But Why Appchains?
Useful and performant applications will likely drive crypto’s mainstream resurgence. But the developers building them are plagued by a fundamental question: what’s the best chain to deploy on? Recently, application-specific blockchains ("appchains") have posed a compelling alternative to general-purpose Layer 1s.
An appchain, as the name implies, is a blockchain intentionally designed for a single application. The level of customization it permits is analogous to building a dream home instead of renovating an apartment (that requires paying for amenities you don’t use). In other words, appchains offer the most adaptable and cost efficient framework.
For example, they allow developers to optimize the consensus mechanism for speed and security, and to implement bespoke transaction fees that serve the application's specific use case (not too dissimilar from the promise of Account Abstraction). Importantly, they can achieve significant scalability without sacrificing decentralization, effectively sidestepping the classic blockchain trilemma.
Appchains have already begun to demonstrate their value, particularly for performance-intensive applications like decentralized exchanges. In fact, dYdX, a derivatives exchange, recently migrated its on-chain deployment from Starkware (and previously Ethereum) to an appchain (using the Cosmos SDK). This type of "chain-hopping" has become increasingly common across crypto projects and reflects the difficulties of determining where to build.
Looking forward, the rise of appchains could represent either a major, permanent shift in developer attitude or a temporary distraction from the steady march of L1s. As developers continue to experiment with and realize the benefits of a specialized chain, we may see an uptick in projects pursuing this path. Ultimately, however, appchains’ longevity and relevance will be determined by users’ willingness to congregate on them.
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Weekly explorations into emerging crypto trends and how to navigate 2023 from the Slow Crypto Team, Sam Lessin, Clay Robbins, and Caroline Cline.