Advantages of a Sovereign Blockchain
Developers face a pivotal decision: should they run their applications atop a layer-1 blockchain or craft a sovereign chain tailored to their application?
This boils down to a choice between smart contract applications — self-executing on-chain programs — and app-specific chains, which separate the application layer from the protocol’s core semantics.
Across the interchain and Cosmos SDK ecosystem, the prevailing sentiment is that each blockchain should excel in a specific domain, be it decentralised exchanges, lending, governance, or Ethereum Virtual Machine (EVM) functionalities.
Both appchains and smart-contract applications benefit from interoperability with other chains or apps. So, how does one navigate this choice? To understand the nuances, we must delve into the sovereignty, complexity, and utility of both models.
The Appchain Explained
An appchain, or application-specific blockchain, is a sovereign blockchain tailored for a specific application or use-case. This model empowers protocols with complete control over their blockchain, decoupling the application from the consensus and networking layers.
This autonomy not only facilitates the creation of custom functionalities, consensus mechanisms, and governance structures but also enhances security. Operating on a dedicated blockchain, appchains are shielded from vulnerabilities that might plague shared environments. Moreover, tailored security measures can be implemented, ensuring robust protection against potential threats.
In terms of performance, appchains provide a more focused approach. Being designed for specific applications, they can offer stable transaction speeds and manage latency effectively, ensuring a reliable user experience.
Leveraging frameworks like the Cosmos SDK, appchains can achieve high interoperability, allowing them to communicate and share data with other blockchains in the ecosystem.
(Source: Cosmos Hub)
Although having comprehensive control over the blockchain grants authority in architecture, fees, revenue generation, and tokenomics, it also comes with its own set of developmental complexities.
Picture the appchain methodology as the blueprint for creating an iPhone. The developer retains total dominion over aspects like the CPU, RAM, sensors, battery, and the end-user experience. Nonetheless, this all-encompassing control amplifies the breadth of knowledge and skill required.
Additionally, choosing to build an iPhone or implement the appchain model incurs costs like greater initial investment, lengthier development processes, and distinct expertise demands.
Smart-Contracts Explained
A smart contract is a self-executing contract with the terms of the agreement directly written into code. It operates on existing blockchains, like Ethereum, and automates the execution of predefined rules when certain conditions are met. As such, smart contracts enable decentralised applications (dApps) to function without intermediaries, ensuring transparency, security, and efficiency.
(Source: Jabbar and Dani, 2020)
Drawing a parallel between the trade-offs of appchains and smart contracts using the iPhone analogy, developers can sidestep the intricacies of constructing the iPhone. However, they must then align with the app store’s terms, parting with a share of their revenue.
While smart-contract apps or those on the iPhone’s app store may have fewer privileges compared to their appchain or iPhone developer counterparts, they benefit from reduced costs, expedited market entry, and a vast developer community.
Contrary to the extensive liberties offered by an appchain, smart-contract applications have a narrower remit. Such an app can modify the application (execution) layer, overseeing user interfaces and state transitions, like transferring a token from one wallet to another. This capability is notably less autonomous and versatile than the appchain approach, given its absence of control over protocol regulations.
Beyond this limited autonomy, smart contract apps also incur fees to their host blockchain for transaction settlements. This submission to their operating chain introduces heightened platform risks, including potential threats from security flaws or platform-imposed censorship.
Considering both appchain and smart-contract application methodologies, each presents its own set of compromises. Nevertheless, both are adaptable, interoperable frameworks, offering the potential for robust governance structures through Gov/Groups modules or smart-contract based subDAO plugins such as DAO DAO.
EntryPoint’s Decision: Understanding the Choice of Appchain Adoption
EntryPoint’s governance structure, comprised of subDAO working groups that oversee distinct functions, theoretically allows it to operate as either an appchain or a smart-contract application. Yet, when one weighs the benefits, the appchain model emerges as the more fitting choice for EntryPoint’s long-term vision.
Considering the aforementioned insights, EntryPoint’s choice to integrate the appchain architecture signifies a commitment to precision and control. This decision enables the crafting of features tailored to the protocol’s requirements, ultimately serving the best interests of its users and clientele.
For starters, the sovereignty of an appchain is arguably a must-have foundation for decentralised public infrastructure seeking to remain independent and neutral.
As an appchain, EntryPoint also benefits from unparalleled control in designing unique features like the Trading and Vault modules, which handle token exchanges and Index Vault operations, respectively. This autonomy also allows EntryPoint to set its own fees, define tokenomics, and strategise revenue generation without the constraints or potential risks associated with a smart-contract host chain.
Importantly, EntryPoint’s ambition to position itself as a regulated on-chain financial services provider further underscores the imperative for robust control over its technological infrastructure. Adopting the appchain architecture aligns seamlessly with this ambition, ensuring EntryPoint retains the desired autonomy and functionality.
Conclusion
The blockchain development landscape presents developers with a pivotal choice: the autonomy and tailored functionality of appchains or the streamlined processes of smart-contract applications.
While appchains offer unparalleled control, they come with their own set of challenges, such as intricate development complexities and initial costs. On the other hand, smart-contract applications, though operating within set protocol boundaries, offer quicker market entry and cost efficiencies.
In essence, EntryPoint’s decision to embrace the appchain model reflects a deep commitment to precision, control, and serving its user base effectively and securely.
For more information about EntryPoint, check out the website and docs below.
