A Deep Dive into Archway: The Value Capture Chain for the Cosmos
Two weeks ago, we announced the Archway Community Sale on CoinList, taking place on June 15th, 2023 at 17:00 UTC.
Archway is a Cosmos-native Layer 1 blockchain that allows developers to capture the value they create to the network through novel, developer-centric economics.
We sat down with the Archway team to learn more about the real world problems they solve, how they differ from other L1s, target use cases, ARCH token utility, and tradeoffs of building on Archway vs. launching your own AppChain.
Let’s dive in.
1. To begin, what is Archway and what real-world problem does it solve?
Archway is an incentivized Cosmos-native Layer 1 that enables developers to capture the value they create for the underlying network. Archway aims to create an economic framework that works with developers instead of against them, by programmatically distributing rewards to developers based on the usage of their smart contracts.
In many cases, dApps built on L1s such as Ethereum don’t benefit from the amount of activity they bring to the chain, as network fees aren’t inherently allocated to the application layer. In order to capture some of this value, some dApps launch tokens with little to no utility or charge users extra fees, with usually low returns. Archway is providing dApps a way to benefit from the activity they create for the L1, enabling a synergistic relationship that thrives not only on value creation, but also on even value distribution.
2. What are the inherent use cases of the ARCH token?
The ARCH token use cases on the Archway Network include:
- Security. The ARCH token will secure the Archway blockchain through staking. Token holders can choose to become delegators by staking their ARCH with Archway’s validators, whose shared responsibility is to validate transactions and maintain the security of the network. In return, validators and their delegators earn a portion of the token inflation.
- Governance. The ARCH token will be the native governance token of the Archway Network. Token holders will be able to propose chain upgrades, community decisions, parameter changes, and more through on-chain governance. In turn, delegators and validators will be able to vote on the proposals set forth proportionally to their amount of staked tokens.
- Transaction Fees.The ARCH token will be used to pay fees on Archway, which will be distributed among the validators and smart contract developers of the network.
- dApps Distributions. The ARCH token will be programmatically distributed among developers on a per block basis based on the usage of their smart contracts.
3. Can you share more about the protocol design of Archway, and how it differs from other Layer-1 networks?
Archway houses 2 custom modules that, together, form its Value Capture Engine. These modules enable the Archway Protocol to calculate and distribute ARCH token rewards to smart contracts based on their transaction volumes. These rewards are made up of a portion of inflation and gas fees, as well as any premium that a developer chooses to add on top of that.
Certain other Layer 1s, in contrast, do not distribute value back to the application level. The few that have made steps to distribute some of the value back have done so by redistributing a portion of gas fees which, on their own, are not equitable to the value created by developers. This is because gas fees on alternative Layer 1 networks can be incredibly low, to the point where allocating a small fraction is not productive. The Archway network natively offers a variety of mechanisms beyond gas fees through which developers capture value, including inflationary rewards and smart contract premiums.
4. Beyond the protocol itself, what other incentives will there be for developers to capture value on Archway?
The Archway Foundation recently launched a grants program to support development of the ecosystem. Additionally, Archway core contributors are readily available to help Archway developers build, deploy, and market their dApps. Through a core Developer Experience team, Archway boasts tools such as Arch3.js, a custom CLI, and more to make deployment on Archway as frictionless as possible. Finally, core teams created Area-52, a free, interactive online platform that teaches developers of any skill level to build and deploy dApps on Archway.
5. What are your thoughts on the future prospects of the Cosmos ecosystem?
The Cosmos ecosystem has a ton of traction and momentum, but has not reached its full potential yet. It is at that point in which innovative technology is used for certain cases that don’t necessarily require it. As time goes by, use cases will become refined as the technology evolves. With developing infrastructure that will soon integrate with and support other networks like Ethereum and Bitcoin, IBC development is making strides toward becoming multi-ecosystem rather than just multichain. This means that the Cosmos ecosystem could stand to become the network that connects all networks.
6. What advice do you have for developers looking to launch their first dApp?
Have clear objectives in mind and think deeply about end-users and their needs. If you have an innovative project, you might be tempted to launch a token or create your own blockchain and ride the hype wave that usually accompanies these two ideas. However, for products to succeed and scale, they need to solve real user problems.
7. What are the tradeoffs of building on Archway vs. launching your own AppChain?
There are a few considerations when deciding where to build. AppChains are a great alternative, as long as the application being built demands that level of customizability, and can justify launching a utility token. AppChain developers are able to create custom modules, which enables them to tailor their network to their very specific needs. While building on a dedicated AppChain affords developers increased granular control, the yearly costs of maintaining a blockchain come close to 3 million dollars. Furthermore, bootstrapping a validator set and creating a sound tokenomics design to secure that network, can be a cumbersome feat.
When building a dApp on Archway, developers are able to focus on building and optimizing their dApp without worrying about protocol overhead costs, chain maintenance, nor chain security. CosmWasm, the smart contracting module that Archway uses, is fairly customizable, meaning most developers will be able to solve for their individual needs without needing full chain customizations.
However, the beauty of building in the Cosmos network is that the endgame is not zero sum. Because CosmWasm is a module, developers that deploy a dApp on Archway can later spin off onto their own Cosmos-native chain with minimal effort.
8. What is the best way to get involved with the Archway community?
The best way to get involved with the Archway community is to stay up to date on our Twitter and Discord channels. We will also be rolling out a community program soon, which you can stay up to date with on our social media. Finally, once we launch, make sure to check out the thriving ecosystem building on top of the network!
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