The use of this site and the content contained therein is governed by the Terms of Use. When you use this site you acknowledge that you have read the Terms of Use and that you accept and will be bound by the terms hereof and such terms as may be modified from time to time.
All text, graphics, audio, design and other works on the site are the copyrighted works of nasscom unless otherwise indicated. All rights reserved.
Content on the site is for personal use only and may be downloaded provided the material is kept intact and there is no violation of the copyrights, trademarks, and other proprietary rights. Any alteration of the material or use of the material contained in the site for any other purpose is a violation of the copyright of nasscom and / or its affiliates or associates or of its third-party information providers. This material cannot be copied, reproduced, republished, uploaded, posted, transmitted or distributed in any way for non-personal use without obtaining the prior permission from nasscom.
The nasscom Members login is for the reference of only registered nasscom Member Companies.
nasscom reserves the right to modify the terms of use of any service without any liability. nasscom reserves the right to take all measures necessary to prevent access to any service or termination of service if the terms of use are not complied with or are contravened or there is any violation of copyright, trademark or other proprietary right.
From time to time nasscom may supplement these terms of use with additional terms pertaining to specific content (additional terms). Such additional terms are hereby incorporated by reference into these Terms of Use.
Disclaimer
The Company information provided on the nasscom web site is as per data collected by companies. nasscom is not liable on the authenticity of such data.
nasscom has exercised due diligence in checking the correctness and authenticity of the information contained in the site, but nasscom or any of its affiliates or associates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this site. The information from or through this site is provided "as is" and all warranties express or implied of any kind, regarding any matter pertaining to any service or channel, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement are disclaimed. nasscom and its affiliates and associates shall not be liable, at any time, for any failure of performance, error, omission, interruption, deletion, defect, delay in operation or transmission, computer virus, communications line failure, theft or destruction or unauthorised access to, alteration of, or use of information contained on the site. No representations, warranties or guarantees whatsoever are made as to the accuracy, adequacy, reliability, completeness, suitability or applicability of the information to a particular situation.
nasscom or its affiliates or associates or its employees do not provide any judgments or warranty in respect of the authenticity or correctness of the content of other services or sites to which links are provided. A link to another service or site is not an endorsement of any products or services on such site or the site.
The content provided is for information purposes alone and does not substitute for specific advice whether investment, legal, taxation or otherwise. nasscom disclaims all liability for damages caused by use of content on the site.
All responsibility and liability for any damages caused by downloading of any data is disclaimed.
nasscom reserves the right to modify, suspend / cancel, or discontinue any or all sections, or service at any time without notice.
For any grievances under the Information Technology Act 2000, please get in touch with Grievance Officer, Mr. Anirban Mandal at data-query@nasscom.in.
The world of blockchain has now an explosion in the number of active decentralized applications and users engaging with them. However, this surge in usage has also exposed the limitations of legacy blockchain architectures and gave birth to new solutions that better suits our needs.
The three major categories of blockchains that are being used now are Layer 2 rollups, alternative layer1 chains, and appchains.
One of the most important decisions now for dApp developers is to identify the right blockchain platform for their specific application needs. There is no one-size-fits-all solution – factors like scalability requirements, security needs, customizability, composability, developer experience, and costs must be weighed carefully.
The right blockchain choice can empower a dApp with the capabilities needed for long-term success and adoption. This guide explores the key blockchain architectures in-depth, including their unique pros and cons, to provide a framework for making this crucial decision.
Main Factors to Consider
When evaluating blockchain options, dApp developers should begin by outlining their application’s technical and functional requirements today as well as anticipated needs over time as adoption grows. Key factors to consider include:
Scalability Requirements
The blockchain must provide the transaction throughput needed to deliver a smooth user experience as demand increases. Slow speeds or high latency due to congestion will frustrate users.
What are the application’s TPS needs today and in the future?
How many daily average active users are there currently?
Can there be spikes in transactions due to sudden demand? Something like we have seen in NFT minting cases or games.
Having precise scalability requirements will make tradeoff decisions clearer later on.
Security Level Needed
All blockchains aim to provide a decentralized and tamper-proof execution environment, but they employ varying strategies to achieve this. dApps with mission-critical functions may require deeper decentralization and security guarantees. Make sure you have answers to the below questions before you make any choice.
Does the app handle high-value transactions or sensitive data?
What degree of decentralization through validator nodes is desired?
Will the app benefit from leveraging an popular L1 blockchain’s security?
Rolling out custom security measures on a less decentralized chain may be complex, costly and hard to achieve.
Customizability
Some blockchains allow the core protocol and parameters to be customized versus others that take a more fixed, “generic” approach. This allows an app to tailor the platform to its usage needs more closely.
Does the app require special protocol optimizations like custom gas tokens, own consensus, etc?
Is on-chain governance a priority, to steer the platform’s evolution?
Will adjusting economic parameters like staking yields or inflation rates benefit the app?
Higher customizability enables tighter blockchain-app integration but may require more ground work.
Composability & Interoperability:
The ability for the blockchain to import dApps from other chains seamlessly, or may be an easy interoperability with other protocols is another key thing to consider. Questions similar to the below might give you answer to this part:
Will users need to move assets between the app and other platforms?
Are there complementary apps in other ecosystems that could provide integrated services?
Does the app rely on external data feeds or oracles?
Higher composability unlocks more functionality but may have some architectural constraints.
Developer Experience
The availability of documentation, tools, infrastructure, and community support is crucial for both the core development team and external developers building on top of the platform.
Is the blockchain stack and tooling well documented, if it’s a new blockchain?
Are skilled developers for the platform’s language available?
Is there an active community for seeking help and collaborating?
What sample apps, tutorials, and resources exist?
A better dev experience enables moving faster but may limit technology choices sometimes.
Costs
In public blockchains, factors like transactions fees, gas costs for computation, and running validator infrastructure impact operations. The app’s revenue model and user profile influences its sensitivity to costs.
Can the app absorb high variable transaction fees or gas costs?
Does the app require predictability around costs for budgeting purposes?
Can validator operation be sustained long-term with target margins?
Higher costs may limit adoption and commercial viability of the app.
By keeping these parameters in mind while assessing each blockchain architecture, an informed choice aligned with the app’s needs can be made.
In the next section, we will explore the architectures and their distinguishing pros and cons.
Architecture Deep Dives
Layer 2 Rollups
Layer 2 rollups have emerged as a popular scalability solution for enhancing transaction throughput on Layer 1 chains like Ethereum. They function by handling transaction execution and data processing “off-chain” while inheriting the underlying L1’s security guarantees.
Rollups batch hundreds of transfers off-chain and generate a compact cryptographic proof. This proof is periodically posted to the L1 chain along with the new state root, allowing transactions to be verified trustlessly while retaining the L1’s decentralization and security.
Rollups represent a modular approach to scaling, as execution and data availability layers are decoupled from the security layer. This enables independent optimization while reusing battle-tested L1s like Ethereum for security, instead of launching entirely new chains.
Mainly two main categories of Rollups exists today.
Optimistic Rollups
zk Rollups
Optimistic rollups assume transactions are valid by default but have a withdrawal delay period where invalid state transitions can be challenged. Invalid transactions are reversed while honest transactions are finalized faster. On the other hand, zkRollups use succinct cryptographic proofs called zk-SNARKs to mathematically prove the validity of state transitions. Transactions are instantly finalized with no challenge period.
Here are some of the key advantages rollups offer to dApp developers:
Improved Scalability: Rollups can achieve better TPS compared to its base chain. This is vital for developing scalable applications.
Lower Fees: By batching transfers off-chain, rollups reduce fees multiple times compared to L1. This improves user experience and reduces initial barrier.
L1 Security: Rollups inherit the strong security guarantees of chains like Ethereum or Polygon leveraging their decentralized consensus and validator pools.
Composability Within Ecosystem: Apps on the same rollup chain can seamlessly interoperate, enabling integrated dApp workflows. For appRollups, there could be a seamless communication with the base chain ecosystem and the rollup.
Familiar Tooling: Ethereum rollups allow using Solidity and EVM, reusing developer skill sets and tools.
However, rollups also come with downsides also. Like, Rollups rely on the underlying L1’s protocol, limiting customization of core chain mechanics. If you want to get your assets back to L1, it will be through bridges. This can be costly, slow and the bridge UX could be complex for average users. Another concern is obviously, the use of centralized sequencers. Interoperability between different rollup chains is also limited at the moment which could lead to an walled garden ecosystem of thousands of rollups.
Talking about its best usages, Rollups are a natural fit for apps already integrated in Ethereum or a similar ecosystem and wanting to retain the network effects. For entirely new apps with complex needs, the lack of customizability and isolation of rollup ecosystems may be limitations.
Alternative Layer 1s
Rather than using rollups to scale existing L1s, another option is to build on entirely new alternative Layer 1 blockchains designed from scratch for higher throughput and better customizability.
Unlike Ethereum which uses a single-chain architecture, these next-gen Alt L1s employ technical innovations like sharding, parallel execution, and optimized consensus algorithms to deliver dramatically higher TPS figures.
Some prominent existing examples include Polygon PoS, Polygon zkEVM, NEAR, Aptos, Coreum, zkSync Era, DCOMM and Tezos. Many other new players are coming up as well.
Here are some advantages of these high-performance Alt L1s:
Extremely High Throughput: Alt L1s exceed thousands in TPS, enabling demanding apps across sectors.
Low Latency: Predictable block times and high TPS provides a smooth user experience.
Cheap Transactions: Lower network congestion keeps transaction fees negligible, around $0.01 on average.
Rich Ecosystems: Many existing Alt L1s already have hundreds of live dApps, developers, and users
New Technical Capabilities: Sharded architectures, WASM/EVM support, native interoperability, and more expand the design space.
However, Alt L1s also have some disadvantages like other solutions. There could be a security issue if the validator sets are not sufficiently decentralized. If the ecosystem is not large enough, your dapp could be in an isolated environments with limited cross-chain interoperability. Opting for Rust, Haskell, Move or any new language over the popular ones like solidity requires new developer skill sets.
For many consumer apps like games or social platforms that require high scalability and low costs, building directly on a high-performance Alt L1 may be the best fit. A strong developer community on the chain is helpful, though. Those prioritizing decentralization, composability, and leveraging Ethereum’s network effects may still prefer certain layer 2 rollup solutions however.
Appchains:
Rather than deploying a dApp on a shared “generic” blockchain network, teams can also build their own fully customizable application-specific blockchains, known as appchains.
Appchains function similarly to an independent Alt L1 but are optimized purely for a specific use case rather than being general purpose. Control remains entirely in creators’ hands.
Two common approaches for creating such blockchains:
Using Frameworks (Cosmos SDK, Substrate): It has modules for customization, interoperability and everything.
Leveraging existing app-chain solutions on L1s: They utilize parent chain’s security with added scalability. Example: Avalanche Subnets, Polygon Supernet & CDK Chains
Here’re some example appchains from different ecosystems:
– dYdX – dYdX became a Cosmos-based appchain with fully decentralized, off-chain order book and matching engine.
– Energy Web Chain – A Polkadot Parachain with a singular focus on energy sector
– Plena Finance: This leading DeFi project has launched its own Polygon CdK powered zkChain
Here are some benefits appchains provide:
Sovereign Control: Teams retain full control over validator choice, gas token, consensus and other things.
Optimized for Use Case: The stack can be customized exactly for the target application.
Scalability: Dedicated throughput for a single app allows pushing limits.
Shared Security: (Optional) Avalanche Subnets and Polygon CDK Chains leverage the security of their base chain by default. For Cosmos SDK chains you can choose to get liquidity of the Cosmos hub if you wish. Same for Substrate chains. You can run its as a parachains connected to Polkadot relay chains.
The main disadvantages of building on an appchain are: finding validators, providing liquidity maintaining an entire network, which is more than just running a few nodes.
Talking about the use cases, for applications that have complex needs and want sovereignty over their blockchain environment, developing a custom appchain can make sense once sufficient scale and product-market fit is achieved.
Shared security and composability with external chains via bridges and protocols like IBC, XCMP, LXLY bridge of Polygon CDK can help mitigate these downsides. Teams can consider appchain strategies as part of a phased roadmap also, after proving core product utility on base L1s first.
Here’s the TLDR:
Based on analyzing various real-world projects, we can extract some best practices for aligning architectures with app goals:
Applications requiring high scalability with many concurrent users fare best on high-performance Alt L1s, at the cost of some decentralization.
Apps wanting Ethereum’s security guarantees can achieve scaling through rollups.
For ultimate customizability and control, build an application-specific appchain aligned with the product roadmap.
New apps with unproven product-market fit may prioritize leveraging existing L1 communities over custom chains.
Shared security systems like Cosmos Hubs, Avalanche C Chain, Polygon’s PoS or zkEVM chain, Polkadot’s relaychain can support with required liquidity and security for appchains. Because of their battle-tested validation.
Be flexible – as products and chains evolve, migration between architectures may be necessary to stay aligned.
By benchmarking options versus core priorities, teams can smartly navigate tradeoffs and engineering costs.
About The Author
Dr. Ravi Chamria is co-founder CEO of Zeeve Inc, an Enterprise Blockchain company. He has an experience of 18+ years in IT consulting spanning across Fintech, InsureTech, Supply Chain and eCommerce. He is an executive MBA from IIM, Lucknow and a prolific speaker on emerging technologies like Blockchain, IoT and AI/ML.
Passionate About: Blockchain, Supply Chain Management, Digital Lending, Digital Payments, AI/ML, IoT
That the contents of third-party articles/blogs published here on the website, and the interpretation of all information in the article/blogs such as data, maps, numbers, opinions etc. displayed in the article/blogs and views or the opinions expressed within the content are solely of the author's; and do not reflect the opinions and beliefs of NASSCOM or its affiliates in any manner. NASSCOM does not take any liability w.r.t. content in any manner and will not be liable in any manner whatsoever for any kind of liability arising out of any act, error or omission. The contents of third-party article/blogs published, are provided solely as convenience; and the presence of these articles/blogs should not, under any circumstances, be considered as an endorsement of the contents by NASSCOM in any manner; and if you chose to access these articles/blogs , you do so at your own risk.
Zeeve is an enterprise-grade Blockchain Infrastructure Automation Platform. Join the growing list of clients that trust us with their Blockchain initiatives
Ethereum is a blockchain-based decentralized platform with smart contract capabilities. As of the platform, ether is the native cryptocurrency. Being the second biggest blockchain network in the blockchain space, Ethereum has a lot of…
The word cross-border refers to payments across different countries. Cross-border payments are vital to individuals, businesses, merchants, industries, and international development organizations. However, cross-border transactions are often…
NFTs will be huge in 2021. In 2022, they will still be the hottest trend.NFTs are gaining popularity at an incredible rate, and it is now possible to create the Metaverse, a digital future. Metaverse allows users to experience a virtual world by…
Driven by the blockchain technology, web 3.0 is already creating ripples and also bringing in changes in the way how businesses operate. Some businesses have already taken initiatives, while many are still exploring opportunities to adopt the new…
There are billions of people who rely on the internet, whether for personal or professional purposes. The Internet enabled people who lived thousands of miles apart to communicate with one another. It aided education, healthcare, and business,…
Web3 is considered as the next iteration of the internet, and is still in its infancy, and will serve as the base for Metaverse. While we are talking about transitioning to decentralised means of storing data, smart contracts and DAOs to host…
