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AppChain is flourishing: Analysis of origins, trends, and future prospects.
The Rise of AppChain: Exploring Origins, Development, and Future Prospects
The Inevitable Trend of AppChain Development
In 2023 and 2024, more and more dApps are announcing their transformation into AppChains. This trend is primarily focused on areas such as DeFi, gaming, social, and AI. The development of AppChains has become inevitable, thanks to the maturity of modular technology, widespread validation of universal Rollup layer two networks, the increase of RaaS platforms and the improvement of services, as well as the push from dApps for competition for public chain block space resources, optimization of end-user transaction costs, and customization of token economies.
The upgrade of dApps to AppChain will not immediately transform into a highly valued infrastructure layer. The advantage of AppChain lies in promoting more high-frequency on-chain transactions through low-cost transactions, utilizing data accumulation to enhance user product experience, creating user stickiness, and thus achieving network effects. Therefore, the core of AppChain development still lies in its unique application barriers and traffic.
Exploring the Origins of AppChain
The origin of AppChain can be traced back to the Cosmos project. Cosmos is known for its modular and pluggable design philosophy, which separates the virtual machine from the consensus engine, allowing developers the freedom to choose the framework for building the virtual machine and to customize the key parameters of the consensus engine. This design enables various applications to exist in the form of independent chains and demonstrates unique advantages in terms of flexibility and sovereignty.
However, the overall growth trend of Cosmos AppChains has not continued, and the number of new AppChains has not significantly increased. This is mainly because the sovereignty granted to AppChains by Cosmos is too strong, and before the launch of the ICS proposal in Atom 2.0, the high security, startup, and maintenance costs of AppChains were the main reasons.
In addition, Cosmos has shortcomings in the attractiveness of AppChain regarding the chain's Liveness characteristics, developer documentation resources, and community culture, which have negatively impacted the onboarding of new AppChains.
Catalyst for New AppChains
The rise of the new AppChain is mainly due to the popularization of the modular blockchain concept, the maturity and widespread validation of general-purpose Rollup Layer2, the development of interoperability and liquidity aggregation layers, as well as the rise and improvement of RaaS platforms.
Optimism, as the first Rollup Layer 2 to launch on the mainnet, marks the practical implementation of modular blockchain theory. Subsequently, other Rollup solutions have also introduced similar concepts, such as Arbitrum Orbits, Polygon CDK, StarkWare AppChain, and zkSync Hyperchains. This enables dApps to use AppChain as a new way to implement business logic.
RaaS(Rollup As A Service) platforms have further simplified the development process of AppChain. These platforms can help dApps quickly select different Rollup frameworks, simplify the complex steps in the AppChain development process, provide customized core features, and support maintenance and optimization after the application is launched.
The infrastructure and related functions surrounding AppChain are also advancing rapidly, with integrated support for features such as Alternative Data Availability, custom Gas tokens, and native account abstraction. At the same time, aggregation and unified layer solutions, such as Optimism's Superchain, Polygon's AggLayer, Caldera's Metalayer, and zkSync's Elastic Chain, aim to improve interoperability and liquidity aggregation between AppChains.
Advantages and Disadvantages of New AppChains
Advantages:
Disadvantages:
Core Considerations for Deciding on AppChain
When deciding whether to upgrade or choose an AppChain, project parties are advised to follow these principles:
Relying on the characteristics of existing public chains: If you are highly dependent on other dApps on the public chain, it is recommended to continue using the existing dApp solutions.
Custom features needed: If the current application is difficult to support specific business needs, and these features are critical to business development, consider selecting or migrating to an AppChain.
Cost-sensitive: If end users are sensitive to blockchain space resources, or wish to reduce losses such as MEV, AppChain may be a better choice. For high-frequency interaction scenarios, AppChain can provide higher resource efficiency and lower transaction costs.
Building and Developing the Moat of AppChain
The moat of the AppChain is always its own application business. The key to success lies in deeply exploring market pain points and building the PMF( Product Market Fit) of the product application. Relying solely on the narrative of the AppChain's chain infrastructure is not an effective way to build a moat.
AppChain should focus on development as the main priority, with promotion as a secondary aspect. A steady and solid development approach is more suitable, starting with the formation of core functions before developing new features and product lines. In terms of the upgrade and iteration of the AppChain, it is also possible to integrate deeply with existing application functions multiple times.
Taking Debank as an example, its core asset management functions, diversified and fine-grained payment features, as well as its synergy with Rabby Wallet, all demonstrate how to build a core moat for applications and provide valuable references for the development route selection of other AppChains.
Token Gameplay Design Concept
When building the token economic model of the AppChain, it is recommended to adopt a naturally evolving (Organic) strategy:
Overview of Well-Known AppChain Projects
Investment Analysis Framework
When conducting investment analysis, the following framework can be used:
Outlook
There is an optimistic expectation for the development prospects of AppChain. As a core platform that supports user activities, AppChain plays an important role in diverse fields such as social networking and gaming. In the future, these AppChains will not only provide users with a rich interactive experience but also drive innovation and development in related industries through their unique technological advantages.