Cosmos Development: L1 vs App Chains

To build or not to build, that is not the question. The real question is… Where? Projects looking to develop new solutions may choose to either build out their own application-specific blockchain or create a decentralized application (dapp) on a Layer 1.

Within the Cosmos ecosystem, it is standard to develop a standalone blockchain to house a specific application, or group of applications, with similar needs. These application-specific blockchains are known as app chains. However, many projects do not require or do not merit the development of their own dedicated chain. So, how do you decide where to build?

Application-Specific Chains in Cosmos

The Cosmos SDK provides developers with all the pieces required to build an app chain. Spinning up an app chain for your protocol can provide many benefits, such as full-stack optimization, sovereignty, and scalability. Developers are able to configure specific chain-level functionality onto app chains to complement the protocol(s) being built on top of them, as well as configure rules surrounding economics and security. Independent chains also have a higher level of sovereignty regarding community and governance. App chains feature increased scalability as well, in both the form of dedicated blockspace and the ability for a greater throughput.

Finally, because Cosmos-native chains are interoperable, app chains don’t sacrifice an app’s ability to communicate with other chains and protocols in the Cosmos. However, while this model increases the customizability of an application, it can complicate development. Maintaining app chains is expensive, requires increased technical overhead, and could pose greater economic risk. Between recruiting and coordinating a validator set, attracting enough capital to secure the chain, navigating legal risks, and managing the overhead of development operations and technical dependencies on upstream infrastructure, the costs add up. Furthermore, the chain’s economic model must be able to sustain itself, and the chain’s native token must accrue enough value to efficiently secure the network.

… Does ICS fix some of these problems?

Interchain Security V1 (ICSv1), allows one chain to “rent” security from another chain once it launches. The validators of the provider chain produce blocks for the consumer chain by running a separate node for it, and in turn, the consumer chain distributes token rewards to the validators. The premise behind this model is that consumer chains are able to bootstrap security from a more established chain, freeing them from concerns around economic attacks that could take advantage of their nascent state.

However, this still leaves the operational costs of running a blockchain to solve for. Validators across the ecosystem have also voiced concerns over how many chains a single validator set can scale to efficiently. Moreover, the provider chain’s community will have to approve consumer chains — meaning shared security is not guaranteed — providing further uncertainty for consumer chains. While the currently-live Replicated Security — as well as versions 2 and 3 — has great promise, not all dapps might be able to reap the benefits these solutions will provide.

Layer 1s

Many Layer 1 blockchains are built to host smart contracts and decentralized applications. Developers building dapps on an L1 benefit from the security of an established blockchain, exposure to an existing community and ecosystem, and more. Protocols that do not have a real need for a staking token can forgo them, and developers can roll out improvements as quickly and often as necessary, without requiring the work and coordination of a chain upgrade. Furthermore, different L1s provide diverse feature sets that dapps can benefit from.

How do I decide where to build?

Before building, it is important to consider what might be the best place to launch your protocol. Ask yourself: Do I want to launch a staking token?

Creating a staking token for your protocol means developing tokenomics, executing an airdrop, etc., which requires extensive development and work. Instead of launching a staking token, a DAO can be used for dapp community governance that leverages a simple governance token or the L1’s native token.

Can I justify the overhead costs of creating and maintaining an application specific blockchain?

If you cannot, you might consider building on Archway, which programmatically rewards developers for their work. Furthermore, L1s significantly simplify the ease of development and deployment.

What added benefits will having custom blockchain infrastructure give the protocol that cannot be built using CosmWasm?

CosmWasm smart contracts allow developers to build a plethora of products that do not require a sovereign chain. However, should the need arise, dapps can easily be spun out into their own blockchain later on, giving developers ultimate flexibility based on market demands and traction.

The Endgame is Not Zero-Sum

The beauty of Cosmos is that developers are not restricted to permanently choosing one solution over another: A developer can easily deploy a dapp on an L1, and choose to spin the protocol off on an independent blockchain in the future. Archway serves as an initial launchpad into the Cosmos, by not only providing a simple and sustainable way to deploy contracts and dapps within the Cosmos ecosystem, but by also making it easy for those dapps to migrate to their own appchain. This migration is straightforward because CosmWasm contracts are portable across chains, and the Ignite CLI enables developers to spin up and configure their own, independent chain in a matter of minutes.

When building on Archway, developers are contributing to a network that prioritizes them, allowing them to achieve more sustainable results. With the vision of becoming the launchpad to Cosmos, Archway has built an ecosystem that puts developers first: Learn to build dapps on Archway’s learning platform, intuitively deploy them on Archway, and earn based on your work. Teams are rewarded for the dapps they build: Developers receive programmatic rewards directly proportional to the value they contribute to the network. Benefitting from an intuitive developer experience, builders on Archway can seamlessly deploy CosmWasm smart contracts and immediately begin earning rewards for their work.

Furthermore, since Archway has a native integration of IBC, building on top of Archway allows for cross chain communication and access to users and assets from across Cosmos. Archway’s innovative rewards model allows teams to build without worrying about network security and technical overhead, all while getting rewarded for building and providing an extra method of sustainability additional to the dapp’s own value proposition.

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About Valeria Salazar

Valeria Salazar is a Marketing and Communications professional in the FinTech space, currently serving as Marketing Strategy Lead for Phi Labs, main contributors to Archway, the Value Capture chain. Prior, she was Marketing Manager for Eqonex [Nasdaq: EQOS]. She is fluent in English, Spanish, French, and German, conversational in Russian, and graduated Boston University with a B.A. in International Relations and a minor in German language and culture.

About Archway

Archway enables dapp developers to capture the value they create for the layer 1 they are building on, creating a sustainable economic model for dapps. Developers–current and aspiring–are at the front of our ecosystem. Teams are rewarded for the dapps they build: Developers earn revenue directly proportional to the value they contribute to the network. Benefitting from an intuitive developer experience, builders on Archway can seamlessly deploy CosmWasm smart contracts and immediately begin earning rewards for their work.

About Phi Labs

Phi Labs is a core contributor to Archway; a layer 1 blockchain designed to reward dapp builders. We contribute to the network one block at a time writing protocols, creating community tools and guiding the brand. We believe in freedom and fair systems for everyone–a simple vision that inspires us to build high quality products and a community as passionate as we are.