App-chain is underrated and almost never gets into narrative.
Because it's designed for the long term to serve a specific niche.
But in the long run, it will outpace competitors due to its robust infrastructure.
A 🧵 on the advantages of app-chain + how to look for good ones👀
In this thread, I'll cover:
1/ Why app-chain?
2/ Thoughts from VCs
3/ Protocol Design/Features
4/ Stakeholders
5/ Roadmap
6/ Tindorr's Take (How to identify a good one)
1/ Why app-chain?
Many people have misconceptions about the purpose of a blockchain.
General-purpose blockchains like Ethereum are not designed to cater specifically to one niche, such as high-performance derivatives trading.
That's why more builders are turning to app chains
If you want a trading app that is fully decentralized and permissionless while maintaining a CEX experience, meaning:
• No single entity has the power to stop the protocol.
• Permissionless market
• Same trading experience as CEXs.
It requires its own network architecture.
Vega Protocol has this goal.
@vegaprotocol is an L1 app-chain specifically built and optimized for trading high-performance derivatives.
With gasless trading, a purpose-built infrastructure, and a commitment to decentralization, Vega is building towards permissionless DeFi.
Example of Competitive Advantages for Derivatives Trading App-Chain:
• No Gas Fee on chain
• Network Speed: Instant Finality (Low Latency)
• Fair Transaction Ordering: Using Proof of Stake
• Governance: Permissionless Market
• Capital Efficiency
And in case you're skeptical about the difference between DEX on other L2s. Again, they prioritize full decentralization so the concept of multisig bridge controlled by validators is also important.
I recommend reading this thread:
twitter.com/ChrisBlec/status/1694359391183482956
2/ Takes/Thoughts from VC
Vega's Total Funding Amount: $10M (2 rounds, led by @Arrington_Cap and @PanteraCapital)
They have been supporting this journey since 2019.
As I've conducted research, App-chain has been an investment thesis that VCs and thought leaders always monitor.
Vega's VCs like Pantera, Greenfield, Arrington realized the pain points happening in the market and shared thoughts on how Vega will tackle all of them.
They consider Vega as "Decentralized Derivatives Layer"
Check the blog for full details:
twitter.com/PanteraCapital/status/1684979861075726336
3/ App Design
From the user interface you can see that Vega's DEX is:
• Full On-Chain Order Book
• No gas fee when placing order
• Professional UI/UX, giving same feeling as TradFi instrument
• Also running on IPFS (decentralised storage network to prevent censorship)
The current type of first market is cash-settled futures, which were proposed and approved through Vega's permissionless market creation.
As Vega just started ramping up in Alpha Mainnet, there will be more complex derivatives products coming for traders, e.g. Perps, SLAs.
4/ Stakeholders
By taking part in Vega Protocol’s ecosystem in early stage, early stakeholders can contribute and front run the rewards from others.
There are 3 ways:
• Price Taking
• Price Making
• Liquidity Providing
I recommend everyone take a look and participate.
5/ Roadmap
They are on full speed, delivering more features to compete with competitors.
Soon, there will be on-chain gamified referral program and Metamask snap integration.
After that:
Sept-23 - Stop orders, iceberg orders, successor markets, Vega wallet - browser extension
Oct-23 - Perps + Ethereum Oracles + potential Chainlink integration
The team is fully transparent about their current activities.
You can also check their backlog and track progress on their GitHub page:
github.com/orgs/vegaprotocol/projects/114/views/4
6/ Tindorr's Take (How to find a good one)
It's evident that the concept of app-chain has already been embraced by VCs and certain communities, like Cosmos.
And you shouldn't overlook this. More developers on this path are taking the challenging route to ensure viability.
Checklist to validate a good app-chain:
• See if a project team has connection to its users
• Have clear image of final product
• Need to constantly make progress
• Have incentives for all stakeholders on this chain
For Vega, they just need to focus on execution to succeed.
The Vega team has been instrumental in helping me understand the vision of one app-chain and supporting this thread.
I encourage everyone to check and ask the team about progress, and development. You can learn more about the differences between operating app-chain vs reg dApps.