The Data Is Available: An Overview of Data Availability Layers

Introduction

As Ethereum has chosen to scale its execution layer through rollups (Layer-2 scaling solutions), data availability has become increasingly important as rollups need to publish their data for visibility and disputing. The importance of data availability is critical: if it is withheld, a rollup may not be able to continue its state (i.e. carry out its state transition function) if the sequencer was to drop out, which would lead to the freezing of users funds.

As rollups have grown in popularity, so has the demand for modularity. Modularity refers to the design principle of breaking down a complex system into smaller and interchangeable components that can be developed, tested, and updated separately without affecting the entire system. Compared to traditional monolithic approaches, at least in the context of EVMs, modularity enables scalability by separating the layers of the chain –  by separating execution from data availability and consensus, rollups can process larger transaction volumes without overwhelming the base layer, which would lead to increased costs and delayed transactions in times of congestion. 

Recently, a great deal of attention has been paid to rollups’ TPS capacities when compared to high-performance, monolithic chains such as Solana. Notably, one of the most significant bottlenecks for rollups is data posting costs. Currently, data availability costs account for approximately 90% of transaction costs for rollups, such as Arbitrum and Optimism, given their reliance on Ethereum for data availability. In comparison, alternative data availability layers such as Celestia can reduce data publishing costs by nearly 100 times.

The current landscape of rollups is predominantly controlled by a handful of major players, while there are only a few application-specific rollups, partly due to the high costs and overhead to operate a rollup. Application-specific rollups, which focus on GameFi, SocialFi or high-frequency trading, require low cost data availability, as transaction counts on these are much higher than those on general-purpose, DeFi focused rollups. Alternative data availability solutions combined with “rollups-as-a-service” providers, which simplify the complexities of development, are necessary to make application-specific rollups more economically viable. This would significantly contribute to the broadening of Ethereum rollups, appchains and sovereign rollups, and introduce a modular future.

Data Availability and The Data Availability Problem

Data availability refers to the guarantee that nodes within a network are able to access and verify transaction data, i.e. the data is available to any node. When a new block is produced, all of the data within the block needs to be published and should be available to other network participants, particularly nodes, who should be able to download the block's data and re-execute transactions to verify validity.