04 Feb 2024

Why we did not include Celestia in the Quality Index

Celestia, or the TIA token, is now in the top 30 by market cap after outperforming since its launch in October. Hype doesn't equate to strong fundamentals, though. Read why we, for now, have not included TIA in our K33 Vinter Quality Index.
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The Celestia network is the coming to life of a novel idea from 2019 related to data availability and modular blockchains. The token hype is substantial, but the actual use of the network is so far not. In Celestia's defence, the network is young. But that doesn't change situation and there is, to our knowledge, no rollup with any traction to speak of currently using Celestia for data availability. One can, therefore, not talk of any meaningful use or persistent network effect yet. Hence, the TIA token is not included in the K33 Vinter Quality Index.The criteria for inclusion in the K33 Vinter Quality IndexThe K33 Vinter Quality Index is a selection of coins among the top 30 by market capitalization. Currently, the index includes 8 of 30 coins. The two most critical criteria for inclusion in the index are the use of the underlying protocol and signs of this use creating persistent network effects. After all, in an open-source world, everything is copyable with a few clicks. If a network does not build up any persistent network effects, it will simply be replaced by something similar in the future (not necessarily better – remember that active networks also can upgrade).The Celestia network is not yet used for data availability by any rollup with a lot of meaningful activity. Hence, almost by definition, it cannot have built any persistent network effects yet. Consequently, the TIA token can't be included in the K33 Vinter Quality Index.The exclusion does not mean that we are adamant that Celestia will not build any persistent network effects in the future. But the K33 Vinter Quality Index is conservative – show it first, and then we include you.That being said, there are other factors to question surrounding the TIA token – namely, how much willingness there is to pay for data availability. The selling point of data availability is being cheap. So, a question to wonder is also: If Celestia becomes popular, how much should it really drive up the TIA token price in the long run?What is Celestia?Celestia, the first blockchain network of its kind, launched its Mainnet Beta on October 31, 2023. The principle behind Celestia is that blockchains should be specialists in one or few tasks rather than doing all in one. The Celestia principle is dubbed modular blockchains (like legos), while the traditional way of all-in-one is called monolithic blockchains.The modular blockchain principle is a broader concept, and the Celestia Network addresses one component of modularity – data availability. Data availability is exactly what the word indicates: keeping data available for anyone to access it. Celestia's role will specifically, but in simplified terms, be the possibility for blockchain networks to outsource the storage and data availability of its blockchain to Celestia. This means that the nodes in a blockchain network using Celestia don't have to store the network history themselves, reducing the need for storage capacity and potentially improving the efficiency and scalability of the network.The TIA tokenThe TIA token is the native token of the Celestia blockchain. The place of the token within the network is similar to the smart contract networks, but FIL in the Filecoin network is perhaps an even better comparison. TIA is used to pay nodes to keep data available and for staking. Also, TIA can potentially be used as the native currency of rollups, if the rollup chooses to do so.
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