It started with a post:
Andre Cronje：
Why L2 as an application chain is unreasonable for developers:
There is almost no infrastructure support when deploying, such as stablecoins, oracles, and institutional custody.
Lack of foundation or laboratory support.
Centralized and vulnerable to attacks.
This leads to dispersed liquidity and the need to rely on cross-chains.
Lack of user and developer communities.
Time is spent dealing with these issues rather than focusing on the application and users.
Reduce network effects.
There are still long transaction confirmation times (some providers won’t work with you)
Developed alone, without team support.
Source: X
This experience exposed me to many product recommendations, and one in particular caught my attention (along with many other cool products, of course);
Source: X
Amazingly, they launched my own app chain in just a few minutes.
Source: X
This was very exciting for me from a technical perspective because there were a lot of new solutions out there that I hadn't been exposed to before, and I'm always keen on learning new technologies, so I started digging into it.
The idea of having your own technology stack, including native stablecoins, oracles, proof systems, network effects, cross-chain and interoperability, sounds really good.
This sounds unrealistic (but not entirely), so I’ll start with what I consider to be the two biggest obstacles: native stablecoin issuance and trusted oracles. Going through this process with the recent launch of Sonic (and spending over $5 million on it) made me realize how humbling and slightly embarrassing it would be to get all this for free.
Of the many recommendations, noble.xyz is the one that interests me the most because it claims to provide native USDC and CCTP for any IBC-enabled chain. First of all, this is a cool product, but it is not a native USDC or CCTP, but a bridge for issuing assets through its blockchain and then transferring them to others through IBC (the interoperability version of the Cosmos ecosystem, which is excellent) Integration chain. It's not automatic, it's not free, and it's not native or CCTP.
Having said that, we can also look at other solutions such as LayerZero and AcrossProtocol, which are great protocols. We work with LayerZero a lot and they are excellent and I would highly recommend any chain to work with them, but this is still not a local release. I know this is nitpicking, but after experiencing various issues with bridges, nothing beats local distribution in terms of trust and scale. If you want local distribution, you need to have the funds ready.
On the oracle side, I've received recommendations for skipprotocol, storkoracle, and redstone_defi, but unfortunately none of these products are plug-and-play and require integration, and I'm not sure if there will be any additional cost. Here, I feel it is necessary to discuss the issue of scale. My assumption is that anyone who wants to be L1 or L2 wants to be in the top 50, 20, or 10 (whether by volume, total locked, or market cap). However, this doesn't always apply and some applications don't need to be that big. I experienced this with the Keep3r network, where everyone expected it to be another Yearn, but it was never intended to be. Yearn is similar to an asset management company, while Keep3r is a niche operation and maintenance tool. The two do not need the same evaluation criteria. So, this post is not to devalue these products, as I said, they are all excellent, but if you hypothetically launch an L2 or L1 application chain to compete with Arbitrum, Optimism, Solana, Avax, etc., these The plan appears not to be comprehensive enough.
Next, let's talk about development tools and wallets, which are compatible with any new chain, but users and developers need to manually configure those RPCs. While this isn't a big deal, it does add some unnecessary friction.
Finally, there is the block browser, Blockscout has to be mentioned, it is the benchmark of free browsers. There's not much more to say, they are excellent. However, paid products like etherscan tend to have an advantage because they have dedicated paid teams.
Of course, this doesn't solve the problem of interoperability or network effects. Taking unichain as an example, if uniswap is the only application on the chain (although it is unlikely, let’s assume), what will its transaction volume be? How much of the volume is arbitrage with other AMMs, how much is liquidating positions in money markets, and how much is other bad flash loan activity? In isolation, transaction fees are reduced, and it’s composability and interoperability that help.
I read a bit about clusters and hyperchains, and I admit, either I didn't understand it thoroughly (which is likely), or it doesn't make practical sense in practice.
Now to the last sentence, it actually doesn't make sense. Being able to spin up your own L1 or L2 in minutes, complete with browser, RPC, cross-chain and more, is truly amazing. But is it really practical?
Taking Unichain as an example (sorry, I've been following Unichain, I do think they might be one of the few exceptions because they have huge network effects, but look at this example with me), they build this chain An important reason is to capture value. Take a look at this post:
Source: X
Uniswap on Ethereum alone generated $2.439 billion in gas fees for validators. This does not include MEV extraction (which as sequencers they can capture). This $2.5 billion could have been earned by Uniswap itself, but instead went to validators. This is a very large number.
So, what if we could solve this problem more practically without running our own chain, browser, RPC provider, or instructing users and developers to configure RPC in wallets and development tools, or integrating oracles and local What about stablecoins? What is the problem we want to solve? The real idea is to capture the value back to the application, rather than having it taken away by the network. Isn't there a simple solution to this? In our creator economy, hasn’t this problem been basically solved? The answer is revenue sharing. Platforms such as YouTube, Twitch, and X all give creators a share of revenue. So, wouldn't a more practical solution be to distribute these gas costs to the application?
I ask, what other practical reasons are there? Of course, the problem of low latency has been basically solved by modern blockchains (such as Sonic, Avax, assuming you need EVM, Solana SVM, Sui MoveVM). Our throughput is also high enough that most of the chains I just mentioned are more efficient than current Layer 2. So, if the problem is not speed, nor throughput, then it must be value capture. Who can blame them? Sorter fees are the new revenue model (basically keeping all network fees to yourself instead of sharing them with decentralized value extraction validators, just kidding, I actually like validators).
So, revenue share, right? In this way, all the troubles are solved and all the benefits are obtained.
The application chain seems like an engineering solution that exists to solve problems. Don’t get me wrong, the tech geek in me loves it, but as an actual developer, I can’t help but wonder: why on earth?
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reproduced with permission from: (Shenchao TechFlow)
Original author: Andre Cronje
