Modular Blockchain is a type of blockchain architecture that separates the main functions of the network into several layers. These functions include :

• Execution - Processing transactions and executing smart contracts.
• Consensus - Ensuring transactions are valid and reaching agreement among nodes.
• Data Availability - Storing and providing the data required to validate transactions.
• Settlement - Completes transactions and manages fraud proofing.

For ease of understanding, imagine a modular blockchain as a large company that divides its tasks into various departments: the finance department manages the money, the production department makes sure the goods are made, and the logistics department takes care of shipping.

With this division of tasks, each department can focus on its specialty, allowing the company to run more efficiently. Similarly, modular blockchains separate functions into specialized layers, allowing each layer to be optimized for a specific task.

Unlike a monolithic blockchain, which handles all such functions in a single layer, a modular blockchain allows each layer to be optimized for its specific task. This opens the door for innovation and efficiency that is impossible to achieve with traditional designs.