Modular frenzy: Is Web3 heading towards fragmentation or maturity?

The blockchain world is undergoing a paradigm shift, with modular architecture becoming the dominant force in Web3 infrastructure.

Unlike monolithic blockchains where all functions are handled internally, modular chains decouple core functionalities such as consensus, data availability, execution, and settlement by allowing different layers or dedicated chains to handle them independently. This results in greater flexibility and scalability.

This decoupling enables each function to be optimized and upgraded independently without affecting others.

This article explores

1. The trend of modularity and its impact on performance, decentralization, and interoperability.

2. Whether this is a sign of a healthy, mature ecosystem or a manifestation of chaotic fragmentation.

From the launch of Celestia mainnet to the rise of Rollup-as-a-Service, narratives around scalability and customization are gaining increasing attention. But is this the path forward or just another fork in the road?

This trend is crucial at this moment.

Specific manifestations

• L2 adoption is soaring, with total value locked in rollups exceeding $40 billion (L2Beat, 2025).
• Developer interest is shifting from L1 competition to modular experimentation.
• Venture capital and protocols are heavily betting on modular infrastructure, such as Eclipse, Avail, and Sovereign.

Founders, researchers, and investors must understand how modularity could redefine the future of blockchain, and whether this is a lasting transformation or just another hype cycle.

Background and Definitions

Monolithic Blockchain

Blockchains like Solana or pre-rollup Ethereum execute all core functions internally:

Consensus, execution, data availability, settlement.

Example:

Bitcoin: Features a single, unified structure with all core functions bundled together, ensuring all transaction data is stored directly on-chain.

Solana: A high-performance monolithic chain focused on speed and throughput through vertical integration.

Pre-rollup Ethereum: Also a monolithic architecture before decoupling execution layers with Layer 2 Rollups.

Modular Blockchain

Modular architecture decouples these layers. A modular chain focuses on one or a few layers and outsources the rest. The goal is to improve efficiency and scalability through specialization and division of labor.

Example:

Celestia: The first modular blockchain providing data availability and consensus layers.

Cosmos SDK: Supports building application-specific execution layers.

Rollup-as-a-Service: Participants like Caldera and Conduit help projects launch their own rollups using modular frameworks. This approach supports customization, scalability, and experimentation but may introduce fragmentation.

ROLLUP

A rollup is a Layer 2 scaling solution in blockchain technology that processes transactions off-chain and then batches them into a single transaction submitted to the main chain.

• Optimistic Rollup: Assumes transactions on L2 are valid by default, with a challenge period allowing users to dispute potentially invalid transactions.
• Zero-knowledge Rollup: Submits validity proofs on-chain to verify each batch of transactions, e.g., Starkware’s StarkEx, zkSync Era.

The rise of rollups, especially within Ethereum’s roadmap, makes modularity not only feasible but necessary.

This stems from Ethereum’s core challenge since inception—scalability—which has led to high gas fees, slow transaction speeds, and network congestion.

Case Study: Ethereum’s Modular Path

By Q2 2025, over 40 rollups are in production or public testnet stages.

Development activity in the L2 ecosystem has increased by 230% year-over-year, with Optimism, Arbitrum, and Base leading in GitHub commits.

Since mainnet launch at the end of 2023, Celestia has seen rapid adoption in testnets and early deployments, with over 25 modular chains relying on its data availability layer.

Since 2022, modular infrastructure projects have raised over $400 million in total funding. Notable financings include:

• Eclipse: $50 million
• Avail: $27 million
• Dymension: $6.7 million

According to Electric Capital Developer Report

2024

• Monthly active developers on Cosmos SDK increased by 13% YoY.
• Rollups based on Celestia attracted over 100 developers in Q1 2025.
• Since late 2023, GitHub activity for modular infrastructure projects (e.g., Celestia, Rollkit, Avail) has grown over 50%.

Chart of contracts deployed using ZK precompiles

Source: Electric Capital

LAYER 2 Growth

Total value locked in rollups has grown from about $10 billion at the start of 2023 to $42.8 billion in June 2025 (L2Beat).

Arbitrum and Optimism remain dominant, but Base and Blast are rapidly gaining market share.

L2Beat’s L2 TVL growth chart

As the blockchain ecosystem continues to evolve, these projects are at the forefront of providing scalable, interoperable, and customizable solutions for developers and users.

Platforms like Caldera, Conduit, and Stackr are reducing the time to launch custom rollups from months to days.

However, there is also noise. Many chains see low usage after launch or are merely speculative experiments. Developer fragmentation, incompatible toolchains, and tokenomics misalignments remain significant challenges.

Narrative Analysis

The shift toward modularity is conceptual. Modular chains embody the spirit of Web3—decentralization, specialization, and permissionless experimentation. But this freedom comes at a cost.

• Users face more wallets, bridges, and interfaces.
• Higher cognitive load, managing multiple layers.
• DA and execution layers must be robust and interoperable.

On the other hand, Solana’s monolithic architecture, where execution, consensus, and data availability are handled within a single layer, offers speed and simplicity but also faces significant challenges compared to Ethereum’s modular approach.

A notable challenge for monolithic chains like Solana is downtime caused by congestion. Since all layers are bundled together, congestion or errors in execution logic can stall the entire network. This has led to multiple full-network outages.

Solana’s single-layer design offers high speed and developer simplicity but at the cost of scalability limits, decentralization challenges, and systemic fragility.

Fragmentation could undermine network effects, liquidity concentration, and security assumptions. However, modularity allows for rapid innovation, customization, and scalability through horizontal growth.

It can be viewed as a decoupling of blockchain components.

This shift is also driven by real-world constraints—monolithic chains cannot scale fast enough. Modular architectures support parallel progress, where DA, settlement, and execution can evolve independently.

What other factors are driving the modular transformation?

• Ethereum’s roadmap centered around rollups
• Venture capital investments in modular infrastructure (over $500 million since 2023)
• Middleware standardization (e.g., IBC, Rollkit)

This recalls the Unix philosophy: do one thing well, then combine. Ethereum is evolving into a settlement and security hub, while rollups and modular DA layers explore execution freedom.

Modular blockchain architectures are often seen as Web3 fragmentation. But this view oversimplifies a deeper evolution.

Below is a direct comparison of the disadvantages of Solana’s monolithic architecture versus Ethereum’s modular advantages:

Future Outlook

The modular movement is still in its early stages.

By 2026, a wave of rollup mergers, ecosystem alliances, and tooling unification is expected.

Interoperability across modular stacks (via shared sequencers or bridges like Hyperlane and inter-chain security) will be key.

Key Predictions

• Data availability layers like Celestia and Avail, which succeed, may dominate and become the new standard for developers, while execution layers become more specialized.
• Many rollups will settle on Ethereum, maintaining its central hub role.
• Shared sequencers (e.g., Astria) and intent-based execution services are expected to emerge.

Risks: User experience fragmentation, liquidity islands, and protocol bloat threaten cohesion. Without shared standards, the modular vision could devolve into a graveyard of disconnected chains.

In summary, modularity is not fragmentation but a foundation for a more scalable, specialized Web3.

The core question remains: can Web3 evolve into a modular blockchain internet that is unified for users while remaining decentralized at its core?