Everyone wants their own appchain now

It’s like back in 2015–2018 when every business and project wanted to create their own L1 blockchain, often under the guise of being the “Ethereum killer” by promising some combination of cheaper, faster, more scalable, a more creative consensus algorithm, a different programming language, WASM vs EVM, added privacy etc

That was the era of “blockchain, not bitcoin” and whilst there’s many big names that launched in this wave that are still around today e.g ZCash, Tron, EOS, Cardano, Stratis, it’s fair to say that none of them ended up flipping Ethereum as the defacto number 2 chain in the industry.

In fact many of the Ethereum challengers who struck off on their own chain have since merged into the Ethereum ecosystem because they couldn’t find product-market fit and sustain their own communities e.g Celo, Lisk, COTI, Skale.

What we have seen in the last few years, boosted by Vitalik’s vision of Ethereum scaling via rollups rather than increasing the base chain itself, is a growing layer 2 ecosystem where projects now launch on top of existing layer 1 protocols like Ethereum, Cosmos, Polkadot and most recently Bitcoin.

These layer 2s now have $34bn in locked value and see combined activity of 330 TPS (providing a scaling factor of over 28x the base chains they are built on).

There’s the big names like Arbitrum and Optimism which are well established and there’s been the phenomenal growth of Coinbase’s ‘Base’ which is now number 2 by size and recently flipped Arbitrum briefly for the top spot. At the end of October, Kraken announced that they were to follow suit with their L2 ‘Ink’. Then hitting recent news is the launch of ApeChain for the Yuga Labs ecosystem of projects and Uniswap’s OP based Unichain

However whilst they bring plenty of benefits, there’s now over 100 layer 2s, all with their own tokens, dApps and communities. This fragments liquidity and users and creates a complex to navigate world of little l2 islands where users must constantly wrap and bridge assets between them to make use of the different ecosystems and their functionalities. It also splits developer focus and support across each layer 2, each with their own engineering quirks to be learned and harnessed.

This is far from a good user or developer experience!

I therefore suspect that we will see a replay from the L1 situation where many L2s fail to survive due to lack of user adoption, some merge together to boost their community, and others merge back into the L1 itself or move their functionality to a more popular L2.

However in the meantime there are some interesting companies looking at how to solve this fragmentation and UX issue:

• NodeKit’s Javelin product allows ‘superbuilders’ to create blocks for multiple chains simultaneously so it removes the need for users to bridge assets since transactions across chains can be built into just one block on their ‘Composable Network;. This is a pretty exciting concept and really takes the cross chain transaction concept to another level!
• Superchain brings together L2s built with Optimism’s OP stack into one big composable and interactable layer. With big names like Base, Mantle and now World (formerly Worlcoin) on OP, this aggregation is a meaningful combination.
• AggLayer from Polygon aims to do similar.

Originally published at https://www.linkedin.com.