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Web3 appchains, the future of DApps

As Web3 attracts more users across the globe, one thing is certain—increased demand for network resources leads to lower performance and higher transaction fees on the network. This can be evidenced by the many expensive and failed transactions that occur during a popular NFT drop, or on a DEX in a bull market. And while as much as we embrace Web3 and its potential, this is one aspect of it that we would prefer to do without. Modern problems require modern solutions, and appchains aim to be just that.

The limitations of using a public blockchain as its base layer for DApps can now be mitigated with their own dedicated chains. As we progress further into Web3 territory, appchains are becoming the thing that could take us to the next stage of adoption. Here at Chainstack, we are excited to offer this product to all the BUIDLers out there.

What are appchains?

With Web3 on the rise, developers need a streamlined method to create applications that will shape the digital future. However, without dev-friendly tools and infrastructure for their projects, these revolutionary ideas remain out of reach. Developers need access to specialized resources so they can unleash their full creativity with every innovative idea.

Appchains are another step forward in Web3 allowing developers to BUIDL and scale DApps on application-specific blockchains. Each application operates as its own specialized blockchain, providing a strong foundation with improved security and scalability. With other factors, they can also provide interoperability with established infrastructure.

Transactions on appchains are processed out of their individual mempool, and gas fees for transactions can be as low as the developer decides them to be. These two factors enable appchains with the ability to process transactions much faster than any L1 can. These advantages in speed and costs with DApps built on appchains have the potential to bring in the next wave of Web3 users.

Appchains provide a powerful platform for DApps, allowing dedicated resources for individual applications that maximize efficiency and performance. With each app having its own autonomy on an independent chain, there’s no need to battle over shared computational or storage resources on the network—freeing up developers to focus solely on delivering the best possible user experience.

Architecture of appchains

The architecture of an appchain is flexible and modular in its design, as it gives developers the freedom to customize the chain and have total control over its mechanics. What this means is that the appchain’s economics, governance models, and consensus mechanisms are all determined by the developer—it is possible to create a chain for virtually any use-case scenario.

The appchain’s architecture can be broken down into several layers:

  • The Network Layer handles communication between different components ensuring secure transactions across nodes present in a peer-to-peer (P2P) network along with other networking technologies used by them.
  • The Application Layer provides an interface to interact with the chain through libraries like web3.js and ether.js, SDKs, or APIs while also providing users access to data stored by it via databases or indexing systems within its Data Layer.
  • The Data Layer allows for efficient storing and management of information. It contains databases, data storage solutions, as well as specialized indexing systems to ensure optimized access and organization.
  • The Consensus Layer ensures all participants in the appchain agree on its state using consensus algorithms such as proof-of-work or proof-of-stake.
  • The Smart Contract Layer contains smart contracts to define rules and logic for a specific application while also executing business logic on it.
Figure 1: The architecture of an appchain

Why use appchains?

Appchains have a modular and decoupled architecture. This offers a variety of advantages that make them an attractive choice to consider when exploring blockchain solutions. From scalability and interoperable features to lower risk of vulnerabilities, appchain technology is revolutionizing the way we utilize distributed ledger technologies.

Scalability

Unlike traditional blockchains, which may become congested and slow due to heavy traffic, appchains are designed to be highly scalable with increased transaction volume and faster processing speeds per second—providing more efficient access for a larger number of individuals simultaneously.

Flexible fees

Appchains provide a more cost-efficient way to conduct transactions. With flexible fees, these chains provide businesses and individuals with new ways to manage digital transactions more cost-effectively. This means that everybody can now use digital payment services for everyday purchases in an easy and economical way. Through the convenience of appchains, users can quickly and conveniently send and receive funds with ultimate flexibility.

Customization

Appchains offer a new level of functionality to conduct secure and reliable transactions in Web3 by creating individual, purpose-built chains for different types of activities—such as supply chain management or identity verification. This opens up previously unimaginable opportunities in many industries across the world.

Security

Appchains offer a robust security solution for blockchain networks and help organizations keep sensitive information secure by managing it on separate chains. This not only helps preserve the integrity of information but also adds an extra layer of security to the network to defend from malicious threats.

Privacy

Appchains provide users with extra security and privacy when making transactions. By operating on a private chain, these transactions are kept out of sight from the rest of the network. This helps keep sensitive information secure and personally collated. No block or associated data needs to be broadcast onto the network—ensuring transferred data remains between the user and the network. This creates an extra layer of discretion that further promotes user privacy and data ownership.

When it comes to Web3, appchains provide developers with numerous advantages over public L1 networks. This makes them a great alternative for developing powerful applications. They offer developers the enhanced ability to create applications on customized networks tailored specifically to their needs—and with dedicated access at a fraction of the cost. This improves accessibility and user-experience amongst all users.

How can appchains be used?

As technology improves and Web3 solutions become widely available, the ways in which they can improve business and lifestyle have countless possibilities. We have only scratched the surface with this technology, and some of those possibilities are rapidly becoming realities. There are already various use cases driven by Web3 innovation on the horizon, along with solutions to help bring new and innovative possibilities to life.

Some of the traditional Web3 uses would be gaming, NFT marketplaces, DeFi, and metaverse projects, but here are some use-case scenarios for more traditional industries.

Financial systems

Appchains enable a new form of highly secure and resilient financial applications. These innovative tools make it possible to build cryptocurrency exchanges, peer-to-peer lending platforms, and a myriad of other secure applications with reduced risks and high potential returns.

Businesses of all sizes can leverage this cutting-edge technology to venture away from traditional banking models toward the benefits of blockchain technology. Such exciting new advancements have incredible potential for transactions, asset tracking, micropayments, and more.

The following are some use cases where blockchain technology can be adopted in the banking and financial industries:

  • Stock exchange and share trading
  • Crowdfunding and investing
  • Syndicated loans
  • Credit reports
  • Accounting, bookkeeping, and auditing
  • Insurance

Supply chain management

Appchains are a powerful tool to create more efficient and transparent supply chain management systems. With improved visibility, these solutions can track the journey of goods from their origin to their destination. It enables real-time tracking of this critical information throughout the entire system. This results in greater control and oversight for businesses in multiple segments.

Enterprises are thus able to gain visibility into their operations that may have been previously out of reach. Appchain technology has become the go-to solution for organizations looking to increase transparency and accuracy along the supply chain. With access to oversight throughout various steps, appchain solutions offer increased security and reliability from source to destination.

Here are some use cases of blockchain on the rise in supply chain management:

  • Synchronize logistics data
  • Track shipments
  • Automate payments
  • Verify source of materials
  • Protect from tampering

Identity verification

Appchains provide the underlying technology for decentralized identity and credential verification, revolutionizing how organizations securely protect and access, validate, and exchange data. Leveraging an immutable ledger system, entities can be verified without any third-party interference. These verifications can have a multitude of applications that simplify data governance and enhance security in numerous scenarios.

The blockchain can provide some solutions in identity verification such as:

  • Digital credentials
  • Digital health pass
  • Immutable documentation
  • Trustless background checks
  • Fraud prevention

Voting systems

Appchains provide a secure and transparent platform for voting systems. This technology is highly dispersed, making it resistant to tampering and fraud. Utilizing the principles of blockchain technology, appchains allow for more confident votes with greater assurances of security and accuracy. With this platform, elections can be organized with unprecedented reliability thanks to blockchain’s capacity to verify credentials and securely manage digital assets.

These are some ways we can see voting systems impacted by the blockchain:

  • Digital voting systems
  • Real time votes and polls
  • Fast, secure, and secret ballots
  • Automatic total vote calculations

Predictive markets

Appchains can be used to develop decentralized platforms for prediction markets. These complex platforms offer users the ability to buy and sell predictions about potential future events. An array of predictions from different markets can provide a comprehensive overview of hypothetical outcomes. With appchains, it’s possible to get a unique insight into what might transpire in the future.

The following are some ways blockchain can facilitate in predictive markets:

  • Determining odds of an event
  • Collecting pool of funds
  • Paying out the winnings

Which appchains to use

Next, we’ll take a look at four popular appchains—Avalanche Subnets, Polygon Supernets, and StarkEx Apps—and compare how they work and what they offer.

Avalanche Subnets

Avalanche Subnets are sovereign networks of validators that work together to reach consensus on the state of one or more blockchains. The Primary Network is a special Subnet that houses Avalanche’s three built-in chains: Platform Chain (P-Chain), Contract Chain (C-Chain), and Exchange Chain (X-Chain).

Network security is at the subnet level and can consist of multiple VMs. Each Subnet validator must also validate a node on the Avalanche Primary Network. VMs on Avalanche make it easy for developers to create application-level logic without having to worry about networking or consensus protocols.

With the power of the Avalanche Virtual Machine and the EVM compatibility of the C-chain, Subnets provide a range of advantages including independent token economics, compliance requirements for validators, application-specific requirements for validators, support for private blockchains, separation of concerns between different blockchain networks, and incentives provided by subnets owners to attract Avalanche validators.

Figure 2: The Primary Network is a special Subnet; Source Avalanche

Polygon Supernets

Polygon Supernets is a blockchain stack designed to simplify and accelerate blockchain development. It utilizes the Istanbul Byzantine Fault Tolerant (IBFT) consensus mechanism supported in two methods as proof-of-authority (PoA) and proof-of-stake (PoS).

Validators are vetted by Polygon and must stake Matic tokens on the mainnet before they can validate the network. They are instantly penalized with the staked amount for misbehavior. This is to achieve maximum network security and protect against malicious activities by any dishonest nodes in the network.

Supernets have built-in EVM compatibility using Polygon Edge, which allows Ethereum developers to easily port their smart contracts. There is a plug-and-play compatibility with existing Web3 tools such as Solidity, Hardhat, ether.js, etc. This provides developers with a smooth integration into the network without modifications. Additionally, this provides interoperability with other EVM compatible blockchains.

Figure 3: The architecture of a Supernet; Source Polygon
Figure 4: The modular Edge architecture; Source Polygon

StarkEx Apps

StarkEx is an L2 scaling solution on the Ethereum network, and delivers ultra-fast performance and lower transaction fees. It’s designed for creating DEXs and DeFi applications that need to be built quickly with unparalleled scalability. It harnesses the power of zk-rollups, an advanced zero-knowledge proof technology that allows for multiple transactions to be packed into a single one; and reduces bottlenecks caused by excessive demand. This expedites network throughput and keeps gas fees low, allowing users to enjoy faster than ever transaction confirmation times.

StarkEx is an ideal platform for businesses and investors, providing a secure and decentralized environment to trade both fungible and non-fungible tokens (NFTs). Using Ethereum blockchain, all transactions are fully auditable. In addition, advanced financial instruments can be created using smart contracts capabilities—enabling automated trading strategies or complex price mechanisms with ease.

Figure 5: StarkEx high-level overview; Source Starkware
Figure 7 High-level application architecture; Source Starkware

The aim of leveraging scalability solutions for blockchain networks is to improve performance and transaction speed at a lower cost. Solutions such as subnets, sidechains, and specialized networks have been devised with this goal in mind. They all serve to facilitate efficient transfers between users on distributed systems.

Are appchains the future?

Trends in general can be difficult to predict, and Web3 is impossible to predict. However, the internet is an evolving lifeform, and Web3 is its next phase of progression. That said, for Web3 to be more accessible and easy-to-use for average daily users (like in Web2), there needs to be more done to make transacting on the network faster and cheaper.

Until now, Web3 developer options have been limited to using public chains where resources are scarce in times of high activity. But now with appchains, their flexibility and power make them a game changer moving forward. With blazing-fast and low-cost transactions, DApps built on appchains offer the user experience that we envision when we think of Web3 and its potential.

When you can control every aspect of your chain, then there is no limit to what you can BUIDL—Chainstack has everything you need to get started now!

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