Celestia - Investor Analysis

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Celestia is a pluggable consensus and data availability layer, to enable anyone to quickly deploy a decentralized blockchain without the overhead of bootstrapping a new consensus network.

Executive summary

New investment opportunity - Celestia - round: Total raised $56,500,000.

Homepage: https://celestia.org/; Entity \

Explorer - Test-net

Product: Consensus and data availability, to projects which are serving as settlement, and especially execution layers. Optimint: Allows to build Cosmos-based chains as rollups that can use other chains such as Celestia as a consensus and data availability layer.

One-Liner: Pluggable consensus and data availability layer, to enable anyone to quickly deploy a decentralized blockchain without the overhead of bootstrapping a new consensus network.

Use-Case: potential users of Celestia are rollups, Sharded L1s

Team: Mustafa Al-Bassam CEO, PhD in blockchain scaling at UCL, Co-founder of Chainspace (acquired by Facebook); Ismail Khoffi CTO Former senior engineer at Tendermint and Interchain Foundation; John Adler CRO, Creator of Optimistic Rollups, prev scalability researcher at ConsenSys; Nick White COO, Co-founder of Harmony

Stats: TW - 85k ; Discord - 56k

Funding Round & Valuation: Total: $56,500,000. Seed 1.5 Million Marzo 2021, Last round (Unknown stage) $55 mil

Investors: Interchain Foundation, Binance Labs, Maven 11, KR1, Signature Ventures, Divergence Ventures, Dokia Capital, P2P Capital, Tokonomy, Cryptium Labs, Michael Ng, Simon Johnson, Michael Youssefmir and Ramsey Khoury.

Competitors: Filecoin; Arwave; Kyve; Security layers like axelar, Layer zero etc since Celestia allows cross-chain interoperability with light clients

Valuation

Pros:

Optimint SDK Ready to accept Cosmos based chains as rollups.

SuperStar Team Trackrecord, CEO made an exit to FB, COO co-founder of Harmony, and other core members have directly contributed to IBC and Tendermint and optimistic rollups.

Target users are Rollups, positioning celestia as market leader in a booming development trend.

Cons:

No clear stats on test-net yet.
No info on economic model and tokenomics.
Unclear competitor landscape. Security layers like Axelar and LayerZero could potentially take over the data availability market as well.

Relevant Notes:

Product delivery (state of dev.): Devnet was released in . Devnet Dec 2021 features three core components: celestia-node, celestia-app and optimint. No stats on Test-net. Q2 Update

Founding: Total raised is 56.5 Million, good warchest.

Token utility: Validating the network, No tokenomics out yet

Deal Structure

Product Use case

Target: Rollups, Sharded Blockchains

Problem: Data availability - Fraud proofs.

Rollups are a design that uses a blockchain only as a data availability layer to dump transactions, but all the actual transaction processing and computation happens on the rollup itself. This leads to an interesting insight: a blockchain doesn’t actually need to do any computation

This is the design philosophy of Celestia which is a “lazy” blockchain that only does the two core things that a blockchain needs to do — order transactions and make them available, in a scalable way. This makes it useful as a minimal “pluggable” component for systems such as rollups.

Features:

Secure cross-chain interoperability with light clients.

Cross-chain interoperability relies on light clients which are typically not secure because they make an honest majority assumption. However, with Celestia, light clients do not need this assumption, which unlocks secure cross-chain interoperability.
Instead of downloading the entire block, Celestia light nodes just download small random samples of data from the block. If all the samples are available, then this serves as proof that the entire block is available. Basically, by sampling random data from a block, you can probabilistically verify that the block is indeed complete.

DevNet release:

The celestia-node repo takes care of the consensus and networking for the blockchain. It's how Celestia full and light nodes make new blocks, sync new blocks and block headers, and of course sample data from blocks.

The celestia-app repo is where the state machine for the chain lives, which handles staking and transaction processing.

Optimint is the software that allows a Cosmos zone to deploy directly on Celestia, as a rollup. It spins up its own p2p network, collects transactions into blocks and posts them onto Celestia for consensus and data availability.

Team

CORE TEAM

https://celestia.org/team/

Mustafa Al-Bassam CEO, Celestia Labs PhD in blockchain scaling at UCL, Co-founder of Chainspace (acquired by Facebook)

Ismail Khoffi CTO, Celestia Labs Former senior engineer at Tendermint and Interchain Foundation

John Adler CRO, Celestia Labs Creator of Optimistic Rollups, previously scalability researcher at ConsenSys

Nick White COO, Celestia Labs Co-founder of Harmony, BS & MS from Stanford

Sources:

Thesis and technical docs

Data Availablity

This problem asks: how can nodes be sure that when a new block is produced, all of the data in that block was actually published to the network? The dilemma is that if a block producer doesn’t release all of the data in a block, no one could detect if there is a malicious transaction hidden within that block.

Where Is the Data Availability Problem Relevant?

Scalability Solutions:

Increased Block size

But what if we wanted to increase the block size limit? Less people will afford to run full nodes and independently verify the chain, and more people will run light clients that are less secure. This is bad for decentralization. Therefore, adding fraud proof support for light clients becomes very important, but as discussed, light clients need a way to check that all the data in blocks has been published for this to work.

Sharded blockchains

These shards have their own block producers, and can communicate with each other to transfer tokens between shards. The point of sharding is to split up the block producers in the network so that instead of every block producer processing every transaction, they split up their processing power into different shards that only process some transactions.

A full node in a sharded blockchain will run a full node for only one or a few shards, and run a light client for every other shard.

In order to solve the problem of detecting if any shard accepted an invalid transaction, you need to be able to guarantee that all the data in that shard was published and made available

Rollups

Optimistic. These sidechains have their own dedicated block producers, which can transfer assets to and from other chains. fraud proofs are needed.

Rollups on Ethereum deal with this by simply posting all of the rollup blocks on to the Ethereum chain and relying on it for data availability, therefore using Ethereum as a data availability layer to dump data on.

Zero-knowledge (ZK) rollups are similar to optimistic rollups, but instead of using fraud proofs to detect invalid blocks, they use a cryptographic proof called a validity proof to prove that a block is vald. Validity proofs themselves don’t require data availability. However, ZK rollups as a whole still require data availability, because if a block producer makes a valid block and proves it with a validity proof but doesn’t release the data for the block then users won’t know what the state of the blockchain is and what their balances are, and so won’t be able to interact the chain.

Celestia’s ‘Modular Blockchain’ Attracts Investors Looking for Scaling Breakthrough

Modular vs monolithic: a beginner's guide

Securely Scaling Blockchain Base Layers - Mustafa Al-Bassam

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Analysis by Mark Mercatali. Disclaimer: This analysis is based on personal opinion only. This is not intended as investment advice. Do your own research. All company data is owned by the respective owners.