Appchain (applied blockchain) is a blockchain invented exclusively for the functioning of one specific application. The use of such tools gives developers more freedom to shape ecosystems, governance structures, and consensus algorithms for the decentralized applications they create.
How do Appchains function?
Appchains function the same way as the fundamental blockchain, but on top of the latter. They are app-specific, which is the primary distinction. Appchains rely on first-level (L1) blockchains in terms of security.
Because they do not compete with L1 applications for processing and storage resources, such systems are extremely configurable and have great performance potential.These solutions frequently include a utility token. It serves as the internal unit of exchange for the app, voting, and staking.
Appchains are supported by primary network validators (if they agree to send resources to a specific application).
Advantages of Appchains
Comparing a new method to L1, second-layer (L2) solutions, and side chains has a lot of benefits when developing applications. As already said, appchains bring customisation and boost the efficiency of systems without sacrificing security, since they rely on the underlying blockchain.
Direct use of L1 means competing with other programs for scarce processing resources while developing dapps. Because the developers have no control over the consensus protocol, this carries the risk of performance deterioration and a drawn-out platform update procedure.
It’s possible that a single software requires an excessive amount of resources due to competition between apps operating on the same network. As a result, fees rise (for instance, in light of the introduction of XEN Crypto), and transaction processing takes longer.
The user experience is enhanced by the cheap and predictable transaction costs offered by appchains.
Developers may need to do advanced customization and optimization of different criteria, such as throughput, finalization, security level, and accessibility, as the use of decentralized applications increases.
Appchains give conventional businesses a chance to explore Web3 without making the platforms accessible to the public right away. For instance, businesses may initially rely on a small pool of developers, demand KYC compliance from validators, and select particular services for cross-chain interaction.
The Disadvantages of Appchains
Appchains are “sharpened” for a single application, which is their primary distinction and potential drawback. Contrarily, L2 solutions can communicate with a range of dapps.
Appchains provide a limited degree of composability and isolation, which may cause liquidity fragmentation. Integrating cross-chain bridges essentially solves the issue, however they are frequently targeted by hackers.
Launching and maintaining the appchain may be a time and money waste if the program is not utilized frequently enough. Platform-specific validators can efficiently use other resources.
The work of the appchain can be complicated in a number of ways. For instance, in relation to the administration of extra infrastructure components like sequencers or validators.
Developers might not be able to use block explorers, “Remote Procedure Cal” (RPC) providers, indexers, oracles, fiat gateways, etc., which are ready-made solutions that come “out of the box.” There are benefits to developing L1 solutions, such as the accessibility of a large number of resources, infrastructure components, and developer tools (especially beginners).
Its abundance may make it easier to integrate with various habitats. Using L2, programmers can make minor adjustments to the coding and boost the scalability of services.
Due to their reliance on the primary blockchain, secondary solutions also provide a high level of security. For instance, Optimistic rollups technology enables Arbitrum and Optimism to execute transactions rapidly and submit “fraud evidence” to the main network.
What distinguishes Sidechains from Appchains?
Although sidechains operate a parallel network with two-way binding to the primary one, they are independent of L1 security. In contrast to L2, sidechains don’t send transactions to the primary blockchain. Appchains are made specifically for a given application (app-specific). On the other hand, sidechains can carry out any kind of operation. Their primary flaw is a lack of decentralization that results in decreased security.
Polygon Proof of Stake, a component of the Polygon project ecosystem, is one of the most well-known sidechains. In the latter, Polygon Edge, an open source development environment that enables L2 solutions creation, is also included.
Developers can build appchains with the help of some blockchain initiatives.
A network of parachains and Ethereum Virtual Machine (EVM)-compatible blockchains called Polkadot is linked to a central network (Relay Chain). The latter is an expert at verifying transactions across all connected platforms.
The Relay Chain uses a Proof-of-Stake consensus mechanism, where validators stake DOT (Polkadot’s native token).
Each group of validators is responsible for a specific parachain, appointed and supported by collators: they collect user transactions and validate blocks based on the Proof-of-Validity algorithm (proof of validity).
Collators are given a reward for acting as nodes; the amount of this incentive varies by parachain. There are only 100 parachain slots available in the Polkadot network. They are given out through auctions, when DOT holders select projects that will be connected to the Relay Chain afterward.
Slots in the parachain are only available for a limited time, up to two years. The spot is returned to the auction at the conclusion of this time frame. Moreover, parachains can act as a link between the Polkadot network and external L1 blockchains like Ethereum.
These solutions give developers access to all of the aforementioned advantages of appchains, as well as the freedom to select a management or economic structure that permits the use of utility tokens. The limited number of slots available during the auction is one of the key drawbacks of parachains. This limits the availability of such options.
The Polkadot team is developing pay-per-use parachains called parathreads. Without having to wait for the parachain auction, the approach will enable developers to submit the project code to the Relay Chain and run several collators.
In the future, parathreads that participate in and are successful in auctions can be upgraded to parachains. Ten thousand is the maximum number of parathreads that Polkadot will support. Relay Chain does not support smart contracts, which is another flaw in the ecosystem. The Polkadot network’s capabilities are therefore constrained.