Web3 has experienced rapid expansion over the years, as an explosion of blockchain applications have necessitated more scalable solutions to become ever more urgent.
AppChain has emerged as an industry buzzword to refer to interoperable blockchain networks designed specifically to offer more scalable, efficient, and flexible infrastructure for decentralized apps (dApps).
In this article, we will look into what AppChains are, their advantages, current AppChain projects being undertaken as well as future prospects of AppChains.
What Is Appchain?
Appchain (Application-Specific Blockchain) is a type of blockchain platform tailored for operating specific applications with unique requirements, providing customized functionality which enhance performance, scalability and effectiveness for specific use cases. Compared with conventional blockchains which exist as one size-fits-all platforms. Appchain provides tailored features which improve performance, scalability and the effectiveness of specific use cases by meeting them more precisely than its traditional counterparts do.
Appchains v.s Blockchains
Appchains and Blockchains both represent decentralized on-chain technologies; however, their purposes, designs, and functionalities vary considerably; Appchains often having one purpose while Blockchains having many more.
Purpose: Appchains typically focus on specific applications that meet targeted use cases while Blockchain platforms offer support for an assortment of uses cases and transactions.
Customization: Appchains offer highly tailored customization that caters specifically to project needs, while general-purpose Blockchains generally adhere to standardized protocols with one size fitting all approach.
Performance and Scalability: Appchains are optimized to achieve peak performance within their domain, adeptly handling any scalability challenges facing their application(s). On the other hand, general-purpose Blockchains may face difficulties scaling to handle various uses cases.
Interoperability: Many appchains feature inbuilt interoperability capabilities for seamless interaction with other systems; on the other hand, connecting different general-purpose blockchains often requires additional efforts or workarounds requiring extra layers or bridges to connect them together.
Blockchains provide an extensible foundation for decentralized applications, while Appchains specialize in offering highly targeted, performance solutions tailored specifically for individual project requirements, providing more focused optimization capabilities.
An Overview of AppChain Protocols
AppChains can be created through several blockchain networks that offer unique benefits for developers:
- Polkadot Parachains: Connect multiple blockchains to a central Relay Chain to enhance validation, with customizable governance and economic models, native token support, customizable token distribution mechanisms and limited to 100 Parachains in total - though no smart contract functionality exists on Relay Chain itself.
- Polygon Supernets: Leveraging Ethereum's security and Polygon Edge's flexibility to build EVM-compliant blockchains that feature dedicated validators, flexible consensus models, customization features and extensive interoperability support.
- Cosmos Zones: Utilizing a hub-and-spoke model, application chains connect to the Cosmos Hub for data and token exchange. Key advantages include Tendermint Core for fast transactions, Cosmos SDK development for development purposes and governance by top 100 ATOM holders.
- Avalanche Subnets: These three chains with various functionalities support L1 or L2 blockchain subnets that use $AVAX for staking. Utilizing Snowball consensus algorithm for fast transactions and high scalability.
Each blockchain network offers unique benefits when developing AppChain projects, meeting various project specifications and scaling needs.
The Benefits of AppChain
More developers are opting for AppChains over smart contracts when managing shared block spaces for three key reasons.
High Performance
As DApps vie for block space on the same network, popular DApps may consume significant resources that cause transaction costs and network latency to increase for other DApps like Polygon or Arbitrum.
AppChains enable project teams to predict transaction costs and network latency within predictable ranges for increased end user satisfaction.
Customization
As DApps grow into larger markets, developers need to continue improving the products for users.
Larger applications must balance various design considerations such as throughput, finality, security levels, permissions, composability and ecosystem coherency when considering design considerations.
Validators typically impose high performance demands upon hardware (for instance running SGX and FPGAs to generate zero-knowledge proofs).
AppChains provide traditional institutions a way into Web3 without immediately taking an entirely permissionless approach. Companies, for example, can require validators to undergo KYC; prescreen engineers who wish to build applications on their network; and select starting/ending points for cross-chain interactions.
Value Capture
While general-purpose scaling solutions reduce transaction costs while upholding security and providing developers with a satisfactory experience, these do not offer them many opportunities to capture additional value.
Existing products demonstrate strong commercial viability of AppChains, enabling developers to fork existing protocols within other ecosystems and generate income (for instance fees from AMM mechanisms or NFT transactions).
AppChains would allow mods to expand these games' IP by expanding it onto rollups, thus sharing block space economically while reaping other economic advantages.
AppChains face challenges as well. Here is what to keep in mind while considering using AppChains:
Resource Wastage
AppChain can become resource waste if applications don't utilize all their potential resources on-chain. With validators dedicated specifically for AppChains, any excess resources could be deployed towards supporting other ecosystems instead.
Additional Development Costs
AppChains development differs significantly from that of smart contracts in that their development involves multiple steps with technical difficulties in managing infrastructure (validators or sequencers) becoming even greater than when working on contracts themselves.
Limited Ecosystem Tools and Technical Support
There are currently no "ready-made" resources such as block explorers, RPC providers, indexers, oracles, fiat gateways and ecosystem funds that exist as "off the shelf."
The Emerging Market of AppChains
Due to their inherent downsides in creating independent ecosystems, AppChains may be better suited for applications possessing certain characteristics:
- Attaining scale in terms of user base, protocol revenue, TVL (Total Value Locked), product-market fit or other measures of success; or 2. Showing significant product or performance advantages within their dedicated blockchain space.
- Needing lower security and indivisibility levels; such as P2E games, NFTs, or crypto social platforms.
Conclusion
As Apple is often associated with offering superior user experiences, blockchain developers can take a similar route by harnessing AppChains for Web3 applications development.
AppChains may not always be appropriate. Engineers should carefully consider what needs their applications have before investing time or resources into development.
Further, many factors can have a substantial effect on an economic security model's security model, monetization strategies, platform defensibility and natural growth of stack value as well as any secondary effects it might have on crypto market structures. We look forward to watching AppChains develop in coming years!