Author: Conor, Web3 Labs Translation: Shanoba, Golden Finance

Between 2022 and 2023, we’ve seen a lot of progress in scaling Ethereum through Layer 2 networks. Optimistic-based aggregations such as Arbitrum and Optimism are combined with aggregations of zero-knowledge technologies used by Polygon ZK-EVM, Linea, ZK-Sync, Scroll, Starknet, and more.

All Layer 2 network providers know that scaling a blockchain network doesn’t end with Layer 2, there is an additional layer in the stack – Layer 3 or appchain, which many consider to be a blockchain scalability nirvana. **

Unlike public Layer 2 blockchain networks, application chains or application-specific blockchains offer faster speeds, lower transaction costs, and can be customized for specific use cases.

Many of the teams that launched Layer 2 networks recently announced dedicated stacks for building application chains that sit on top of Layer 2 networks.

Appchain stack

As of this writing, the major Layer 2 teams have announced all of the following appchain stacks:

• Polygon’s Chain Development Kit
• OP stack for Optimism
• ZK stack for ZK Sync
• Arbitrum’s orbital chain
• Starknet 的Starknet 堆栈

Linea and Scroll didn’t make it to this list, but that’s likely because they launched Layer 2 mainnets later than the other teams.

Outside of the Ethereum ecosystem, there are appchain toolchains for many other blockchain networks, including Polkadot (Substrate), Avalanche (subnets), and Cosmos (Zones). These all offer EVM support to onboard the Ethereum ecosystem.

Rollup-as-a-Service (RaaS)

In addition to the teams building these appchain stacks, there are companies that have traditionally offered Blockchain-as-a-Service (BaaS) deployments, expanding their offerings to include Aggregation-as-a-Service (RaaS).

When referring to these types of networks, the terms rollup, appchain, and layer 3 networks are used interchangeably. In addition, given its abbreviation, it is unlikely that the appchain as a service will catch on… ）。

Private Chain 2.0

In some ways, this sounds like history repeating itself. Five years ago, when BaaS offerings were first introduced, companies were launching private blockchain initiatives.

Since then, the narrative has shifted more towards the future of public blockchains rather than private blockchains. Private networks still have a place, but they are more difficult to guide, manage, and maintain than public networks, which are similar to utilities in all intents and purposes.

It’s not just the overhead of running a private network, and many projects simply can’t guarantee beyond a proof of concept.

Organizations investing in web3 initiatives are now smarter than before. They understand the field, and many of them now recognize the coverage that can be achieved through public networks.

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They still face challenges on the public network, such as that they are competing with all the other users of the network, and the transaction costs may be higher than they like.

The attractiveness of the appchain

For these and other reasons, launching a dedicated appchain may be appealing to them.

By initiating an application chain, they are able to control some of the components of the network but inherit the security provided by the Layer 2 network without having to bootstrap the trust themselves.

This means that creators can specify the network configuration that best suits their use case. Some options include:

• Cryptocurrencies or tokens used to pay for transactions on the network. Whether it’s the currency of the underlying network like Ether, or the network’s own token. They may even opt for a gas-free network
• Block size. If the network is going to process a large number of simple transactions, it can use a smaller block size to increase throughput. Conversely, if the transaction is more complex, a larger block size can be specified.
• Restrictions on which wallets can transact with the network, e.g. only those wallets that have undergone a KYC process.
• The frequency at which a transaction or proof of proof is aggregated into the underlying network for which it is being used.

In addition, the lifecycle of the required rollup varies. Unlike blockchains, rollups can be ephemeral or temporary.

Ephemeral chain

Altlayer’s Amrit Kumar discussed these brief roundups in a great talk at EthCC earlier this year (he covered many other topics, which is why you should definitely watch his full talk).

He stressed that temporary rollups would be ideal when a large amount of on-chain activity needs to happen in a short period of time, such as NFT minting or virtual land sales like Yuga Labs.

Blockchain-intensive activities can take place on private rollups, and once completed, the rollups can be decommissioned, with all state changes remaining on the underlying network.

When someone wishes to subsequently append to this aggregate state, such as transferring ownership of a minted NFT. They can do this on the network used by the rollup, because the full history of the ad-hoc rollup will always be stored on the network it protects.

How many appchains do you need?

With all the activity of the Layer 2 team in launching the appchain stack and blockchain infrastructure providers scrambling to support them, we will see more and more appchain launches in the coming months.

The question on many people’s minds is how big this space might grow. Opinions vary widely, with some believing that there will only be hundreds of appchains in the future, while others believe that there will be hundreds of thousands in the future.

More results are advantageous for Layer 2 teams and infrastructure providers, but not all investors believe in this at the moment.

Until the next wave of growth in web3, driven by a new set of problems that the technology solves, we don’t know how much of a role appchains will play in it. As winners start to emerge, there may also be consolidation in the number of appchain platforms.

Universal Settlement Layer

Appchains are an important conduit to help blockchains scale. They offload the execution of decentralized applications to their own private network to better meet their needs rather than overload the underlying blockchain network.

This allows foundation-layer networks such as Ethereum to transition to a universal settlement layer, which plays a more appropriate role in Web3 given their lower throughput and higher costs.

Many new app chains will be launched in the coming months. Unlike standalone blockchain networks, they exist as part of a broader ecosystem because they settle transactions on the underlying network.

These ecosystems will reinforce the claims of many of them. However, it will take time for this pattern to be established and real winners emerge. Especially when there are so many Layer 2 networks to choose from and there is a need for greater product-market fit in web3.