Thread by @dberenzon

1/ Application-specific blockchains ("AppChains") are back with a vengeance.

I've written a piece on AppChains and their:
- History
- Pros & cons
- Future market structure
- Design space
- Current solutions

medium.com/1kxnetwork/app…

+ a thread to accompany it 👇

2/ What's an AppChain?

Simply put, an AppChain is a blockchain that dedicates its blockspace to a specific application.

Importantly, they *do not* only refer to monolithic L1s because "layers" are mostly just trust-minimized blockchains w/ two-way trust-minimized bridges.

3/ AppChains as a concept have been in the making since 2016 but have evolved and accelerated since 2020.

4/ Today, there are a variety of platforms providing AppChain infrastructure, both as "modular execution layers" (i.e. rollups & sidechains) and "monolithic blockchains" (i.e. combining execution, settlement, and consensus).

5/ There are also a bunch of teams building on these platforms across a number of use cases, and teams continuing to launch standalone AppChains optimized for their use-cases.

6/ There are 3 main reasons why devs are building AppChains:

- Performance: low & predictable TX costs
- Customizability: optimizing for throughput, security, permissioning, etc.
- Value capture: forking DeFi infra, internalizing MEV, and token-based staking & gas fees

7/ But this is *not* a shill piece - there are actually *many* issues with AppChains!:
- Limited composability & atomicity
- Recreating walled gardens
- Liquidity fragmentation
- Reflexive security model
- Waste of resources
- Additional developer lift
- Limited ecosystem tooling

8/ So which apps are AppChains best suited for?

Apps that:
- Care less about security and atomicity (e.g. P2E games, NFT collections, cryptosocial)
- Reach some notion of scale & PMF
- Have significant product/performance benefits from dedicated blockspace

9/ Will we see a UNIchain?

Unlikely, unless we can solve for x-chain liquidity and atomicity.

Remember that flash loans provide effectively infinite capital efficiency with zero balance sheet risk, which is incredibly important for a well-functioning DeFi ecosystem!

10/ Still want to build an AppChain? Unfortunately, there are lots of factors to consider, e.g.
- Security source
- Permissions
- Composability
- Finality
- Gas currency
- Required stake
- EVM support

There is no "best" solution, but roll-ups are sufficient for most requirements

11/ Thank you to @Jskybowen, @cemozer_, @pseudotheos, and @delitzer for conversations around this topic!