a settlement layer is, is sort of like this bridge. It also, in a sense, custodies assets. And it helps to make it easier for those rollups to talk to each other. But you don't actually need, like, the settlement layer is not fundamental to the security of these rollups. In fact, you know, these, like, rollups can actually have bridges with each other directly. They don't have to go through, for example, Ethereum as a settlement layer. It's like, it's like a nice-to-have, if that makes sense.

• 23:46David Hoffman?

  Okay, okay. And so the plan for, like, an asset on rollup A to go to rollup B if the, both of these rollups settle on Celestia is to, it's up to their own, it's up to those two rollups to establish communication between them, rather than having to rely on, on Celestia as the settlement layer?

• 24:06Speaker 00

  Yeah, basically. So, well, I think the way to think about it is that Celestia doesn't enshrine a settlement layer. So like in Ethereum, I mean, it's debatable if you would call like the Ethereum, like, L1 EVM, an enshrined settlement layer, because rollups on Ethereum can also just connect to each other, on their own, independently of that. But in Celestia, there is no enshrined settlement layer, but you can build a settlement layer on top of Celestia as a rollup. So like, settlement, a settlement layer is basically just a special case of an execution layer. It's an execution layer that's just, it's not really meant to do any fancy kind of execution. It's just meant to verify state transitions of other rollups

• 24:51Speaker 00

  and kind of like, you know, facilitate the movement of, of funds between places.

• 24:57David Hoffman?

  What would you say is the advantage of that design structure?

• 25:01Speaker 00

  The advantage is basically that, to me, you kind of have, well, there's a few. So one is, as we just, as we talked about, like, it adds order. Like, we, we imagine a world where, you know, it's not just, you know, hundreds of blockchains, not just thousands, but in the future, long-term future, millions of blockchains, right? And when you have that level of complexity and emergence, you, you're gonna need some more, some organization. And so I think settlement layers act as like a way in which, like, coordination mechanisms between all these different state spaces, so that they can easily route funds to each other. Like, rather than, you know, Me having to create, you know, run like a hundred clients to all the different other chains

• 25:45Speaker 00

  that I want to talk to, I just run one client to the settlement layer. And every other chain that is connected to that settlement layer is also just one hop away. So it's almost like a, kind of like a, I don't know, like a network kind of thing. But like you, you're able to like, the topography of the network gets, gets more organized. The other thing that's really important is that fungibility in a multi-chain world becomes really challenging because depending, like the, the fungibility of an asset is path dependent. So it depends on how you bridged, like, let's say I took a USDC from chain A and bridged it to chain B and then to chain C. That USDC is actually different than if I took it from chain A to chain D and then to chain C.

• 26:30Speaker 00

  So like, but if you routed it through a common settlement layer, that USDC then can, if it, if it originates at the same settlement layer, then it becomes fungible across that sort of like universe. So I think that's, that's a really important feature for, for settlement. And also actually last, the last point about why settlement is important is that if I am running a client, the settlement layer verifies the state transitions of all these other rollups. So if I'm a user and I don't, like, I, I want to have, I want to be trust minimized. I want to like make sure that all the, the state of all the, the rollups that I'm using are, is legit. Like no one's like pulling a fast one on me, which is key to decentralization.

• 27:14Speaker 00

  Then I, instead of having to run a hundred clients of every different rollup, I could just run a client of that one settlement layer. And that settlement layer will tell me the state of all these other rollups. So it, it also kind of reduces the amount of overhead that I need to verify other chains.

• 27:31David Hoffman?

  So this is all talking about the advantages of having just like a single shared source of truth, right? Like this is like you have this one place where everyone, everyone can look at me like, all right, here's where the, here's what the state is. But I'm having a hard time differentiating that between like that and the Ethereum L1, because isn't that also what the Ethereum L1 does?

• 27:49Speaker 00

  Yeah, so I mean, like the Ethereum L1, I think in this model is a settlement layer in a sense. But the thing is, so why, okay, so to, I think maybe you're touching on two things. Why not have settlement on the L1 itself?

• 28:06Speaker 00

  Uh, well, one of the main reasons is that the settlement layer is this, it actually reduces, it makes it harder to make that layer one trust minimize. So like in Celestia,

• 28:19Speaker 00

  we have made the L1, that there is execution on the L1, but it's minimal, minimal, minimal. It is like Bitcoin is basically just sending and receiving funds and staking them. That's it. And the reason that we did that is that it incurs like, okay, so if I'm a roll up and I want to use an L1 to post my data there, I actually have to take an interest in the validity of that chain for my own security. So, so with Celestia with minimal execution, it incurs minimal overhead on the rollups that use it, if that makes sense. So that, that's like, I think a really key advantage. So that's why we have chosen to remove as much execution as possible from L1. And then, ah, man, there was, there was another

• 29:02Speaker 00

  point on this that I, I wanted to talk about, but I'm kind of blanking on what it was. Maybe it'll come back to me.

• 29:08David Hoffman?

  Yeah, probably, it probably, probably will. When you said, it'll, the rollup will have the minimum overhead when it posts to Celestia, because Celestia has reduced, it minimized the amount of execution it needs to do at the L1. Is this related to like gas fees? Because I know like, I know that the Ethereum gas fees actually does impact a layer two gas fees. Uh, and a large part of that is because there actually is computation that happens at the L1. That's why we have, that's why I have high gas prices. Is that the same conversation?

• 29:37Speaker 00

  That's part of it. Although if you, um, you know, I know that like, for example, in the, in new Ethereum world map, as I understand, they're, they're going to actually separate fees for data availability space and execution on like gas, basically on the one. So it's possible to do that. But, but, but you're right, that like it, it, it doesn't, and that's why Ethereum is doing that. They don't want to conflate these two resources. So this is like this topic of resource pricing, John Adler gave a talk on at ECC last year, which basically is like, you know, and this is part of the modulate blockchain paradigm is the like pricing. There's different resources that need to be consumed to build a decentralized application.

• 30:21Speaker 00

  One resource is execution, like, you know, I want, I want to be in the chain of this order. Like, I want to have priority, right, of my transaction. That's a, that's a big one. And then another one is just straight up block space. Like, I want to be, I want, I need block space. I need data. I need data to be made available. So those are two different kind of resources. And in Celestia, it's purely data availability. That's, that is the resource, basically, that we are selling or providing as a service. And then the, the, the layer twos, the rollups will have, will have their own, probably have their own token or their own fee model, which is all about execution, which is about like priority in this queue to like, I want to be execute, I want my transaction to get executed, if that makes sense.

• 31:05Speaker 00

  But, but yeah, we can go deeper into that.

• 31:08David Hoffman?

  Okay, yeah. Um, with, so if it's, it's an L1 that doesn't have an execution layer baked into it in the same way that Ethereum does, does it have its own native token then?

• 31:19Speaker 00

  It does, yeah. So it, it, it's a proof of stake network. And so the, you know, we need that for the crypto economic security of, you know, ordering, guaranteeing the, that the blocks will not be reorganized, that they won't be reverted, which is critical to all the L2s building on top. So it's critical for that. And then the token is also used in the fee market. So there's, you know, there's a scarce resource, which is block space. So like, and, and every rollup will basically, instead of Ethereum where you pay gas to like, you know, have space on the Ethereum computer, you just pay, you pay in the Celestia token to have space in the, in the Celestia block, right?

• 32:02Speaker 00

  Because like, I want my block for my rollup to be included, well, I have to pay, and it basically will be a fee market, um, apportioned by the, like, the number of bytes of, of block space that you want to take up.

• 32:14David Hoffman?

  Okay, and so that doesn't seem all that different from Ethereum in the sense that

• 32:18Speaker 00

  Yeah, very similar.

• 32:19David Hoffman?

  There's just like, there's demand for block space. When demand goes up, prices go up.

• 32:24Speaker 00

  Yeah, well, so, but there's a key difference, and this is maybe a good, good time to transition into data availability sampling. So, one of the key reasons why you want to remove execution from L1 is that one of the, one of the bottlenecks for scaling any chain is that the full nodes of the network have to re-verify or re-compute every transaction. They have to re-compute every state transition and make sure that it's legit before they accept a block. So what that creates is this dynamic where you can only be as fast, you only do as many transactions as the slowest person, right, the slowest full node, right? So all of a sudden, you can only, you, you reach this maximum amount of scaling and, and

• 33:08Speaker 00

  you can't go past that unless you basically do what Solana did and said, hey, everyone just has to upgrade their machine, right? But then, then you run into centralization because then all of a sudden, hey, I just have a laptop. All of a sudden, I can't run a full node. I'm no longer like a first-class citizen of this network. Now I have to delegate my trust to, I don't know, some, some, someone with more, more like money than me, basically. So we want to avoid that situation. So when you remove execution from the layer one, all of a sudden, you, you, you remove that constraint because what you can do is now, instead of re-executing transactions, you're just verifying that the block data is available. And it's a very nuanced thing, but basically for all L2 security, you need to make sure

• 33:53Speaker 00

  that the transactions were published to the network, that someone out there, if they wanted to, could download them at that point in time. So, and, and you can verify that. Normally, you'd have to download the whole block yourself to make sure that all the data is actually there. But with these data availability sampling schemes, you can verify that a massive block was available with, by only downloading a very, very small subset of the entire data. So all of a sudden, You remove this constraint where like, you know, it used to be every node in the network had to download the full block. Now every node in the network just has to sample, you know, maybe a few kilobytes of

• 34:36Speaker 00

  data and all of a sudden they have, they have security that the whole block data is available. So it increases like in orders of magnitude, the amount of like the size of the blocks that you can create in the network still in a trust minimized way.

• 34:51David Hoffman?

  And this sounds a lot like sharding.

• 34:53Speaker 00

  It is, it is like sharding, actually. It's a very good point. So in sharding, you try, you build a system where there's a bunch of different blockchains running in parallel, but they're all sort of secured by like this sort of like shuffling of validators. So like all like the, the security is uniform. So, and the point is that each node, rather than having to verify the whole network and every single chain, they just verify their one chain. So this similar to that, but in, in sharding, you a the, like you can corrupt each like sub-shard committee, which is like, I think very, very feasible attack that you can do. The other thing is that you're still monolithic in the sense that each shard is still executing every transaction.

• 35:38Speaker 00

  So in, in Celestia, it is similar in that like you reduce the, the resource requirements for the nodes and network. But it is, it is actually quite, quite different in the end. You do end up like, you can think of rollups in a modular blockchain as sort of like the shards in, in, in a sharded model, except the difference is again, in a sharded blockchain, you can only pretty much run that one execution environment and you can't just spin up shards or spin down shards. And in a modular blockchain, you can, you can have, there is no limit to the number of shards that you can have. You can have any kind of execution. It's like way, way, way more flexible.

• 36:15David Hoffman?

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• 37:43David Hoffman?

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• 38:49David Hoffman?

  I think perhaps a more correct word was parallelization. Where like with Celestia, what you guys are paralyzing is data availability by not having to have every single node, download every single block, but just some of the data. And there's because there's many, many nodes and they're all doing the same sort of thing. There's sufficient overlap in the data that's being downloaded. So you have redundancy and assurances that all the data is actually there. And the way that you have these assurances is through sampling. You sample like random bits of data, make sure it's all there. If it's all there, you have assurances that all the rest of the data is there. But all that data is actually split among many, many, many, many nodes.

• 39:33David Hoffman?

  Allowing lighter work for each individual node, but a heavier total summation of all the nodes altogether.

• 39:41Speaker 00

  Yeah, absolutely. I mean, we can go into the exact mechanism if you want. It's pretty technical, but you can think of it as like strength in numbers. It's like everyone's pitching in, everyone's sampling. And yeah, exactly. And then by that sort of like group effort, everyone becomes secure.

• 39:59David Hoffman?

  Okay, so does the Celestia blockchain in terms of like total available block space? Does it have like, is all these innovations that we're talking about, especially with data availability sampling? Does it give Celestia the ability to have like more block space? Cause like Ethereum's biggest constraint is that its block space L and the L1 is really, really limited. I would imagine like Celestia doesn't, doesn't have like, it's not like the Solana type level of scale, where it's basically like infinite level of block space. But does it get tailwinds or just like perks from this model to have more available block space at the L1?

• 40:37Speaker 00

  That's a really good question. In fact, this is why, I think I forgot to like follow up, but we were talking about fees, right? And you were saying that in Ethereum, the more demand there is for blockchain space, the more that fees go up. And so the really key thing about data availability sampling is that there is no limit. Well, okay, there is, there is probably a theoretical limit, but for all intents and purposes, for the current scale of like blockchain utilization, like there is almost, there is no limit to the block's size. Like you can keep increasing it with the number of nodes in the network. So more node sampling means you can safely increase the block size. So, and if you, if you assume that the more people that are using the network, the more nodes there are

• 41:22Speaker 00

  in the network, that means that the more users there are, the bigger the block size gets. So as there's more demand, the block size increases, so the fees actually stay constant. So like, there's an aggregate more demand for the token being spent to pay for that block space, but the fee per user or per byte of data to use the block is the same. So it's, it's like a fundamentally new sort of paradigm in terms of like the fees. Every monolithic chain, as more users come on, inherently because of the design, the fees have to increase. Yeah, but we can talk about the limits of scaling or sort of scalability properties, if that's interesting.

• 42:03David Hoffman?

  Yeah. So the, the cool, the cool thing is that when the more users are paying more fees to the chain, the block size increases at some function related to the level of new fees being paid. So the fees, is it hardcoded in that like the user just always pays the same exact fee? Or is it like flexible, like Ethereum's gas, gas markets?

• 42:27Speaker 00

  Yeah. So I want to be clear. So like, it is just a fee market, but, and they will have to actually

• 42:32David Hoffman?

  Oh, right, right, right.

• 42:33Speaker 00

  Decide to increase the block size. So like,

• 42:36David Hoffman?

  Okay.

• 42:37Speaker 00

  It's not like

• 42:37David Hoffman?

  Over long terms, it's, it's

• 42:39Speaker 00

  Yeah, over long term. So it's not like, it's not like, oh, well, from one block to the next, it's going to like scale up or scale down or whatever. It's more like, okay, well now we're realizing we have more users and most of the block space is filled. So now we're going to increase the block size. So that's kind of the way

• 42:54David Hoffman?

  And you have the capacity to increase the block size because you have extra fees being collected by the use. So you have extra incentives to people, for people to spin up more nodes?

• 43:05Speaker 00

  No, so it's a little bit different. So there's the validator nodes who are the ones who are earning block rewards. But then they are also sampling and downloading the data. So they're securing the network. But there's also just the end users who are sampling because they're running what we call a light node. So the more people using the network, the more sampling is going on and therefore the bigger block size you can get. So the fee part doesn't actually incentivize the increase in block size. It doesn't increase the number of people sampling per se.

• 43:38David Hoffman?

  Okay, okay. Then what is the incentive to spin up more nodes to increase the block size?

• 43:45Speaker 00

  So there's a few different things. So first of all, the more rollups that are being run, they're running nodes, right? And they're sampling and they're doing everything. And then all the clients of those rollups, if they want to be trust minimized. So we assume that users of chains want to have full security and be trust minimized, which I think they do. That's the world I want to live in, is where I'm not just like pinging in Fura to know what the state of Ethereum is. I want to know myself directly. Then every user will be running, and it will be feasible because of validity proofs, fraud proofs, and data availability sampling for every user on their phone, for example, to be running a full node. Then like more users of these products equals more sampling in aggregate.

• 44:29Speaker 00

  So that's kind of the base assumption there.

• 44:33David Hoffman?

  The base assumption is that it just becomes more and more feasible to contribute resources to the network.

• 44:39Speaker 00

  Well, the base assumption is that end users want to be secure. And if they want to be secure, then they will run the, like a sampling node. And the reason, so I think one of the reasons why people don't run, I mean, how many people do we actually know that actually run an Ethereum full node? Not very many because it's A, quite technical, B, it's kind of expensive, right? But in a Celestia model, on a modular blockchain model, one of the things that we want to do is democratize the ability for people to run full nodes. So like, for example, on Ethereum, to run a full node, in theory, it's like a laptop. I don't know if that's really feasible anymore, but that was sort of like the target, right? In Solana, it's like, you know, mega power, like, cloud machine with a gigabit internet.

• 45:23Speaker 00

  But in Celestia, we want to target, and like modular blockchains, we can target something like much more broadly accessible, like a smartphone, because it's actually feasible because of the way that the technology works.

• 45:36David Hoffman?

  So, zooming out and looking at Celestia holistically, is this particular construction, like, designed for something? Like Ethereum, I think, in my mind, is very much designed for DeFi, like, hard money assets, tokens, high security because of high-value transfers. Does this change in how Celestia is designed change what it's kind of optimized for? Or is it the goal, definitely something like DeFi, NFTs, kind of all the stuff that we know of today?

• 46:05Speaker 00

  It's basically, like, as general purpose as any Layer 1 blockchain can get. So it can be used for any application. I would say that the real, the raison d'etre for Celestia is to create plentiful blocks, plentiful trust-minimized block space that any developer or community, whoever, can leverage to build their own blockchain, their own decentralized application. So I wouldn't say that it's specific for any particular thing. I think what Celestia enables, again, is experiment, more experimentation. Like, it'll be, it'll increase the speed at which people can spin up new blockchains

• 46:48Speaker 00

  and try new things and experiment, which I think will overall increase the round of innovation in the space. And then I also think that, you know, Celestia is really this place that makes it easier for people to have access to their own blockchain computer. It's like before, like, let's say, I don't know, I'm someone who just, like, it's a huge overhead to deploy my own blockchain. And if I wanted to have that level of sovereignty and control over my own decentralized computer, I have to pay a high price. And so I think Celestia brings that price down significantly. And so, yeah, we just want to, we want to democratize access to block space. Maybe that's the best way to put it.

• 47:31David Hoffman?

  Are there any other components or aspects of Celestia that we haven't touched on yet?

• 47:37Speaker 00

  That's a good question. I would talk about two things. One is Celestiums. So we released a blog post maybe a month ago that talks about this idea where we want to help Ethereum rollups scale. So as you might be aware, like as of now, the call data on Ethereum is still quite expensive. So even though these rollups have massive increases in scalability, the fact that they post their data back to Ethereum main chain makes it kind of expensive, like still more expensive than I think these rollups would like to be. And if adoption continues, then that price will only go up, right?

• 48:19Speaker 00

  Because Ethereum's block space is still limited. So Celestia is trying to build a solution for that problem. So what we do, what we've done is we're building a bridge that it will allow Ethereum rollups, they will still settle to Ethereum. So they'll post their state updates to the Ethereum EVM, but they will post their transaction data that needs to be made available for their security to Celestia. And then the Celestia validators will attest to that data being available. And if they lie, it's a slashable offense. So there's actually crypto economic guarantees. And then that attestation gets relayed to Ethereum so that the contracts, the rollup

• 48:59Speaker 00

  contracts can actually verify them. So it's a way of basically being this sort of like off, Ethereum can offload some of this data availability need to Celestia so we can help the Ethereum community scale in the time being.

• 49:17David Hoffman?

  And for, this is called a Validium, right?

• 49:21Speaker 00

  Yeah. Well, yeah. So Validium, yeah. So that's why we call it Celestium because basically it's like a portmanteau of Celestia and Validium. And that so Validium is a zero knowledge rollup where rather than posting the data on chain, you post it off chain. But the problem is that a lot of these Validiums today is they're really not decentralized. They use what often are called data availability committees. And so, and that's just basically like a multi-sig. And we all know multi-sigs are really not that secure. So Celestia is like a A much more decentralized version of that with with actual crypto economic guarantees like it's a slashable offense. So we think of them as different, like an upgrade above the lydiums. So that's why we call them celestiums.

• 50:05David Hoffman?

  So with a the lydium, like in theory, you could just place that data on AWS, right? And because you still have the execution of the assets that get settled on Ethereum, the assets are safe. But then there's data that's relevant, that's needed, that could go in theory, just on like AWS, right? But what Celestia is doing, correct me if I'm wrong, but what Celestia is doing is like, well, you don't have to put on AWS. You could just put it on Celestia instead and like retain some of those crypto economic assurances that we all know and love in this industry. Is that all right?

• 50:36Speaker 00

  Kind of, yeah. So what you need, right, for the security of all these layer two constructions is data availability. And so what that is, is not, it's different than storage. This like it's something that, you know, a lot of people get hung up on when they're first learning about data availability. It's very understandable because it's a nuanced concept. And the term data availability sounds a lot like, oh, well, you got to make it available. You just like store it somewhere, right? But it's different. It's not that you need to store the data, it's that you need a guarantee that the data is public information that anyone can download. So, you know, just the validator telling me, hey, well, I don't worry, I uploaded the data to AWS.

• 51:19Speaker 00

  Doesn't give me that guarantee because they can just delete it like, or they didn't even necessarily release it. They're the only ones who know it. It's about information dispersal. It's like multiple people know what this data is. That's what you need. And so Celestia actually can give you like a guarantee of that. Whereas other off chain data availability mechanisms don't really give you very strong security on that. That's the key difference.

• 51:47David Hoffman?

  Okay, so this next question comes from the ETH maxi camp of the world. What about the idea that Celestia is just trying to vampire attack all of the Ethereum rollups? Trying to get all the Ethereum rolls to settle their data on Celestia. And then eventually tries and just convince the the rollups to come over to Celestia.

• 52:09Speaker 00

  That's a really good question. So first of all, ironically, actually, we never thought that this would be a use case. We were very dismissive of it because we didn't believe, like, because, okay, because what happens when you build a Validium, or when you start, when you settle, if you're a rollup and you're putting your data on Celestia, now your minimum threshold of security is actually now the Celestia blockchain, right? So like, you're no longer really a rollup in the sense that you're no longer the same security level as Ethereum, right? Because that's the whole point of a rollup. So that's why we were always kind of like, really? Are people going to want to do this? But then, when we looked into it and we saw how desperate the need was, and the fact that people were using these data availability committees, we're like, actually, we can do better than that.

• 52:53Speaker 00

  But frankly, like, if I were an Ethereum rollup and I were settling to Ethereum, and Ethereum actually had plentiful block space, then I wouldn't use Celestia. Like, there is no reason to do that. Like, you know, if you're, if all your assets and your users are coming from the Ethereum chain and the Ethereum ecosystem, then you should stay there. So it's not, I don't think it works as a vampire attack for that reason. And that's really not our intention.

• 53:20David Hoffman?

  Okay, cool. I don't know, I don't know much about the technical details to be able to go further with that, with that question. But another question I have for you is just like, I mean, I'm already totally sold on like the modular blockchain thesis. How, if we zoom forward five, 10, 50 years, how does the general crypto ecosystem landscape topology look like under, under like a Celestia paradigm, or just a modular blockchain paradigm? Like, who's doing what? What applications are using Celestia? How? Just like, how does this thing mature and develop and expand over time?

• 53:53Speaker 00

  That's a really good question. So I also, this reminded me of the fact that we never, when we were talking about scalability, you were saying like, oh, well, you know, Celestia wouldn't be as scalable as Solana or something like that. Actually, the answer is no, it's the opposite. Celestia will be far more scalable than Solana or any monolithic chain ever possibly could be. Because basically, we get the best of both worlds. We can have these like mega-powered nodes, where like, the block production is, I'm going to call it centralized, but high, very high resourced. But it actually doesn't cause centralization so that the because the end users are still verifying everything. And so I foresee a future where Celestia has maybe orders of magnitude more

• 54:37Speaker 00

  data throughput than any monolithic chain ever did. And so I think we'll we'll really reach this like if we if we want to transition to mass adoption, to me, the only viable path is via modular blockchain. So but beyond that, what is what is the future? I mean, I see a proliferation of execution layers, I think. And I'm already seeing this sort of anecdotally within our own ecosystem and and within the blockchain space of like, a lot of people are getting excited about rollups because they're realizing how they're they're really a new paradigm. And I also frankly, see a proliferation in the long term of other data availability schemes and other data availability layers. Like, I think and I think that's healthy, right? Like, the

• 55:20Speaker 00

  like, we have this saying in Celestia, which is modularism, not maximalism. And so what that means is basically that, you know, in a in a like, I think one of the reasons why the blockchain space has had this crazy tribalism and maximalism is that every monolithic chain has to be its own island and is really locked into its one design paradigm and has to do everything on its own. Right? So it's like, it's very much like dog eat dog and every man for themselves. And in a modular blockchain paradigm, it's more about like, hey, I'm, you know, I'm building this one chain to focus on this one function. And then the end users and the developers can plug in and mix and match and do what they want. And there, let

• 56:02Speaker 00

  the market sort of decide, right? It's like there will like, there'll still be a competition between different execution layers or different data availability layers. But the point is that we're we're all sort of like on an even playing field and we're all trying to build the most trust minimized, most useful, most like pluggable and modular components as possible.

• 56:25David Hoffman?

  I think to put that differently is that we're all very tribal because our island, our blockchains are all siloed away from each other. But then when you put them on to a substrate that allows cross-chain communication, cross-chain assets, cross-chain whatever, all of a sudden that those tribes perhaps melt away just because like we're all on the same protocol for the first time.

• 56:47Speaker 00

  Yeah, exactly. And a key part of this vision, and we didn't really touch on this, but one of the other reasons why this modular blockchain paradigm is so important and I think revolutionary and is the future for blockchain infrastructure is that rollups or these chains, when they share a common data availability layer, they can interoperate with the highest security. So they can have truly trust minimized security. So it's almost as if, so it's almost as if they would be applications running on the EVM, like, you know, we're used to the fact that applications of the EVM, they all share Ethereum as their security layers. You don't, for an application to talk to each other, they don't have to worry like, oh, is this application secure or not? So you get that same thing. What you don't, what you lose though, is atomicity.

• 57:30Speaker 00

  So like, you know, different rollups will still, you know, have this sort of cross-chain thing where you can't guarantee that a transaction here is going to be automatically executed with another like contract here. So you do lose that, but what I think what it will supercharge this multi-chain, the evolution of this multi-chain universe and really like create like an internet of blockchains where there's this common security layer that underpins everything. And then you can proliferate, you can like deploy chains at will. Like, we want to make it possible for people to deploy a blockchain as easily as it is right now to deploy a smart contract on Ethereum. So like, if you imagine that world, we'll have the same amount of proliferation of

• 58:14Speaker 00

  contracts or of chains as there are contracts and applications on Ethereum in the long term. Like, that's, that's really what gets me jazzed up is like, just the future sort of explosion and Cambrian sort of like explosion of like the multi-chain universe. Like, we're so early still in this whole exploration of what blockchains are capable of. And I think this is a fundamental evolution and how we'll be able to build these systems and how we'll be able to scale them.

• 58:44David Hoffman?

  Well, Nick, I can certainly see your excitement. So it gets me excited as well. If any listeners or viewers on YouTube are excited and want to learn more about Celestia, where should they go?

• 58:54Speaker 00

  So our website is a good place to start, celestia.org. And also Twitter account, celestia.org, one word. You know, we have a bunch of, there's a resources page, there's a FAQ page. You can go onto YouTube, a bunch of other podcasts and talks that we've given. I really enjoy, there was a recent interview that John Adler did on the Delphi Podcast, which I think is a great starting point. But yeah, like reach out and join our Discord, of course, and Telegram. You'll find those links on our website.

• 59:26David Hoffman?

  And we will also put them into the show notes as well. Nick, thank you so much for coming on to Bankless and telling us all about Celestia.

• 59:33Speaker 00

  David, it's my pleasure. Thank you again, and let's stay in touch. Thanks, Bankless community.

• 59:38David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcasts, and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks, and exclusive content, and even the Bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless Premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and weekly rollups where we summarize the week in crypto and other

• 1:00:23David Hoffman?

  fantastic content. Thanks, everyone, for watching and being on the journey as we build out the Bankless Nation.