An Appchain, short for application-specific blockchain, is a customized blockchain designed to support a single functionality or application e.g., a game or a DeFi application. Unlike general-purpose blockchains like Ethereum or Solana, Appchains are tailored to meet the unique needs of a particular application, providing enhanced performance, security, and customization options.
Recently, numerous prominent crypto applications have started exploring and launching their application-specific chains, with several already active on Mainnet. As founders and developers seek innovative solutions to meet their business requirements, understanding and leveraging the potential of Appchains can offer substantial advantages.
This guide provides an overview of what Appchains are, why builders from various industry verticals are considering this framework, which types of applications benefit the most, and why you, as a founder, should build an Appchain.
Developers waited many years for blockchain technology to offer reliable Appchain infrastructure. While Cosmos and Polkadot introduced and popularized this concept in 2016, it wasn't until early 2021 that their networks were fully operational with IBC and Parachain functionality, respectively.
At the same time, Ethereum's scalability research was gradually implemented through Optimistic and Zero-Knowledge (ZK) Roll-ups, and Sidechains (collectively known as L2s). Scaling solutions such as Polygon, zkSync, Optimism, and Arbitrum were launched to increase throughput, increase Ethereum’s scaling, and reduce transaction load on ETH mainnet.
While launching and interoperating with Appchains has historically been difficult, the last few years have seen an acceleration of both developers and founders creating their own Appchains or thinking about creating one. Today, there are a variety of platforms providing Appchain infrastructure.
Appchains enables the capture of Maximum Extractable Value (MEV) and fee generation within the ecosystem. This helps developers and businesses optimize revenue by efficiently managing transactions and fees, creating a more profitable environment for their applications.
Appchains are designed for high transactions per second (TPS), essential for applications needing fast processing and minimal latency. A prime example of this is dYdX’s move to build a Cosmos-based sovereign Appchain, allowing the protocol to offer higher throughput to its users. Optimized blockchain architecture ensures smooth and efficient operations even under high demand.
Appchains offer a scalable infrastructure that grows with the application. They also provide interoperability with other blockchains, allowing seamless integration and communication across different networks, and enhancing the application’s functionality and reach.
Developers have full control over the user interface and user experience (UI/UX), enabling the creation of a customized, intuitive interface tailored to the application’s users. This significantly enhances user satisfaction, engagement, and activity.
Appchains give developers complete control over the entire technology stack, including the consensus mechanism, transaction processing, and data storage. This ensures maximum efficiency, security, and performance tailored to specific use cases.
Despite their numerous benefits, building an Appchain comes with its own set of challenges and limitations. These complexities can make the development process daunting for many founders and developers.
Building an Appchain requires managing a complex technical stack, including the blockchain infrastructure, consensus mechanisms, and application logic. Ensuring seamless integration of all components demands specialized knowledge and expertise.
Selecting the right technology stack is crucial. This involves decisions about the blockchain protocol, programming languages, and development tools that best fit your application’s needs. Poor choices can lead to inefficiencies, security vulnerabilities, and scalability issues.
Implementing an Appchain involves multiple steps, such as designing the architecture, developing the application, deploying the blockchain, and managing ongoing operations. Each step requires careful planning and execution to ensure the Appchain's success.
Layer Labs is an Appchain incubator dedicated to guiding founders, businesses, and developers through the complexities of Appchain development. Our comprehensive incubator services cover all aspects of Appchain creation and deployment, saving you time, effort, and capital, ensuring that your project is built on a solid foundation and primed for success.
We provide expert guidance on Appchain design, helping you choose the right technology stack and architecture for your application. Our experienced blockchain engineers optimize your Appchain for performance, security, and scalability.
Effective tokenomics and incentive structures are crucial for success. We offer insights and strategies for designing tokens, reward systems, and incentives that drive user engagement and ensure long-term sustainability.
Effective governance maintains the integrity and stability of your Appchain. We help develop governance frameworks and manage grant programs to support your Appchain ecosystem's growth and development.
Building a strong ecosystem and brand attracts users and developers. We provide comprehensive marketing and branding services to help establish a robust presence in the blockchain community and beyond.
Interoperability is key for Appchains. We offer bridging solutions to enable seamless interaction between your Appchain and other blockchain networks, enhancing your application's functionality and reach.
Securing funding and managing investor relations are critical for success. We support your fundraising efforts and investor relations, ensuring you have the resources needed to achieve your goals.
Appchains suffer from a degree of isolation and a limited amount of composability. In most cases, bridges sufficiently solve the issue of composability, but the limiting factor becomes broken atomicity. Atomic transactions are not often needed by applications, and the ones that do need this feature will be better served to remain on a monolithic execution layer.
Assets must be bridged between chains, causing liquidity fragmentation. Appchains need to choose their security model: use their token, an existing asset like ETH (e.g., Coinbase’s Base), or let validators choose any token (e.g., Osmosis).
Using their own token for security introduces the risk of token value dropping, which can undermine the app's economic security. Additionally, building an Appchain requires higher developer skill compared to smart contracts, though this is becoming easier.
App builders should be aware of the different design tradeoffs that come with using different infrastructure stacks. On one end of the spectrum lies Cosmos. For teams that want to own the entire technical stack, Cosmos is a great choice; the downside is the technical skillset required to build and maintain a full-stack Cosmos Appchain is the highest out of all of the available options. For the teams that might not need quite as much granular control over their tech stack (and thus less technical ability is required), there is less friction in using Celestia. Finally, Ethereum app-specific chains come with even lower degrees of sovereignty, but this structure grants developers access to unmatched liquidity and security. Below, we dive into these three main Appchain environments and the tradeoffs that come with each.
Appchains Running a Cosmos Appchain is technically intensive and involves significant business development efforts to bootstrap validator sets. Despite the challenges, Cosmos Appchains offer specific advantages for projects with unique requirements, such as privacy use-cases and advanced features like free transactions for unexecuted orders (dYdX), superfluid staking (Osmosis), and JavaScript-based smart contracts (Agoric). However, most projects may prefer modular execution layers like Roll-ups due to the capital required for a large validator set.
Celestia simplifies building blockchains by handling data availability and consensus, enabling easy deployment of rollups with built-in validity, finality, and censorship resistance. Rollups on Celestia can be upgraded independently from L1s, offering sovereignty and flexibility. Early projects like Dymension, AltLayer, and Eclipse showcase its potential. Celestia addresses the validator bootstrapping challenge by allowing chains to use its validator network and introduces Optimint for improved block publishing. This setup is attractive for smaller projects like games or NFT platforms, though the demand for modular sovereign rollups is finding its product market fit.
Ethereum-adjacent ecosystems now offer interoperability tools similar to Cosmos, such as the OP Stack, Arbitrum Orbit, and zkSync Hyperchains. Optimism's Superchain exemplifies this approach, providing interconnectedness, shared security, and scalability through horizontal scaling. Building on Optimism offers benefits like reduced transaction fees and enhanced node performance. Rollup as a Service (RaaS) providers like Conduit and Caldera facilitate the creation of rollups using Optimism and Arbitrum technologies, making high-performance, customizable blockchains accessible.
It is likely that most applications will choose modular execution layers rather than monolithic Cosmos chains because they often don’t have the capital required to bootstrap a large validator set or a deeply experienced technical team to run the require infrastructure, although there will be niche cases where all three development stacks will be used.
What is an Appchain?
An Appchain is an application-specific blockchain designed to support a particular application or suite of applications, offering tailored performance, security, and customization options.
What are the benefits of building an Appchain?
The benefits include MEV value capture, high throughput, scalability, interoperability, custom UI/UX, and full control over the entire tech stack.
What challenges are involved in building an Appchain?
Challenges include maintaining complex technical stacks, choosing the right technology stack, and implementing the Appchain effectively.
Should I transition my app to an Appchain?
Application-specific rollups are best suited for apps that have reached some notion of scale and product-market fit, have no requirements for atomicity, and benefit from increased user experience or higher performance when using dedicated blockspace.
How can Layer Labs assist in developing and incubating my Appchain?
Layer Labs offers comprehensive services for Appchain development, encompassing Appchain design, technical guidance, tokenomics, governance, marketing, bridging, and fundraising support. Choosing Layer Labs means gaining access to extensive expertise and a holistic approach to Appchain development, ensuring that your project is built on a solid foundation and strategically positioned for long-term success..
Appchains represent a revolutionary approach to scaling business operations by offering customized blockchain solutions tailored to specific applications. Unlike traditional one-size-fits-all approaches, Appchains optimize performance, enhance scalability, bolster security, and enable seamless customization.
The adoption of Appchains is rapidly gaining traction among industry leaders seeking innovative solutions to scalability challenges. These technologies empower businesses to maximize value capture and elevate user experiences while gaining unprecedented control over their technology infrastructure.
While embracing Appchains necessitates careful consideration of trade-offs such as technical complexity, security implications, and interoperability, navigating these complexities can be daunting. Layer Labs stands ready to guide and support you throughout the Appchain development journey, offering expert guidance and comprehensive assistance.
Application-Specific Blockchains: The Past, Present, and Future | by 1kxnetwork
The Appchain Universe: The Risks and Opportunities | by AllianceDAO
The Potential of Application-Specific Chains on Cosmos | by Bing Ventures
What are Optimistic Rollups?
What are Zero Knowledge Rollups?
DYDX move to a Cosmos-based Sovereign Appchain
Potential of Cosmos Appchains
Layer Labs is an Appchain and L2 venture studio & incubator. Our goal is to help builders navigate a fragmented service industry with high technical complexity while contributing to the Appchain ecosystem through in-house project development.
Website: https://layerlabs.app/
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