Modular blockchains are built with a quite different approach to the regular blockchain architecture, that aims to address the limitations of monolithic blockchain designs. Instead of a single, all-encompassing blockchain network, modular blockchains are composed of multiple interconnected and interoperable blockchain modules or layers.

The modular approach decouples different blockchain functionalities into separate layers, each optimized for specific purposes. This separation of concerns allows for greater flexibility, scalability, and specialization within the overall blockchain ecosystem.

Key Components of Modular Blockchains

Consensus Layer: It's responsible for establishing consensus and maintaining the integrity of the blockchain network. It ensures that all nodes agree on the current state of the ledger.
Execution Layer: This layer handles the execution of smart contracts and decentralized applications (dApps).
Settlement Layer: Processes and settles transactions, ensuring the immutability of the recorded data on the blockchain.
Data Availability Layer: Stores and distributes the blockchain data, ensuring that all nodes have access to the necessary information for validation and execution.
Messaging Layer: This layer facilitates communication and data exchange between various blockchain modules, enabling interoperability and cross-chain interactions

Examples of Modular Blockchains

Polkadot: Polkadot is a modular blockchain network with a focus on interoperability and scalability. It consists of a central Relay Chain that coordinates and secures a network of specialized parallel chains called Parachains. These Parachains can have their unique characteristics and use cases while benefiting from the shared security of the Relay Chain.
Cosmos: Cosmos is another modular blockchain ecosystem that enables the creation and interconnection of independent blockchains called Zones. These Zones can have their governance, validator sets, and characteristics while still being able to communicate and transfer data and assets through the Inter-Blockchain Communication (IBC) protocol.

Modular blockchains are working towards addressing the limitations of monolithic designs and paving the way for more scalable, specialized, and interoperable blockchain networks in the web3 ecosystem.