Modular vs. Monolithic: The Crypto Scalability War Heating Up in 2025

Crypto's next big battle isn't about prices—it's about architecture. As chains strain under record adoption, developers are picking sides: all-in-one monoliths or specialized modular stacks.

The case for going modular

Chains like Celestia and EigenDA are betting that separation of powers—execution, settlement, data availability—creates leaner, meaner networks. No more congested jack-of-all-trades blockchains.

Monoliths strike back

Solana and other single-layer stalwarts argue tight integration beats modular complexity. Their pitch? 'You wouldn't disassemble a sports car to make it faster.' (Tell that to the users paying $50 gas fees.)

Meanwhile, VCs are placing bets on both horses—because when in doubt, hedge. The only certainty? This infrastructure arms race will separate the scalable from the roadkill.

This expanded Google’s distribution far beyond the early web-adopters who knew to go straight to the Google.com homepage for the best search algorithm.

This was critical because web search is a bizarro business in which the law of supply and demand is flipped on its head — the more ads Google sold, the more it could charge for them.

This unique dynamic of “increasing returns to scale” (as the Acquired co-hosts call it) made web search a winner-takes-all market.

It also ensured that whoever got the most users first WOULD win that market, however good or bad their tech was.

We might soon learn if the same applies in crypto.

When one is the greatest number

Robinhood does not have the best tech in crypto — not yet, at least. 

After announcing its new offering of tokenized stocks yesterday, CEO Vlad Tenev said Robinhood would be issuing the new tokens on Arbitrum, but only “for a short time” while it builds its own blockchain.

It might, however, have the best distribution.

Given its branding, Robinhood’s 25.9 million account holders probably represent the cohort of retail investors most inclined to give new crypto products a try.

In addition to tokenized stocks, Robinhood will be offering perpetual futures and crypto staking.

I’m guessing that Robinhood’s tech in these categories won’t be as good as, say, Hyperliquid’s and Jito’s, respectively.

But much like Google’s early revenue-sharing deals, Robinhood is doubling down on distribution by offering a “2% match” on any crypto that customers deposit.

And Robinhood’s slick, mobile-first UX could play the same role as Google’s search toolbar: a distribution shortcut that brought a complex product to the mainstream.

Unlike search, crypto is probably not a winner-takes-all business because it doesn’t enjoy “increasing returns to scale” — anyone that’s been long altcoins recently will know that the standard laws of supply and demand still apply.

But the standard laws of counting might not.

As Robert Baratheon explains in Game of Thrones, one can be bigger than five in the same way that one clenched fist is more powerful than five waggling fingers.

“One army,” he says, “united behind one leader with one purpose” will defeat five armies with five leaders and five purposes. 

Similarly, Robinhood is betting that its unified offering of crypto services will defeat the crypto industry’s ever-growing offering of individual purposes. 

Crypto has been arguing about this for a couple of years now: Solana is the clenched fist of monolithic blockchains and ethereum is the waggling fingers of modular ones.

So far, that ever-heated debate has played out along technical lines: parallel execution, local fee markets, decentralized sequencers and other things I don’t totally understand.

Either approach could work, just as monolithic worked for Apple and modular worked for Microsoft. 

And both sides can claim victories this week: Robinhood is building an Ethereum layer-2 blockchain for tokenized stock trading, and tokenized “xStocks” began trading on Solana today.

So we might finally find out which approach to blockchains is faster, cheaper and more secure. 

But what if it’s distribution that really matters?

If so, crypto could turn out to be a winner-takes-most kind of business. 

Robinhood says its intention is to “make the technical part invisible” and offer “one platform for everything investing,” which sounds like a take-most-of-the-business kind of strategy to me.

Notably, that ambition was announced by a CEO in a WHITE pinstriped suit and silk cravat at a French seaside villa in front of a Robinhood-branded pool and the Mediterranean Sea (not yet branded). 

Could anything be further removed from crypto’s cypherpunk roots than that?

But crypto is a business now.

And distribution might make Robinhood its big winner.

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