Guide to Celestia

Celestia, one of the most hyped launches in recent memory, is trying to bring scale to billions of users. Blockchains need to evolve to support the next billion users making scalability one of the most important challenges to support growth. Scaling blockchains refers to the ability to handle a growing number of transactions without increasing the cost of verifying the chain. There are two primary approaches to address scalability: enhancing the “base layer” (also referred to as L1) or modularity, abstracting away some of the functionality into specialized layers. Most blockchains are monolithic and historically to date focused on enhancing the base layer to solve the scalability problem. The Celestia launch marks the launch of the first ever modular blockchain network aimed to solve the blockchain scalability problem.

Celestia provides data availability services for rollups. Celestia solves the scalability problem of blockchains without sacrificing decentralization by separating out execution from consensus and introducing data availability sampling to solve the data availability problem.

For more information on this, check out these docs on their data availability layer. 

Celestia’s design choices also offer sovereign rollups, which allows developers the ability to build and deploy execution-specialized blockchains as easily as they would build and deploy a smart contract. Sovereign rollups publish transactions to another blockchain (like Celestia) for ordering and data availability, but these rollups handle their own settlement. Rollup nodes enforce transaction validity rules and also monitor Celestia to identify and download transactions that belong to them.

If you are interested in learning more about scalability problems, the data availability problem, and sovereign rollups, refer to Coinbase Cloud’s Unpacking Celestia: An Introduction to Modular Blockchains.

Community members can run two “classes” of nodes on Celestia, the consensus nodes and the data availability nodes, to support the network.

Consensus Network

Validator Node 

Participates on consensus by producing and voting on blocks.

Source: Consensus Nodes

Full Consensus Node 

A full node to sync blockchain history.

Source: Consensus Nodes

Data Availability Network

Bridge Node 

Bridges block between the data availability network and the consensus network. They can also be a validator in the Consensus Network. Here’s what they do:

1. Import and process headers and blocks from an RPC connection to a Celestia node in the Consensus Network

2. Validate and erasure code the blocks, reconstructing data from pieces of data provided by the light node

3. Supply block shares with data availability headers to Light Nodes in the Data Availability Network 

Source: Setting up a Celestia Bridge Node

Full Storage Node 

Full Storage Nodes store all the data but don't participate in consensus. They send block shares, headers, and fraud proofs to Light Nodes. 

Source: Setting up a Celestia Full Storage Node

Light Node 

Light clients conduct data availability sampling on the data availability network. Light nodes gossip headers, fraud proofs, and sometimes block shares between each other received from the Full Storage Nodes. 

Source: Setting Up a Celestia Light Node

Celestia issues its own token called TIA used for multiple purposes on the Celestia network.

Proof of Stake

Celestia was built with the Cosmos SDK and uses Tendermint consensus. Similar to other Cosmos SDK chains, any user can secure the network by delegating their TIA to a Celestia validator in exchange for a portion of the validator’s staking rewards. 

For more information on how Proof of Stake works in Cosmos, refer to Coinbase Cloud’s guide on the Cosmos Hub. You can also check out the x/staking Cosmos documentation and Celestia’s docs on staking, governance, and supply.

Economics

Celestia uses many standard Cosmos-SDK modules and tries to keep the modifications to each to a minimum. But the modules they use and the modifications are always subject to change.

However, one thing Celestia does differently from the standard x/mint Cosmos module that provides a flexible inflation rate is that Celestia intends to have a predictable one with the following constraints below.

When the target inflation is reached, it will remain at that rate. Target inflation is expected to be reached in year 16.

Tokens that are minted throughout the year should not be used when calculating the annual provisions for that year and should only be based on the total supply at the beginning of each year. 

For information on provisions and yearly inflation expectations, see this doc.

Slashing

Celestia follows the default slashing Cosmos-SDK module x/slashing. 

There are two ways that a validator and their delegators can get slashed

1. Downtime: When a validator misses more than 95% of the past 10,000 blocks, they are jailed for 10 minutes. When jailed, the validator’s total stake is slashed by 0.01%. After the 10 minutes ends, the validator is allowed to rejoin the validation process by manually triggering an unjail transaction.

2. Double signing: If a validator proposes more than one block at a specific block height, the validator gets slashed by 5% and gets tombstoned in which that validator is permanently banned from validating.

Governance

Stakers and holders can participate in decentralized governance by voting on items presented through governance proposals as well as governing the community pool which receives 2% of block rewards. 

• What Celestia parameters are changeable and non-changeable

• Community pool

• How to submit and vote on governance proposals

• How to submit a governance proposal to spend community pool funds

Paying for Blobspace

To use Celestia for data availability, rollup developers using Celestia as the base layer submit PayFor Blobs transactions on the network for a fee in TIA. 

For more information on the lifecycle of a Celestia transaction, see Celestia’s docs.

And for more information on their fee market, check out these docs.

Bootstrapping Rollups

One of Celestia’s main value propositions is that developers can easily deploy a blockchain as easily as deploying a smart contract. In this case, developers can quickly bootstrap their chain by using TIA as a gas token to focus on the application creation or execution layer instead of tokenomics. Over time, developers may decide to issue their own token if they desire.

Celestia is a modular data availability layer that makes it easy for builders to launch their own blockchain. Celestia keeps decentralization and openness top of mind with their architecture, design choices and innovations. We’re excited to watch their ecosystem launch and grow in 2023 and beyond and are happy to support Celestia Day 1.

Work with a trusted partner with over a decade of experience serving custodians, exchanges, fintechs, dapps, self custody wallets, and liquid staking protocols to address their complex and varied needs. Our longevity in the industry is a testament to the quality of our products and the prudent perspective we take in regards to risk management.

Coinbase Cloud is happy to support the growing ecosystem of protocol teams like Celestia and works closely with protocol teams to bring clients deep insights into our support networks. Our reliable infrastructure provides enterprise-grade security and a 99% uptime guarantee, minimizing operational risk so that your assets continue to earn rewards.

Check out our delegation guide or contact our team today to get started.