A modular blockchain is an architectural approach to building blockchain networks in which the key functions of the system are separated into independent layers (modules), each performing a strictly defined task and capable of evolving independently from the others.
In the classical understanding, a blockchain performs several core functions at once:
processing and executing transactions;
verifying the correctness of computations;
storing and distributing data;
achieving consensus among network participants.
In a modular architecture, these functions are not concentrated within a single protocol but are distributed across different layers. This approach allows optimizing each part of the system separately and avoiding overload.
As a rule, the structure of a modular blockchain includes two key layers:
the consensus layer — responsible for coordinating data between nodes;
the execution layer — responsible for processing transactions and verifying them.
It is at the execution layer that technologies such as rollups* (batching transactions) and sharding* (splitting the network into parts) are implemented.
* Rollups (batching transactions) — a scaling technology in which transactions are first processed off the main blockchain network, then combined into a single compressed batch and recorded on the main blockchain. This reduces the amount of data that needs to be stored and verified on the base layer, lowering fees and increasing throughput. Security is maintained because the final data remains anchored in the main blockchain network.
* Sharding (splitting the network into multiple parts) is a method for improving blockchain performance by dividing it into parallel shards (separate segments). Each shard processes only its own transactions and data, distributing the load across the network rather than concentrating it in a single place. This significantly increases processing speed without sacrificing decentralization.
In some blockchains, such as Celestia, an additional layer is introduced — the data availability (DA) layer. It manages how nodes access information, reducing the load on the network.
How do modular blockchains differ from monolithic ones?
Monolithic blockchains combine all functions within a single layer. This simplifies the architecture but creates significant limitations:
network congestion;
high fees;
low transaction processing speed.
A typical example is Ethereum, where during periods of high activity, fees could reach tens of dollars per transaction.
The modular approach addresses this issue by separating tasks across layers. This provides:
higher throughput;
better scalability;
reduced load on individual network components.
Another important difference is upgradability. In monolithic systems, changes often require forks*, meaning вмешательство в основной протокол. In modular networks, individual components can be updated without affecting the entire system.
* Fork (intervention in the main protocol) — a change in the blockchain protocol that can either result in a full network upgrade or a split into two independent chains. If all participants accept the new rules, the network upgrades without splitting. If part of the network remains on the old version, two blockchains emerge with a shared history but different future rules.
Additionally, modular blockchains provide developers with greater flexibility:
easier testing of new solutions;
faster feature implementation;
simpler creation of custom (tailored to specific requirements) networks for particular use cases.
One of the largest representatives of the segment. As of May 2026, its market capitalization exceeds $1.6 billion. However, compared to its 2022 highs, this figure has declined by roughly seven times.
The second-largest project has a market capitalization of around $750 million. Despite its popularity, its valuation has also dropped significantly compared to peak levels.
Originally created as a Layer 2 solution* for Ethereum. After implementing rollups (transaction batching), it was classified as a modular blockchain, although it only partially uses this architecture. In recent years, the project’s market capitalization has fallen by more than 10 times.
* Layer 2 solution — an additional infrastructure layer that operates on top of a base blockchain and takes over part of the computation and transaction processing. Such solutions help offload the main layer, speed up execution, and reduce costs while leveraging the security of the underlying blockchain.
The first blockchain was originally designed to be modular. It introduced a separate data availability layer, reducing node resource requirements and improving network efficiency. Despite its technological strengths, the project’s capitalization has also declined significantly from its peak.
Another solution that emerged from the Ethereum ecosystem. Over time, the project transitioned to a modular architecture. However, investor expectations proved to be overestimated — its market capitalization dropped more than 8 times, and the project fell out of the top largest cryptocurrencies.
Conclusion
Modular blockchains are a relatively new direction: the first projects appeared only in 2023. By 2026, their number is still small — just over 30.
Despite technological advantages, there is still no mass demand. Against the backdrop of the overall crypto market downturn, most such projects have shown declining market capitalizations.
At present, the total value of all modular blockchains is about $3.8 billion — comparable to the capitalization of a single large memecoin — Meme core (M).