Well yes, but actually no.

The main reason why dApps move to sovereign chains is because they believe they are being robbed.

And it’s not far from the truth, as the majority of dApps are not profitable.

You can consider the recent example of @zkxprotocol shutting down, and many other apps in the past like @utopialabs_, @yield, @FujiFinance, and more.

But is the business model truly that flawed, or are protocols actually being robbed?

The primary source (and often the only one) of income for a dApp is fees. Fees are paid by users because they directly benefit from them.

However, users are not the only parties that benefit from dApp usage.

There are several actors who profit from the transaction supply chain, but primarily they are block proposers, even though they are the last to see the transactions. In the case of L2s, these are sequencers.

MEV is heavily extracted, which is not always a bad thing, but the value that dApps create is taken away from them, so they do not receive the full value they provide.

There are currently 3 ways to address this:

1. Become an appchain.

2. Select an L1/L2 that returns value.

3. Implement app-specific sequencing.

Like everything in crypto each solution comes with its tradeoffs.

1. Becoming an appchain: High Cost + High Value

There are countless pros you get: extract value as much as you want, control your own network (if you’re L2), scale easier, avoid competing for blockspace, and more.

Cons: it’s really expensive, like really expensive. And it’s harder to do, because you have to craft both app and chain.

Even if you want to build an L2 and use solutions like @alt_layer.

Thesis that every app will eventually become an appchain is generally broken, because of 3 reasons:

• Not every dapp is big enough to have a need to move to an appchain.

• Some dapps directly benefit from architecture of underlying chain.

• Dapps feel pretty comfortable on another chain.

1. L1/L2 that returns value: Low Cost + Mid Value

Deploying app on a rollup or L1 costs way less, because you don’t have to implement new rules for validation, inclusion, consensus, transaction flow, etc.

In case of rollups: it’s really easy (most of the times) to bring your app from Ethereum to a rollup, because the rollup is either EVM-compatible (e.g. @arbitrum), or EVM-equivalent (e.g. @taikoxyz).

You still have to consider the architecture of underlying chain, but you don’t have to build it from scratch.

Maybe in the future we will have TRUE chain abstraction, where devs don’t have to care about anything but their dapp, but that is another story…

Devs get mid value in return because it’s not high (you don’t own chain economy), but not low as well (you get some value in return apart from fees).

Currently there are hardly any implementations of it, as sharing MEV with dapps is still a complex process, we need to do more R&D.

1. App-specific sequencing: Mid Cost + Uncertain Value

The concept of app-specific sequencing is quite new and people often mix it up with appchain, the difference is simple:

• Appchain cares about sequencing and execution.

• Self-sequenced dapp cares about sequencing only, “outsourcing” execution to L1/L2

It’s mid cost, because you have to think about ordering transactions apart from dapp building, and the value is uncertain, because the concept is quite new and has different concerns.

First of all, you still depend on proposer, because of games of inclusion: you can send any bundle you want to send, but the decision to include your bundle or not lies on the shoulders of a proposer.

There is no clear incentive for a proposer to include your bundle in the block, if you will take all MEV.

So it opens another market of incentives for proposers. They (dapp + proposer) should collaborate, otherwise none of them have any value or power.

It also has uncertain value because we don’t know for sure if shared value from L1/L2 will exceed the value the dapps will create for themselves via ordering transactions.

Any chain is a dark forest (not only Ethereum!). So back to the question at the beginning:

Is everything really moving towards AppChains?

1. Well, yes (there are some dapps that benefit from having their own chain more than staying on existing one).

2. Well, no (there are other solutions suitable for dapp needs)

The forest is pretty big for exploring all of the options.

Every landscape in the world (crypto) has some diversity, so choose what better suits your needs or build your own solution!

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