Guides

Appchains Explained: Everything You Need to Know About Application-Specific Blockchains

Appchains are blockchains designed to support a single application. Learn how appchains enable better performance and scalability here.

Henry Updegrave

Henry Updegrave

— 8 min read
Appchains Explained: Everything You Need to Know About Application-Specific Blockchains

Ethereum is designed to act as a decentralized world computer, where we can run onchain apps without censorship, downtime, centralized points of control, and other problems inherent to web2. However, running all of those apps on a single shared blockchain leads to scaling problems: Congestion, latency, high fees, and more. Plus, Ethereum and other L1s aren’t one-size-fits-all – different apps have different needs from the blockchain they run on.

Appchains solve these problems.

An appchain, or application-specific blockchain, is a blockchain designed exclusively for a single application. In this article, we’ll explore how appchains empower onchain app builders, enable greater scalability, and allow blockchains to tackle a wider variety of use cases.

What is an appchain?

An appchain is a blockchain dedicated to a single application, unlike general purpose blockchains such as Ethereum and Solana, which are designed to support many apps. Appchains give apps the dedicated blockspace they need to scale, and allow for greater customization – each appchain is built from the ground up to meet the specific use case of the app it supports.

Appchains typically maintain a connection to a larger L1 that gives it some combination of bridging access, inherited security, and shared developer tooling with that L1. In the Ethereum ecosystem, this generally comes through one of two frameworks: rollups and sidechains. However, some appchains are themselves independent L1s.

Types of appchains: Rollups, sidechains, L1s

Appchain rollups

Rollups are L2 blockchains that run on top of an underlying L1 like Ethereum. Rollups help Ethereum scale by processing transactions on the L2, and periodically sending them to the L1 in batches for final confirmation. This allows rollups to inherit the security of Ethereum, ensuring appchain rollups remain credibly neutral and decentralized. Appchains can also deploy as L3s on top of other L2s, which can further improve performance and cost-efficiency, but also takes them another step away from Ethereum L1 security and liquidity. While many rollups are general purpose chains acting as ecosystems of apps, others are appchains dedicated to one app.

Rollups have native bridges connecting them to Ethereum out of the box, and there are many third-party bridges they can add as well. That makes it easy for them to draw on Ethereum’s userbase and liquidity, which is crucial to onboarding and user acquisition. 

Finally, as L2s running on Ethereum, rollups have full EVM equivalence. That allows appchain developers to use the same programming languages and smart contract libraries they would on Ethereum and other popular EVM chains, and even means they can build an appchain quickly by simply porting over an existing protocol from Ethereum mainnet.

Another major benefit of rollups for appchains is that they can be deployed and maintained using rollups-as-a-service (RaaS) platforms. RaaS platforms allow developers to build customized rollups quickly with a simple UI, picking from many options on modules like DA, settlement layer, and more.

Sidechains can act as appchains or general purpose chains

While rollups run on top of Ethereum, sidechains run in parallel to Ethereum. Like rollups, most sidechains have a variety of options for bridges connecting them to Ethereum, and can maintain EVM equivalence as well. This makes them comparable to rollups on ability to draw users, liquidity, and developer talent from the Ethereum ecosystem. Like rollups, some sidechains are appchains, while others are general purpose ecosystem chains. 

The key difference between rollups and sidechains is in security. Sidechains maintain their own consensus and security mechanisms, with their own sets of validators, which are often not as robust as Ethereum’s. They also don’t post transaction data to Ethereum, though some sidechains submit partial data like block headers. 

Those security differences mean that funds deposited to a sidechain bridge may be at greater risk of being stolen or lost. On the flip side, those compromises mean sidechains have historically been able to offer more throughput and lower transaction fees.

L1 appchains: The standalone option

Some teams also opt to build their own L1 blockchain from scratch to support their app. Unlike rollup appchains and sidechain appchains, L1 appchains don’t rely on another primary blockchain like Ethereum for security, consensus, or settlement – they maintain their own mechanisms for each. 

Since L1s operate independently, they provide the most opportunity for appchain customization. Developers have total control over every aspect of the chain, from network design and consensus protocols to fee structures. That flexibility enables L1 appchains to fine-tune performance and governance to the app’s precise specifications. 

However, L1 appchains face unique challenges for liquidity and user adoption. Without a direct, native connection to other popular chains, L1 appchains must bootstrap liquidity and build a user base from scratch. L1 appchains can establish bridges with other major blockchains, but must typically do so using custom implementations, often requiring greater validator centralization, which introduces security risks. However, L1 appchains can still establish EVM compatibility, streamlining developer experience and user onboarding. 

Benefits and tradeoffs of appchains summarized

Appchains give onchain builders several advantages, but there are also potential drawbacks to consider. Let’s look a bit at both below.

Appchain benefits

  • Enhanced scalability and performance. Appchains can scale independently, allowing app builders to get better onchain throughput for user growth and high-performance use cases.
  • Customization opportunities. Developers can choose the right governance models, consensus algorithms, and infrastructure for their apps.
  • Cost-efficiency. Dedicated blockspace means the app doesn’t need to pay gas fees to the L1 the way a protocol on a shared blockchain does. Appchain developers can set transaction fees themselves, capture those fees as revenue, and charge users lower fees than they would see on an L1. 

Appchain tradeoffs

  • Setup complexity. Building an appchain requires different technical skills than building a dApp, particularly around chain infrastructure. However, RaaS platforms can significantly mitigate this for appchains that deploy as a rollup.
  • Security and maintenance considerations. Appchains have to manage their own security mechanisms, especially if they go the L1 route. Even rollups and sidechains have significant security decisions such as what proving mechanism to use, and there is a range in the Ethereum security equivalence an appchain can get depending on the validator setup. 
  • Interoperability and liquidity fragmentation. Appchains must take steps to ensure optimal interoperability with other blockchains, especially with Ethereum or any other L1 they may be aligned with. Bridging represents an extra step for users to move funds to your appchain, though these solutions are improving all the time, especially with the growing prevalence of ZK proving.

Appchain platforms

There are several different networks and developer platforms teams can use to build appchains, each with their own unique benefits, communities, and infrastructure frameworks. Let’s look at a few below.

Appchain rollup frameworks on Ethereum

There are two major rollup frameworks developers can use to build L2 and L3 appchain rollups on Ethereum: Optimism OP Stack and Arbitrum Orbit. Developers can deploy and maintain rollups on either framework through RaaS platforms like Conduit.

Optimism OP Stack

OP Stack is a modular, open-source rollup framework maintained by the Optimism Collective that enables developers to deploy custom L2s and L3s with Ethereum compatibility. Appchains built with the OP Stack can opt into Optimism’s “Superchain,” a unified network of interconnected OP Stack rollups aiming to achieve native interoperability and seamless cross-chain experiences. By participating in the Superchain, OP Stack appchains benefit from shared liquidity, user communities, and development resources, contributing a portion of their revenue to support ongoing ecosystem growth. This collaborative approach has positioned Optimism as one of Ethereum’s most active and appchain-friendly communities.

OP Stack appchain rollup examples:

  • Unichain: An appchain dedicated to the Uniswap DEX.
  • Derive: A large derivatives DEX deployed as an L2 rollup on Ethereum. 
  • Aevo: A large perpetuals DEX deployed as an L2 rollup on Ethereum.

Arbitrum Orbit

Arbitrum Orbit is the rollup framework built and maintained by Arbitrum, specifically optimized for developing customizable Ethereum-aligned rollups. Orbit appchains offer fast blocktimes, making them particularly suited for real-time, transaction-heavy use cases like onchain gaming or sophisticated consumer applications. Additionally, appchains built with Orbit have exclusive access to AnyTrust, a data availability layer designed by Arbitrum to significantly reduce transaction costs. Orbit also supports Arbitrum Stylus, an innovative tool that allows developers to deploy smart contracts written in multiple languages beyond Solidity, such as Rust or C++, expanding the chain’s potential developer pool, while also unlocking higher performance and lower fees.

Arbitrum Orbit appchain rollup examples:

Polygon CDK

Polygon’s Chain Development Kit (CDK) is a modular, open-source framework for building ZK rollups on Ethereum, providing strong security guarantees. 

Polygon CDK appchains also integrate seamlessly with Polygon’s Agglayer, a dedicated interoperability layer for the Polygon ecosystem. This integration enhances appchain security, reduces transaction costs, and simplifies bridging across multiple chains within the Polygon environment, promoting shared liquidity.

Polygon CDK appchain examples:

Cosmos SDK

Cosmos SDK is a framework for creating appchains under the sidechain model. Cosmos SDK appchains run independently with their own validator sets and use the CometBFT consensus mechanism, a Byzantine Fault Tolerant PoS framework.

Cosmos SDK appchains communicate through the Inter-Blockchain Communication (IBC) protocol, enabling native interoperability with other chains in the Cosmos network. This connectivity allows Cosmos SDK appchains to tap into one another’s liquidity and offer users easy bridging across Cosmos chains.

Cosmos SDK appchain examples:

  • dYdX: A perpetuals DEX appchain on Cosmos SDK 
  • Osmosis: A DEX appchain on Cosmos SDK 

Polkadot parachains

Polkadot parachains are specialized, customizable sidechains connected to Polkadot’s central Relay Chain, which developers can use to build appchains. Each parachain operates independently but benefits from Polkadot’s security by sharing validators with the Relay Chain, which verify and finalize blocks for parachains. Each parachain also maintains its own set of collators, which process parachain transactions and submit them to Relay Chain validators for final consensus.

Parachains can leverage Polkadot’s Cross-chain Message Passing (XCM) protocol for interoperability, which allows parachains to communicate, transfer assets, and share liquidity with one another. 

Polkadot parachain appchain examples:

Avalanche L1s (formerly Avalanche Subnets)

Avalanche L1s (formerly known as Avalanche Subnets) present a highly customizable framework for developers to build appchains. Developers can tailor their Avalanche L1’s governance, tokenomics, consensus parameters, and even create a custom virtual machine. Avalanche L1s maintain their own unique validators, which utilize Avalanche’s consensus protocol to prevent malicious behavior by those validators. 

Avalanche L1s utilize Avalanche’s native interoperability solutions to enable bridging and liquidity sharing across the entire ecosystem, including Avalanche’s core chains. 

Avalanche L1 appchain examples:

  • Off the Grid: A gaming appchain on an Avalanche L1
  • Q Chain: A brand loyalty app on an Avalanche L1

Appchains mean performance for developers, scaling for L1s

Appchains are already proving to be a crucial tool for scaling L1 blockchains like Ethereum and bringing more users onchain. By giving apps dedicated blockspace on blockchains specifically tailored to each app’s unique needs, appchains are enabling better performance and UX for onchain apps, while still providing decentralization and security guarantees comparable to the underlying L1. 

However, each appchain platform and framework comes with tradeoffs between performance, security, and existing potential user base. As a developer, you need to evaluate these tradeoffs carefully before building, and make sure that your appchain is in position to easily onboard existing crypto users in your target audience. It’s also important to consider the network of potential partners in each platform to ensure you’ll be able to integrate the tools you need and offload blockchain infrastructure maintenance to trustworthy partners as needed.

Want to build your own appchain? Contact us to see how Conduit makes it easy to customize, build, and scale.