Sonic Labs (formerly Fantom) cofounder Andre Cronje believes that developers should steer clear of using layer 2 (L2) app chains. App chains are customized L2 blockchains designed to cater to the specific needs of an application.
In a recent post, Cronje outlined several disadvantages that impede the growth of app chains. These drawbacks include the high cost of infrastructure, fragmented liquidity, and lack of developer support.
Cronje highlighted the absence of infrastructure for deploying stablecoins, oracles, and institutional custody within app chains. He also emphasized that the actual costs of infrastructure are often underestimated.
According to Cronje, expenses related to custody, exchanges, oracles, bridges, and more are quite substantial. His team has already allocated $14 million towards such expenses this year, with a significant portion accounting for recurring costs.
Contrary to Cronje’s perspective, Hilmar Orth, the founder of Gelato Network, has a different viewpoint. Orth suggests that developers can easily access infrastructure through rollup-as-a-service providers (RaaS). He believes that RaaS providers and framework teams offer ample support to developers, contrary to Cronje’s assertions.
Cronje also raised concerns about fragmented liquidity within app chains that rely on vulnerable bridges.
Marc Boiron, CEO of Polygon Labs, proposed a potential solution to this issue through the AggLayer (aggregation layer), which could create an interoperable network of app chains. The AggLayer by Polygon facilitates the sharing of liquidity among sovereign blockchains.
Alternatively, Orth pointed out that each rollup comes with its own bridges and market makers, leading to liquidity concentration in a few chains with high total value locked (TVL). The remaining chains can tap into this liquidity based on demand.
Orth mentioned that faster zero-knowledge (zk) proofs would streamline fund transfers across rollups even further.
Community and network effects
Cronje highlighted that app chains often lack a community of builders and users, which hinders network effects. On the other hand, Boiron argued that network effects would thrive on the AggLayer, as it aggregates users and liquidity. He expressed:
“So many collaborators contributing to the AggLayer, all eager to help expand the ecosystem.”
However, Orth believes that applications within app chains are competitors vying for users and are not necessarily allies.