Definition and Concept
An appchain is a blockchain built with a specific use case in mind. Unlike general-purpose blockchains, appchains optimize for one particular area rather than welcoming any use case. They are standalone blockchains offering high customization and optimization, allowing focused development and attention to the nuances needed for app success.
The concept was first introduced in 2016 by Polkadot and Cosmos, though the first appchains didn’t launch until 2021.
Early examples include Axie Infinity, which created a sidechain after high demand strained Ethereum, and DeFi Kingdom, which migrated to an Avalanche subnet.
Benefits of Appchains
- Sovereignty: Operate independently from other blockchains
- Customization: Developers can tailor chains to specific app needs
- Increased efficiency: Dedicated resources improve transaction throughput and confirmation times
- Value capture: Projects retain all value created rather than benefiting underlying ecosystems
Challenges
- Limited composability: Users need bridges to access other chains, creating friction
- Liquidity bootstrapping: Difficult to attract crypto investors competing for highest rewards
- Security: Must build validator sets from scratch without inherited security
- Development work: Requires more effort than building on existing blockchains
Appchain Ecosystems
Polkadot
Polkadot uses a relay chain model where parachains benefit from shared security. The Substrate framework powers development, providing a modular toolkit for building custom chains that connect to the Polkadot network.
Cosmos
Cosmos chains use the Cosmos SDK and share interoperability through the Cosmos Hub. Recent shared security mechanisms allow chains to rent security from the Cosmos Hub, reducing the burden of bootstrapping a validator set from scratch.
The Inter-Blockchain Communication (IBC) protocol enables seamless cross-chain communication between Cosmos chains, addressing one of the key composability challenges that appchains face.