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In the early days of the Internet, it was much easier to define what the technology was and what it was useful for. In the same way, coming up with a comprehensive definition of blockchain technology was once much, much simpler. What Satoshi originally envisioned as a “peer-to-peer system for digital cash” has evolved significantly from those early years. As different blockchains emerge, all with varying use cases and tradeoffs, the definition of what exactly constitutes a blockchain has become much more fluid and dependent on the context.
While many of the early blockchain networks were initially built with ambitions of being generic computing layers that will house all kinds of applications and transactions, we are deviating from this model as the demand and versatility of the decentralized space continues to rise. Isolated blockchains simply will not have the capacity or the specifications to cater to the broad variety and increasing number of applications being launched, similar to how a single computer cannot cater to all the internet demands of users worldwide.
An Appchain-focused future is currently being built whereby blockchain networks and side chains are being designed for specific types of applications. This new Appchain thesis states that utilizing separate chains will be the preferred model to house applications related to DeFi, gaming, NFTs, or countless other implementations of decentralized technology.
A future where Appchains are prevalent will address critical bottlenecks currently present in the blockchain ecosystem. In this article, we will present the history leading up to the Appchain thesis and also identify the bottlenecks which an appchain future will address. Readers will learn why the Web3 space needs an Appchain environment and how startups like Stardust are building next-generation tools for developers to build assets that easily deploy and migrate on multiple blockchain networks.
A brief history of the Appchain Thesis
The Appchain thesis came to the limelight as the blockchain industry saw its first signs of mainstream adoption in 2017. The increased public demand for blockspace to serve use cases such as blockchain-based crowdfunding and gaming applications like CryptoKitties made it evident that developers needed much more capacity to bring blockchain to the masses.
In the same year, pioneers like Cosmos floated the idea of a novel Inter-Blockchain Communication Protocol (IBC) for connecting application-specific blockchains, thus publicizing the concept of an “internet of blockchains.” Cosmos would enable the launch of private Ethereum chains and bridging assets across the different networks.
App-chain solutions began coming online in 2018, with the launch of the LoomSDK for the gaming-focused Loom Network being one of the highlights. Loom became the go-to option for game developers and saw significant growth until the following year’s bear market pushed the industry towards consolidating from app-specific chains to single L1s.
Meanwhile, other ecosystems, such as Axie Infinity, Sandbox, and Neo District, experimented with different sidechain solutions to serve the growing demand from blockchain gamers. These solutions proved especially helpful at the time. They provided a haven for players to enjoy the first generation of blockchain games without the ridiculously high fees or slow settlements that plagued L1 networks.
Fast forward to the present, the Web3 economy is in full swing. There are thousands of applications across different sectors and chains, including decentralized finance (DeFi), digital identity, non-fungible tokens (NFTs), Metaverse, and blockchain-based gaming. The emerging industry is already seeing an adoption rate similar to the internet in its early years and is on track to onboard one billion users within the next decade.
However, the biggest lesson from the first decade of blockchains is that application-specific chains are the only way to scale the technology to mainstream adoption. A world where a single L1 scales to serve billions of users and the myriads of exciting Web3 use cases is simply impossible.
What the Appchain thesis is solving
The Appchain thesis addresses two significant pain points for blockchain developers: scalability and the idea that diverse applications must deploy on a monolithic network. This section examines these problems and how an app-chain environment provides a solution.
- Scalability
“No matter how many transactions per second (TPS) a blockchain has, it will never be enough. 8, 15, 10k, 100k, 1m+, blockchain will always reach that ceiling as many applications grow and scale” – Canaan Linder, Stardust CEO
Layer-1 blockchains will ultimately always face new limitations as the number of applications on it grows and scales. It is helpful to consider a hypothetical case where a monolithic blockchain processes one million TPS; applications that take up several micro-transactions will eventually breach that ceiling as it onboards more users. Current Layer-1 solutions such as Solana and Avalanche have faced similar limitations resulting in network outages, congestion, and fee spikes.
The Appchain thesis draws insight from the internet’s success in the Web1 and Web2 era to solve Web3’s constraints.
The early internet scaled through the adoption of interconnected application-specific servers managed by different providers. Amazon Web Services (AWS), for instance, has grown exponentially, not by having a single computer with more RAM added yearly, but through running individual servers that get faster as the years go by.
Similarly, it is easy to envision a world where the most widely adopted Web3 apps like Uniswap will migrate to an app-specific chain as usage increases. Such a move allows each ecosystem to consolidate its growth, guarantee a seamless user experience, and bring more value to all stakeholders.
- The One-Size-Fits-All Fallacy
“Blockchain networks like Polygon, AVAX, and Cosmos should be compared to an operating system. Different operating systems work better for different applications. There will never be “one” to rule them all.” Canaan Linder, Stardust CEO
The idea that all decentralized applications should live on a monolithic chain ignores the reality that blockchains such as Solana, Polygon, and Cosmos are akin to different operating systems which work better for diverse applications. For instance, Polygon prioritizes the provision of SDKs to scale Ethereum-based dApps and rollups, while Solana is designed to support micropayments and similar use cases.
An appchain environment enables developers to harness a blockchain’s potential fully by customizing each chain’s design to meet a specific need. In a real-world example, an app chain dedicated to an NFT exchange would require fewer compute and validator resources compared to a DEX with several order types and liquidation bots. The same comparison can be made between a DeFi lending protocol and a Web3 gaming platform, with the latter requiring a high throughput to scale.
In an ideal appchain environment, developers can tap into multiple chains for the same use case. Stardust, for instance, provides a secure infrastructure for blockchain game developers to launch on different chains while building their ecosystems. Stardust simplifies the game development process by providing a single API and dashboard for clients to manage gaming assets across other chains simultaneously. Thus, game developers can focus on building cutting-edge gaming environments without worrying about scalability.
Why Web3 Gaming Needs an Appchain Environment
The Appchain thesis is especially useful for Web3 gaming, which has an addressable market of over three billion users. Considering that a typical Web3 game features micro-transactions such as account management, modifying gaming characters, trading assets, and social interactions, these features mean gaming applications are inherently compute-intensive and prone to high gas fees.
The status quo of monolithic blockchains passing these transaction costs to gamers and developers is not feasible in the long term. Even a $0.0005 fee model would add up to a significant amount as the number of users and transaction volume grows. In stark contrast, a purpose-built Appchain reduces these costs by isolating game developers from other Web3 ecosystems competing for blockspace.
Another benefit of such a purpose-built system is that it empowers good developers by providing them with familiar tools and composability across multiple chains. For instance, using tools such as Stardust’s blockchain-agnostic APIs, developers can deploy assets that can be seamlessly minted, burned, and transferred between several blockchain environments. The solution empowers developers to launch blockchain-based games in record-breaking time with a unified dashboard for managing players and NFT assets on multiple chains.
Appchain is the future of blockchain and gaming
The Web3 industry is following a similar growth curve as the internet in its early days. Without a doubt, the opportunities inherent in this exponential growth is beyond exciting. However, to reach this level of adoption, the gaming industry must address its scalability issues and provide an environment for developers to launch mainstream-scale applications across different verticals.
The Appchain thesis leans into the lessons learned from scaling Web1 and Web2 to scale gaming ecosystems into a similarly developer-friendly, reliable, and low-cost future. The rapid adoption of the principles of the appchain thesis holds considerable promise for game developers and has promise to enable the onboarding of one-billion players within the next decade.
This content is sponsored by Stardust.
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