IOSG Ventures: Detailed explanation of DA ecology and competition landscape

Original author: IOSG Ventures

background

Two years ago, at the beginning of the rise of the modular blockch人工智慧n narrative, we wrote an article to put forward our views and predictions on the data availability track. As we expected, the modular blockchain narrative has prevailed and promoted infrastructure innovation, enhanced network interoperability, and promoted more cooperation and integration within the ecosystem. Various Rollup as a Serv冰 (RaaS) solutions (Altlayer, Caldera, Conduit, Gelato) have begun to emerge. The figure below shows the interface of the Rollup 發展 tool Conduit, showing that deploying Rollup and selecting DA solutions have become extremely simple and convenient.

Source: Conduit

In the past two years, alternative DA solutions (Alt-DA) such as Celestia, EigenDA, Avail, and NearDA have made significant progress, each demonstrating unique technical advantages and market share. At the same time, with the launch of Ethereum EIP-4844, the introduction of blobs to replace calldata has greatly reduced the cost of using Rollup in Ethereums native DA layer. Today, developers and project owners face more trade-offs when choosing a data availability layer. This article will track and analyze existing DA solutions, explore their performance costs, technical characteristics, and market performance in depth, and put forward our views and thoughts on the future development of the DA track.

1. Current DA solution adoption

Rollups that use Ethereums native DA on-chain solutions are mainly focused on mainstream Layer 2 solutions that have been updated from calldata storage to adapt to Blob, including Arbitrum, Optimism, and Base, as well as Starknet, zkSync, and Scroll. By using Ethereum as the DA layer, the data of Rollup will be verified and stored by Ethereums full nodes, and it will benefit from Ethereums security, degree of decentralization, continuity of protocol upgrades, and economic incentives. Comprehensive L2 occupies an important position in the Ethereum ecosystem, and the above-mentioned orthodoxy brought by the native DA is needed as a core difference. (Vitalik believes that the core of rollup is unconditional security guarantee: even if everyone is against you, you can withdraw your assets. If data availability depends on external systems, this equivalent security cannot be obtained)

However, publishing data to the Ethereum mainnet is accompanied by high costs, especially before EIP-4844 (calldata costs 16 gas per byte, and L2 spent more than 15,000 ETH on DA costs in December 2023 alone). Therefore, a variety of Alt-DA off-chain solutions have emerged, such as Celestia, EigenDA, and Avail, which have been launched, through different technical means, such as DAS, erasure coding, KZG commitment, etc., to reduce the cost of data storage and transmission.

Among them, Celestia, as a modular blockchain dedicated to DA, has become the leading project in the DA track after its mainnet was launched in October 2023. Its main target customers include projects that require modular architecture: cross-chain bridges, settlement layer solutions, defi projects, games, sorters, and Layer 2 solutions that are not limited to the Ethereum ecosystem. Its existing customers include Omnichain DEX protocol Orderly, modular L2 Manta Pacific customized for EVM-native ZK applications, Base-based L3 Hokum, and DEX Lyra and Aevo focusing on derivatives trading. As a pioneer of modular design DA layers that are not limited to a specific ecosystem, Celestias advantages make it the first choice for many emerging Layer 2 projects.

EigenDA is developed by EigenLabs, using EigenLayers restaking mechanism to provide efficient, secure and scalable DA service solutions, which inherit the security and huge validator network of the Ethereum mainnet to a certain extent. EigenDA focuses on providing high-performance DA solutions for the Ethereum ecosystem. As the first active verification service (AVS) on Eigenlayer, EigenDA was launched in April together with the Eigenlay mainnet. The existing customer base is also diverse, including Ethereum L2 Swell, Celo, Mantle Network, and multiple other AVS built on Eigenlayer, such as the decentralized computing stack Versatus, Polymer, DEX protocol DODO, and CyberConnect as Social L2.

Source: EigenDA

2. Tradeoffs between native DA (EIP-4844) and existing Alt-DA

2.1 Ethereum Native DA

Lets briefly review the development and changes of Ethereums native DA solution. Before the Cancun upgrade, Rollup mainly used calldata as a means of data storage and transmission. Due to permanent storage and high network congestion, high costs have become a major obstacle to expansion and adoption. As a mainnet upgrade, EIP-4844 introduced a new data structure, Blob. Blobs can accommodate large amounts of data, but will increase the storage burden on nodes accordingly. Over time, storage requirements will continue to increase, which may eventually lead to excessive hardware requirements for running nodes and harm decentralization. Therefore, Blobs only need to be stored for about 18 days (4096 epochs) before being deleted.

Since Blobs only require temporary storage and use a separate fee market, after the implementation of EIP-4844, the average daily DA cost of each L2 for 60 days before and after the adoption of blobs (Scroll Starknet took 30 days before and after) has dropped by about 99%. Due to the different types of uploaded data (transaction data or status differences), the Layer 2 using OP rollup has benefited more from the cost reduction compared to Zk Rollup.

Source: Dune Growthepie

EIP-4844 Blob capacity and storage characteristics and pricing mechanism

Blob capacity and storage characteristics:

• Each block can hold up to 6 blobs

• Each blob can store up to 128 KB of data (the sender will be charged the full blob fee even if the full 128 KB is not used)

A new blob gas market that operates similarly to EIP-1559, adjusting the blob base fee based on supply and demand changes:

• If the number of blobs in a block exceeds the target (currently 3), increase the blob base fee.

• If the number of blobs in the block is less than the target, reduce the blob base fee.

Source: IOSG Ventures

Source: Dune / Ethereum block blobs 3-day moving average

L2 mainly uses the newly introduced type 3 transactions, adding max_fee_per_blob_gas and blob_versioned_hashes fields based on previous transactions, representing the maximum fee per blob gas that the user is willing to pay and the hash output list of kzg_to_versioned_hash respectively.

This new pricing mechanism means that type 3 transactions still require the max_fee_per_gas and max_priority_fee_per_gas fields and are subject to the existing EIP-1559 market. In addition to blob space, type 3 transactions still need to pay for the EVM space they use.

Therefore, there is still competition for block space for blobs, causing cost uncertainty, because the blob space in each block is limited and the blob gas fee market is dynamically adjusted based on demand.

Therefore, as a general chain, Ethereums weakness lies in the uncertainty of block space – there may be sudden on-chain activities such as NFT Minting and airdrop claims, which may lead to on-chain congestion, and the pricing of Blobs will be raised, making it impossible for Rollup to estimate the cost basis. This will cause uncertainty in the Rollup expenditure budget, resulting in unstable profit margins, and increase the barriers to use for new projects that are still in their infancy. Project parties find it difficult to determine whether Ethereum DA can be used as a long-term solution. In the figure below, using blobs is about 98% cheaper than calldata most of the time, but in the figure below, it can be seen that using Blobs is only 59% cheaper than using Calldata during a certain period of time.

Source: Ethernow

Lets calculate the cost of two blob transfers as an example:

Source: Ethernow

The figure shows a type 3 transaction of Zksyncs Validator Timelock in a block on March 28, 2024. We calculate its data cost based on the blob fee, basic fee and priority fee decomposition:

Assuming the price of Ethereum is $3600, the cost of using a 1 Mib blob of data at that time is approximately:

4 × 0.018 ETH × 3600 USD/ETH = 259.2 USD

Let’s take another type 3 transaction from the zksync era on June 24:

Source: Ethernow

At that time, the main network activity dropped slightly, and its data cost was broken down and calculated:

The data cost of using a 1 Mib blob at that time was approximately:

4 × 0.0021 ETH × 3600 USD/ETH = 30.24 USD

This shows that the cost of using blobs to transfer data is uncertain and still relatively high. However, for a rollup, the stability of the cost structure is one of the key considerations when choosing a DA solution.

2.2 Celestia

As the pioneer of modular blockchain, Celestia focuses on providing the DA layer and the consensus layer, separating the execution layer, thereby specifically optimizing the DA function and improving efficiency and scalability. Celestia, as an off-chain solution L1, has many different technical features compared to the method on the Ethereum chain, thereby reducing the cost of data availability and providing relatively higher flexibility and scalability. The modular design makes Celestia extremely flexible, allowing developers to freely choose the execution environment without being limited to a specific virtual machine (VM), allowing Celestia to support a variety of different application scenarios and meet diverse needs.

If Rollup wants to integrate Celestia as the DA layer, it needs to submit the transaction data (Data Blob) generated by the execution layer to the Celestia network instead of the original Layer 1 (Ethereum) to ensure data availability for verification and transactions. Celestias Data Availability Sampling (DAS) technology re-encodes block data using a two-dimensional RS erasure code encoding scheme, allowing light nodes to download only a small part of the block data to verify the availability of data through multiple rounds of random sampling, and allows multiple nodes to process different parts of the data in parallel, improving overall efficiency.

Source: Celestia.org

Another key technology in the process is the Namespace Merkle Tree (NMTs) technology introduced by Celestia, which allows different rollups to only download transaction data related to themselves, thereby improving data processing efficiency. NMTs not only reduces data redundancy and improves system performance, but also provides developers with a more efficient way of processing data.

In terms of security, Celestia is based on the Tendermint consensus mechanism. Validators reach consensus on Data Blob to ensure the availability and consistency of data in the network. It can tolerate failures or malicious behavior of up to one-third of validator nodes. By staking TIA tokens, Celestias validators are financially incentivized to ensure honest behavior and impose penalties for malicious behavior or improper operations, thereby ensuring the security of the network. Currently, Celestias TVL is approximately US$6.44 billion, and the number of full nodes is 100.

Regarding scalability, Celestias block size can be dynamically adjusted based on the number of active light nodes in the network. As more nodes join, Celestia can safely increase the block size, theoretically increasing throughput and scalability infinitely. Current data shows that its data throughput is about 6.67 MB/s.

Celestia Blob capacity and storage features and pricing:

For cost comparison, we briefly discuss the performance and pricing mechanism of Celestia. When users submit data on Celestia, they do so by submitting a Blob transaction (BlobTx), and the fee consists of blob space fees and gas fees.

Specifically, the maximum size limit for each Blob is slightly less than 2 MiB (1,973,786 bytes), and each block can contain multiple Blobs, the specific number depends on the total size limit of the block. The current maximum block size is 64 x 64 shares (about 2 MiB), a total of 4096 shares, one share is reserved for PFB (PayForBlobs) transactions, and the remaining 4095 shares are used for data storage. Celestias fee market is similar to Ethereums EIP-1559 mechanism, using a priority memory pool based on gas prices. Transactions with higher transaction fees are prioritized by validators, and the fees consist of a fixed fee for each transaction and a variable fee based on the size of each Blob.

According to the comprehensive statistics of rollup data on Celenium (June 17), for each customer who integrated Celestia, the cost of using Celestias DA is between 0.02-0.25 Tia/Mib, which is equivalent to the price of $TIA on June 17 ($ 7.26), and the DA cost of several major customers ranges from $ 0.15 – $ 1.82/MiB. Therefore, compared with the native DA on the Ethereum chain, Celestia provides a competitive and stable cost structure.

Source: Celenium

Source: Celenium, gas price is stable at around 0.015 UTIA (1 uTIA = TIA × 10 − 6)

However, Celestia itself is a Layer 1 blockchain network that requires a P2P network to broadcast and reach consensus on Data Blobs. Although light nodes can use DAS to ensure data availability, the network still has high requirements for its full nodes (128 MB/s download and 12.5 MB/s upload), which poses obstacles to decentralization and future throughput improvements. In contrast, EigenDA uses a different architecture—no consensus is required, nor does it require a P2P network.

2.3 EigenDA

As an active verification service (AVS) built with EigenLayer, EigenDA uses the security of Ethereum through a re-staking mechanism (no need to introduce a new validator set, Ethereum validators can choose to join freely, and EigenDAs re-staking nodes are a subset of Ethereum nodes) to ensure data availability, making good direct use of existing infrastructure. Its main workflow is that the Rollup sequencer generates Blob Data and sends it to Disperser (which can be run by rollup itself or through a third party, such as EigenLabs). Disperser will shard the Blob Data, generate erasure codes and KZG commitments, and then publish them to EigenDAs nodes. Then EigenDAs nodes will verify Attestation and ensure data availability. After the verification is completed, the node needs to store the data and send the digital signature back to Disperser. Finally, Disperser will collect signatures and upload them to the EigenDA smart contract on the Ethereum mainnet for the final correctness verification of the aggregate signature.

The core idea is still to use technology to reduce the requirements for data storage and verification computing power of nodes. However, EigenDA chose the KZG commitment verification technology that is consistent with the Ethereum upgrade to achieve it. In addition, EigenDA does not rely on consensus protocols and P2P propagation, but uses unicast to further increase the consensus speed.

To ensure that the EigenDA node really stores the data, EigenDA uses the Proof of Custody method. If it appears, anyone who is a lazy validator can submit a proof to the EigenDA smart contract, which will be verified by the smart contract. If the verification is successful, the lazy validator will be slashed.

Therefore, EigenDAs solution process is all carried out on Ethereum, and Ethereum provides consensus guarantees. Therefore, it is not limited by the bottleneck of consensus protocols and low throughput of P2P networks. Nodes do not need to wait for sequential sorting and can directly process data availability proofs in parallel, greatly improving network efficiency.

Source: Eigenlayer

EigenDA capacity performance and cost:

EigenDA currently has 266 node operators. Its maximum throughput target is 10 Mbps. Based on the 7-day average data, EigenDAs data throughput is 0.685 Mib/s, and the data storage and transmission fee is about 0.001 Gas/Byte. Assuming the gas fee is 10 gwei and the Ethereum price is $3600, the fee for every 1 MB of data is about $0.038. The total staked TVL is 3.33 M ETH, close to $1.2 billion.

Source: EigenDA.xyz

Comprehensive Comparative Analysis of Celestia vs. EigenDA

From a technical perspective, Celestia and EigenDA differ in several aspects. First, in terms of node load, Celestias full nodes need to handle broadcasting, consensus, and verification, with a download bandwidth requirement of 128 MB/s and an upload bandwidth requirement of 12.5 MB/s, while EigenDAs nodes do not handle broadcasting and consensus, with a bandwidth requirement of only 0.3 MB/s, and it can use a subset of Ethereum nodes. Second, in terms of throughput, Celestias maximum throughput is about 6.67 MB/s, while EigenDA aims to reach a maximum of 10 MB/s. In terms of security, Celestias security comes from its network value, with a pledged value of approximately $6.65 billion and an attack cost of more than $4 billion. EigenDA inherits part of Ethereums security based on the value of re-pledged assets and the share of mainnet operators. The current TVL is close to $1.2 billion, which is about 2% of Ethereums security.

In summary, Celestias competitive advantage lies in its flexible modular design and high data throughput, making it more popular with small and medium-sized L2 and application chains. EigenDAs advantage is the legitimacy brought by using Ethereum infrastructure to decouple data availability from consensus. In the future, as the dual trends of modularization and application chains develop, Celestia may benefit from the incremental market, while EigenDA may occupy a larger share of the Ethereum-centric market that requires higher security.

3. Avail and NearDA

Although Celestia and EigenDA currently dominate the data availability market, the competition landscape may change in the future. With the potential launch of the two projects Avail and NearDA, the competition in the data availability field is expected to intensify further.

Avail is a blockchain network focused on data availability, designed to provide efficient transaction ordering and data storage services for EVM-compatible blockchains and Rollups. It uses the BABE and GRANDPA consensus mechanisms inherited from the Polkadot SDK. Avail uses KZG polynomial commitments as proof of validity, uses Nominated Proof of Stake (NPoS) to support up to 1,000 validators, and provides reliable backups through a unique light client P2P network sampling mechanism.

On the other hand, NearDA is a data availability solution launched by the NEAR Foundation, which mainly provides DA services for ETH Rollup and Ethereum developers. Its goal is to provide a cost-effective DA solution with the same degree of decentralization as Near Protocol. It has established strategic partnerships with major players in the Ethereum ecosystem such as Polygon CDK, Arbitrum, and Optimism.

In the short term, for Rollups, the best way to build barriers is to more effectively reduce marginal costs, among which adjusting revenue and cost models according to market conditions is a better solution.

4. DA for specific scenarios

In addition to the general DA for rollups mentioned above, the current DA track has also spawned some relatively early DA projects that target specific scenarios, such as Zerogravity (0G), a high-throughput DA solution customized for AI, and Nubit, a Bitcoin DA solution.

4.1 Zerogravity (0 G)

AI applications have different requirements for data availability than traditional blockchain applications. AI model training and operation require processing of large amounts of data, including model parameters, training data sets, real-time data requests, etc. This data needs to be stored and transmitted quickly and reliably to ensure the efficiency and performance of AI models. However, existing general-purpose DA solutions, such as Celestia and EigenDA, are mainly designed to meet the data availability requirements of ordinary blockchain applications and have certain limitations when processing large-scale data transmission with ultra-high throughput and low latency.

ZeroGravity (0G) hopes to specifically meet the needs of AI applications through modular design and high-performance data transmission. Its modular design divides the data availability workflow into two channels: data publishing and data storage, allowing the system to scale linearly as the number of nodes increases. The data storage channel focuses on big data transmission, ensuring that big data can be stored and accessed almost instantaneously. The data publishing channel is used to ensure the availability of data, which is verified through an arbitration system based on the majority honest assumption. 0G Storage is an on-chain database composed of a network of storage nodes. Storage nodes participate through the Random Access Proof (PoRA) mining process to ensure the availability and integrity of data. It supports the storage of various types of AI-related data, including models, training data, user requests, and real-time retrieval augmentation generation (RAG) data.

Source: 0 G

Through innovative system design, 0G claims that its goal is to achieve GB-level on-chain data transmission per second, far exceeding other DA solutions currently on the market (such as Celestia and EigenDAs MB-level data transmission per second). Specifically, 0G claims that its data throughput can reach 50 to 100 GB per second, which can support scenarios such as AI model training that require large amounts of data transmission.

4.2 Nubit

As the Bitcoin ecosystem gradually takes off and attracts attention, various technical routes related to Bitcoin are also surging. With the development of these technical routes, applications such as Ordinals, Layer 2, and Oracles have an increasingly urgent need for efficient and secure data availability solutions. These applications need to be able to quickly and reliably store and transmit large amounts of data to ensure their normal operation and improved user experience. For example, Ordinals requires efficient data storage and transmission to support the creation and trading of digital artworks, Layer 2 solutions require high throughput and low latency to achieve better scalability, and Oracles require reliable data transmission to ensure the accuracy and timeliness of data.

Nubit is the first native data availability (DA) layer project in the Bitcoin ecosystem. It aims to solve the problem of limited throughput of the Bitcoin mainnet and provide infrastructure support for the long-term development of the Bitcoin ecosystem. Nubits workflow includes multiple steps such as data submission, verification, broadcasting, storage, sampling and consensus to ensure efficient data processing and high availability. After the data submitted by the user is processed by RS encoding, it is verified by the validator node using the NuBFT consensus algorithm and a KZG commitment is generated. The verified data block is broadcast to the entire network, the storage node is responsible for storing the complete data block, and the light client verifies the availability of the data through the data availability sampling (DAS) protocol. Even in the event of a network failure, the node can still recover the data through the full storage node and the KZG commitment on the Bitcoin network.

Nubit aims to provide infrastructure for Bitcoin ecological projects and has established partnerships with multiple projects such as Babylon, Merlin Chain, Polyhedra, etc. Nubit will reduce the cost of data storage. For example, when the demand for inscription market surges, Nubit can serve Bitcoin Layer 2 to significantly reduce the cost of data release, making it more economical to store and process data on Bitcoin.

5. Closing Thoughts

Analyzing the differences among projects in the DA track, we see a range of unique technologies and market positioning in terms of security (including data integrity, network consensus, etc.), customizability and interoperability, performance, and cost. With the widespread adoption of these DA solutions and the differences in DA layer choices among different projects, we have seen a range of unique technologies and market positioning.

In the future, we believe that more App-Rollups will be launched on the market. However, although the potential market is increasing, the head effect of the DA track is obvious. Celestia, EigenDA, etc. will occupy the main market share, leaving few opportunities for the middle and tail, and competition is also intensifying. The current capacity is in excess of the supply for Rollup. For example, after the launch of the main network, the utilization rate of Celestias network bandwidth has been below 0.1% for a long time, far below its maximum support capacity of 46,080 MB per day. However, compared with Ethereums current 15 Rollups and 700 MB of data per day, Celestias activity still has a lot of room for use.

Of course, it is not ruled out that there may be a demand for high DA bandwidth in high-performance networks in the future, or for AI projects, for example. In addition, there are some relatively early DAs and DAs for specific scenarios, such as Bitcoin DA, which may gain a good market share in the niche. But DA is essentially a to B business, and the income of DA projects is closely related to the quantity and quality of ecological projects. At this stage, we believe that there is no need for too many off-chain DA solutions in the market unless their cost and efficiency achieve a leap of several orders of magnitude.

In general, the supply of DA business model is sufficient now, but the development of the track is still evolving, and various solutions show different competitiveness in technology and market positioning. Future development will depend on the continuous innovation of technology and the dynamic changes in market demand.

References:

https://medium.com/@MTCapital_US/mt-capital-research-da-sector-analysis-comparative-study-of-celestia-and-eigenda-acc0 7 ea 5694 f

https://www.theblockbeats.info/news/51171

This article is sourced from the internet: IOSG Ventures: Detailed explanation of DA ecology and competition landscape

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