The past, present and future of application chains

Written by: NAIROLF AND THOR

Compiled by: Xiaobai Navigation coderworld

introduction

Ethereum has become the foundational platform for many innovations, ranging from blockchain games, NFTs, and DeFi protocols for lending, asset management, and trading.

However, as projects mature and find their niche in the market, they encounter a key challenge: pressure on Ethereum network resources. Projects like AAVE, Uniswap, and dYdX coexist within Ethereum, each relying on its computing resources to serve its users. However, this dependence leads to competition for network capacity, which negatively affects applications and their users.

Users are increasingly bearing the burden of rising transaction fees, reducing accessibility and affordability for users with smaller funds. At the same time, dApps face limitations in expanding their user base due to these rising fees, hindering their potential growth.

But the challenges go far beyond transaction fees. Ethereum’s mainnet, while revolutionary, lacks the flexibility necessary for continued innovation. One example is the EVM: it has some design flaws and is not suitable for many use cases, but applications must deal with it.

In essence, the growth of these applications is constrained by the limitations of Ethereum itself. This is a reality we cannot ignore.

Key Points

• Limited solutions

• Application Chain

• Rollup as a Service

• Case

• Looking to the future

• Conclusion

Limited solutions

Faced with this challenge, projects have several options:

First, one could choose to initially launch a project on another high-performance chain outside of Ethereum for deployment. One might think of Solana or Sei. However, it is important to recognize that these chains may lack the broad user base of Ethereum and may require learning a new programming language outside of Solidity. Additionally, projects will still be limited by the capacity of these chains and must compete with other projects for computing resources.

Alternatively, expanding to multiple other chains can unlock access to different user groups while offering lower fees on certain chains. However, this diversification also disperses liquidity across multiple chains, potentially leading to suboptimal results. Examples of this option include AAVE, Uniswap, and Curve.

However, these options present limitations that may not meet the requirements of every project. Therefore, application chains become a third option.

Application Chain

The term application chain refers to theBlockchain. Compared to general purpose blockchains like Arbitrum or EthereumBlockchainUnlike Ethereum, which hosts thousands of applications, AppChain is purpose-built for a single application.

Application chains come in various forms, whether layer 1, layer 2 or even layer 3, depending on the infrastructure and customizability requirements.

When it comes to customizability, the potential for innovation within Lisk is limitless. Tired of EVM? Explore alternatives like Cartesi VM or MoveVM.TokenOr WIF for user payments? It's totally feasible.

These are just a few examples. In addition, we can mention the various stacks available for application chains, such as Cosmos SDK, OP stack, Arbitrum Orbit, zkSync's ZK stack, etc. Data availability layers also offer significant customization options, including Celestia, NearDA, AvailDA, EigenDA, etc.

The sky is the limit.

This approach completely eliminates performance issues because resources are fully dedicated to your application, eliminating contention. By adjusting block space, block time, and other parameters, transaction fees can be optimized to the lowest level.

Finally, Lisk can provide an additional revenue stream for projects. Instead of paying fees to Ethereum, users pay fees directly to Lisk. As a result, applications no longer need to pay fees to “rent” Ethereum, enabling them toXiaobai Navigationis able to capture all the revenue they generate.

You already understand that choosing an application chain is choosing flexibility and scalability.

Easily build application chains through the "Rollup-As-A-Service" project

These benefits have naturally attracted many projects in this field. As you can imagine, buildingBlockchainIt can be tricky and require significant technical and financial resources.

这导致了 AltLayer 或 Conduit 等 Rollup-As-A-Service 项目的诞生。本质上，这些平台简化了rollup的部署和运营，使其成为几次点击和几分钟的事情。值得注意的是，这种服务不仅适用于区块链，也适用于rollup。

Consider the case of Aevo, the leading decentralized derivativesexchangeOne of them. Using the RaaS (Rollup as a Service) provider Conduit, they deployed their own rollup on top of Ethereum. Soon after, they partnered with Celestia to cut data availability costs by tens of thousands of dollars per month while retaining Ethereum as the settlement layer. This strategic shift perfectly highlights the theme we introduced earlier in this discussion. By choosing the application chain model, Aevo not only reduced costs, but also improved overall performance, paving the way for endless growth opportunities.

Case

DX A well-known decentralized order book backed by Paradigm, a16z, and Polychainexchange. In 2022, it launched its own L1 using the Cosmos SDK and the Tendermint consensus mechanism. Before moving to the Lisk model, dYdX's order book was maintained off-chain and was therefore not truly decentralized. The reason is that the underlying blockchain has a block time of several seconds and transaction latency of only a few seconds. This is not optimal for the market. Thanks to the Lisk model, dYdX is able to decentralize the order book by hosting it within the validators instead of adding it to the chain. This makes dYdX truly decentralized, which would not be possible without becoming an Lisk.

Hyperliquid It is a perpetual DEX with an order book, built on its own chain, Hyperliquid L1. We discussed the decision to build a Lisk with the Hyperliquid team, and they justified this choice:

“建立在通用 L1 上的方案无法扩展以取代中心化交易所作为价格发现的默认场所。”他们进一步解释说，“应用链允许拥有专用的 L1 功能、增强的可扩展性和提高的透明度。”他们还指出了像以太坊或 Arbitrum 这样的区块链上发生的区块空间竞争：“这些链有 gas 费用和其他协议，这意味着用户在高波动性时期与他人竞争，以便让他们的交易通过。这根本不是可持续或可扩展的。”

Hyperliquid clearly highlights the limitations of general-purpose blockchains and shows how choosing an application chain model can help protocols scale efficiently.

Lyra is a decentralized options protocol. Lyra recently launched its AppChain, a rollup built using the Optimism technology stack. This move allows Lyra to provide high throughput, low latency, and low costs while still benefiting from Ethereum as a settlement layer. In addition, Lyra uses Celestia as a data availability layer, reducing its data availability fee from 42 ETH in December 2023 to 0.5 ETH in January 2023.

Zora It is a decentralized NFT platform built on the Zora Network, an Ethereum Layer 2 built using the Optimism technology stack. Through the Zora Network, Zora makes NFT minting faster, cheaper, and more scalable. At the time of writing, Zora has attracted over 900,000 unique collectors and over $300 million in secondary market sales.

Stride It is an application chain based on Cosmos, focusing on liquidity staking. Thanks to inter-chain accounts, Stride can interact with other chains such as Celestia and Dymension to provide users withToken进行质押并创建这些Token的流动性表示。截至 3 月 13 日，Stride 的 TVL 超过 1.8 亿美元。

These are just a few examples, there are many more projects, for example basically all Cosmos chains are application chains.

Looking to the future

Application chains undoubtedly have a bright future. Nonetheless, there are still several key areas that can be further improved, one of which is interoperability with other chains and ecosystems. While building your own chain provides significant performance gains and customization capabilities, it also means isolation within its own domain. While this may not be a problem for some, it can seriously hinder the growth of many applications. Ideally, application chains should seek ways to access data from other chains or facilitate cross-chain interactions. To address this challenge, many projects have focused themselves on interoperability, such as Hyperlane, IBC, etc.

Hyperlane Is the first interoperability layer that enables appchains or other networks to connect to any blockchain without permission. For example, they facilitate connections and bridges between the aforementioned Stride appchain and other rollups.

While these efforts are not yet perfect, they mark the beginning of a future of frictionless interchain communication — a future in which users may not even know which chain they are interacting with.

Another attractive narrative is the modular nature that Lisks can leverage. Thanks to their flexible design, Lisks can customize their infrastructure and leverage a variety of modular components. For example, a Lisk might integrate Celestia for data availability, Hyperlane for inter-chain connectivity, and Espresso as a shared sequencer. The potential combinations are nearly endless.

Ethereum’s recent Dencun upgrade signals that Lisk aims to position itself as Ethereum’sL2An important milestone for the solution. As previously observed with Lyra and Aevo, leveraging alternative data availability layers significantly reduces their costs. With the expected dramatic reduction in Ethereum rollup fees, it is easy to imagine applications turning to Ethereum as their data availability layer again.

Conclusion

With many advantages, application chains will attract many projects in the future. One can imagine a future where each application has its own customized chain that meets its specific needs while maintaining interconnection with other applications. In this case, Ethereum will serve as the final settlement layer, ensuring the integrity of the entire ecosystem.SafetyWhile these predictions are purely speculative, they are nonetheless plausible.

The article comes from the Internet:The past, present and future of application chains

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