What is the problem with public blockchain?

When Satoshi Nakamoto first released his Bitcoin blockchain in 2008, it was specifically designed for electronic cash transactions. This means it was built to serve the financial system that doesn’t really require high data consumption and customization. The Bitcoin blockchain did great for what it was built for. As the use cases and business opportunities of blockchain grew, there was a demand for more storage space or the block space and the need for faster transactions of data and information grew. It is when Vitalik Buterin built Ethereum as the general purpose computer and composability feature with faster transactions, we get to build more than just financial products on the blockchain.

As more projects were built on top of the existing layer 1 (L1) chain, these applications began to fight for more resources. Today on the general purpose computer, Ethereum, decentralized applications ranging from DeFi, SocialFi, Web3 Gaming, Metaverse, and NFTs fight for more block space thereby leading to network congestion. Network congestion costs slower transaction speed, higher transaction cost, and higher latency and it’s also more expensive to build on.

To solve the scalability of the L1 chain, developers started to develop scaling solutions like polygon, and a different consensus mechanism like Proof-of-Stake blockchains. Though these chains give faster transactions, and bigger blockspace, they are public blockchains where all the applications built on them have restricted customization for their user experience. Thus, the L1 chains and L2 scaling solution chains have the following drawbacks:

• Built for financial applications and not for applications like Art, Social Media, Gaming, etc.-

While L1 and L2 chains are built perfectly for financial applications, the use of blockchain have grown to other industries. Digital applications for Art, Media, Gaming etc require higher speed, more storage space and greater customizability which L1 and L2 chains are not capable of giving to them.

• L1 and L2 chains have limited block space and slower transaction speed-

Most L1 chains are slow in transactions and have smaller blockspace which results in higher gas fees. L2 scaling chain like polygon provides a great solution to this problem.

• Composability and interoperability issue-

While the Ethereum blockchain has a composability feature, Web3 gaming and media applications need a higher degree of composability and interoperability.  

This brings us to find a better solution to bring gaming, media, and other content on-chain.

What do developers need to build for web3 mass adoption?

As more applications are developed in the web3 space, we need a blockchain solution that is customizable, and scalable, while still decentralized and consensus validated. When we look at the L1 blockchains, most developers and builders want to have two key things:

• Convenience and comfortability-

Building a great product or service comes with having the right resources. Building on multiple public blockchains means a requirement to learn the skills and tools for each chain, which is a challenge for developers. So, developers need to have easy-to-use with their tools and better building environments on the specific blockchains instead of jumping to different chains for every project.

• Individual blockchain infrastructure-

To build a better user experience product and services, each developer needs one blockchain and one shared space of their own like web2 dev have their own dedicated space on AWS. Developers need a dedicated and specific blockchain where they can build, launch, and scale faster. This also helps to remove network congestion on the public blockchain.

For instance, the famous Axir Infinity, the pioneer of the Play-to-earn game was initially built on the Ethereum blockchain. As the game grew bigger and more users came to play the game, the demand for faster transactions and more blockspace made them build their own Ronin chain, a side chain compatible with Ethereum built specifically for the game, Axie Infinity. This helps the game with higher transaction speed and a greater degree of composability and interoperability.  

Application specific blockchain or Appchain is the solution.

“An application-specific blockchain, or appchain, is a blockchain that is exclusively designed to operate one specific application instead of multiple apps like a public blockchain is designed to do.”

It’s a “one app one chain” concept of a blockchain that is specifically designed for a specific app. Meaning, instead of building your decentralized application on a public blockchain and completing for blockspace, paying high transaction costs and weak performance with other applications, you can build a specific design blockchain for each application.

Building an Appchain brings many benefits but there are six key reasons on how they can help build your dApps:

• Better performance-

Building on a public blockchain means you are competing for blockspace, and as more dApps are deployed on-chain, there will be network congestion leading to an increase in transaction cost, latency and gas fees. But by building a specific chain, you have complete ownership over the chain blockspace, control over transaction cost and predictable gas fees. This will give better performance for the dApp. 

• Customizability-

Customizability might be one of the main reasons why developers need to build their own blockchains. Customizability comes in different forms for different applications, but the end goal is to get a tailor-made feature that works best for developers, applications and their users. Appchain can also help developers customize the throughput, finality, security level, permission-ing, composability and ecosystem alignment.

• Streamline building-

By building an Appchain, developers can keep a single mempool for their entire project, process transactions and interact within the chain more quickly and efficiently. This basically means having computing resources and infrastructure serving only one application.

• Scalability-

Better performance means better scalability that can handle any number of transactions and interactions in the chain without causing problems in the application performance. 

• Superior User Experience-

Building decentralized applications on an Appchain can give a much superior user experience, faster speed and responsiveness to read and write requests, adjustable and predictable gas fees and interoperability within the chain ecosystem.

• Value capture-

Building an Application specific chain can also bring a better and more rewarding business model. As all the resources and tools are within the ecosystem, developers can monetize them as per their demand and use cases. Developers can also build DeFi model staking and vesting for the chain tokens for more rewards and have the treasury within the ecosystem to capture more value. 

Though Application Specific Blockchains offer novel concepts of building applications that require a high level of speed, better performance and customizability, developers need to know a few drawbacks while developing Appchain. Some of the few drawbacks are:

• Appchain adds a degree of isolation to interact with other L1 blockchains,

• Creating a specific blockchain means undermining decentralization to a certain extent by moving the ecosystem to more permission-based blockchains,

• If the Appchain doesn’t share the consensus and execution layer with other public blockchains, liquidity will be fragmented thereby causing low liquidation.

• Economic and security insolvency in case the application token’s value goes down to zero.

• Huge cost of development and waste of resources if the application can be deployed on a public chain with similar performance.

• Developing Appchain will require more ecosystem support as the support system will be different from those of public chains.

Applications already building on Appchain.

Many projects and applications are already built on Appchain. There are blockchains that allow developers to build their own Appchain. Before we go on explore them, here are three key criteria developers need to take care of:

• Economic structure-

Developers need to know the cost per block size, token models, payment modes, etc.

• Governance structure-

How the chain governance is structured, shares of votes within the validators, developers and token holders.

• Consensus structure-

Whether developers want to go for Proof-of-work or Proof-of-stake consensus model, or other consensus mechanisms. 

So where can developers build their decentralized applications?

Here are some of the major blockchains that allow developers to build Applications Specific Blockchain.

• Polkadot Parachains-

Polkadot parachains is an L1 EVM-compatible blockchain connected to a center blockchain Relay chain. Raley chain, a proof-of-stake consensus mechanism blockchain is the foundational layer responsible for security, consensus and network interoperability. It allows parachains (parallel chain) to process transactions, offer specific use cases and execute smart contracts.

There are about 185 projects on Parachains from NFTs, Gaming, DeFi, Metaverse and many more.

• Avalanche Subnets-

Avalanche Subnets uses a unique tri-blockchain infrastructure model:

1. C-chain or contract chain which executes smart contracts,

2. X-chain or exchange chain to handles the exchange of assets,

3. P-chain or the platform chain to coordinate validators and subnets (Appchain).

Validators secured and validated all three chains to form a primary network to create scalable and customizable blockchains called Avalanche subnets.

Crabada Swimmer Network Subnet and DeFi kingdoms are major projects on Avalanche subnets.

• Polygon Supernets

Built on the L1 Ethereum blockchain, Polygon Supernets is a dedicated chain that allows developers to build EVM-compatible Appchain. Developers can choose zk L2 or a non-zk L2 for their dedicated chain. Developers can also on a shared chain using zkEVM or choice to connect other supernets for scaling solutions.

Projects on polygon supernets-

@vorztoken - A tokenized metaverse social media.

@BoomLandGames - Web3 play-and-earn game.

• Cosmos Zones

Cosmos provides a cosmos SDK to build application specific blockchains. Cosmos ”zones” are Appchains connected to the Cosmos Hub to create interconnectedness in the cosmos network. Appchain as “zones” on the Cosmos are connected together through Inter-blockchain communication protocol (IBC), they are operated autonomously and have their own validators and validate transactions.

dYdX, a decentralized exchange and Osmosis, the largest DEX on Cosmos are popular projects in Cosmos Zones.

• Ankr AppChains

Ankr AppChains is an infrastructure solution to build application specific blockchains, it is built on Binance Smart Chain, Polygon, and Avalanche. They offer RPC endpoints, Block explorer, Direct staking UI, Testnet faucet, Exchange-Readiness Program, and Validator setup.

Appchain will give Specialization, Scalability and Better Experience 

Web3 space is growing continuously even at the time of “crypto winter,” innovators and builders are bringing better solutions for every problem. The future of web3 is composability, interoperability, and scalability, layer 1 chains and layer 2 scaling blockchains solve greatly for those. To onboard the next billion users in web3, we need to build a better user experience, and a specialized and scalable application and application specific chain is the right answer to that. For instance, web3 games, metaverse, and social media will need better user experience, DeFi will need a better scalability chain and together all these applications will need a specialized chain at the execution layer while still benefiting from the layer 1 chain on security and consensus layer.    

Twitter: Kuzote Lohe