In-depth analysis of Archway: the value capture chain of Cosmos

Editor's Note: CoinList will start the Archway Community Sale on June 15, 2023 at 17:00 UTC. Archway is a Cosmos-native Layer 1 blockchain that allows developers to capture the value they create for the network through a novel, developer-centric economic model.

CoinList recently communicated with the Archway team and analyzed Archway in depth with 7 questions, such as the real-world problems Archway solves, the difference between Archway and other Layer 1 blockchains, Archway use cases, the practicality of ARCH tokens, and building on Archway Or the trade-off between developing your own application chain, etc.

Golden Finance 0xxz compiled the interview between CoinList and Archway, as follows:

1. What is Archway? What real world problems does it solve?

Archway is an incentivized Cosmos native Layer 1 blockchain that enables developers to capture the value they create for the underlying network. Archway aims to create an economic framework that works with developers rather than against them, by programmatically rewarding developers based on smart contract usage.

In many cases, dApps built on Layer 1 blockchains like Ethereum do not benefit from the activity they bring to the chain because network fees are not inherently allocated to the application layer. To capture some of this value, some dApps launch tokens with little utility, or charge users extra, often with little return. Archway provides a way for dApps to benefit from the activities they create for Layer 1 blockchains, enabling synergistic relationships that are both value creation and value distribution.

2. What is the intrinsic use case of the ARCH token?

ARCH token use cases for the Archway network include:

1. Safety. ARCH tokens will be staked to secure the Archway blockchain. Token holders can choose to stake their ARCH tokens to become delegates with Archway's validators, whose shared responsibility is to verify transactions and maintain the security of the network. In return, validators and stakers will receive a portion of token inflation.

2. Governance. The ARCH token will be the native governance token of the Archway network. Token holders will be able to propose on-chain upgrades, community decisions, parameter changes, etc. through on-chain governance. Accordingly, stakers and validators will be able to vote on proposals in proportion to the amount of tokens they stake.

3. Transaction fees. ARCH tokens will be used to pay for fees on Archway, which will be distributed to the network's validators and smart contract developers.

4. DApp distribution. ARCH tokens will be automatically distributed to developers on a block-by-block basis based on smart contract usage.

3. Archway's protocol design and the difference between it and other Layer 1 blockchains?

Archway has two custom modules that together form its value capture engine. These modules enable the Archway protocol to calculate and distribute ARCH token rewards based on the transaction volume of smart contracts. These rewards are made up of inflation and a portion of the gas fee plus any additional fees the developer chooses to add.

In contrast, some other Layer 1 blockchains do not distribute value to the application layer. The few blockchains that have taken some steps to distribute value back do so by redistributing a portion of gas fees, but in isolation these gas fees do not compare to the value created by developers. This is because gas fees on other layer 1 blockchains may be so low that allocating a small portion is not productive. The Archway network natively provides a way to go beyond Gas fees through various mechanisms such as inflation rewards and smart contract additional fees, through which developers can capture value.

4. Besides the protocol itself, what are the other incentives for developers to capture value on Archway?

The Archway Foundation recently launched a grant program to support the growth of the ecosystem. Additionally, Archway's core contributors are ready to help Archway developers build, deploy, and promote their dApps. Through the core developer experience team, Archway provides tools such as Arch3.js, custom CLI, etc., to make deployment on Archway as frictionless as possible. Finally, the core team created Area-52, a free interactive online platform that teaches developers of any skill level how to build and deploy dApps on Archway.

5. How do you see the future prospects of the Cosmos ecosystem?

The Cosmos ecosystem has high energy and momentum, but has not yet reached its full potential. It is in certain situations where innovative technology is not necessarily required that the technology of this ecosystem finds application. Over time, use cases will become more granular as the technology evolves. With infrastructure under development that will soon be integrated and supported with other networks such as Ethereum and Bitcoin, the development of IBC is moving towards multi-ecosystems rather than just multi-chains. This means that the Cosmos ecosystem is expected to become the network that connects all networks.

6. What advice do you have for developers who want to launch their first dApp?

Have clear goals and think deeply about end users and their needs. If you have an innovative project, you might want to launch a token or create your own blockchain and gain traction along the frenzy that usually goes with these two ideas. However, for products to succeed and scale, they need to solve real user problems.

Seven, choose to build on Archway or develop your own application chain?

There are several considerations when deciding where to build. As long as the application being built requires that level of customizability, and launching a utility token can be justified, then Lisk is a great option. Lisk developers can create custom modules, enabling them to tailor the network to their specific needs. While building on a dedicated Lisk gives developers more granular control, maintaining a blockchain costs close to $3 million per year. Additionally, starting the validator set and creating a stable token economic design to secure the network can be an onerous task.

While building dApps on Archway, developers can focus on building and optimizing their dApps without worrying about protocol overhead, chain maintenance, and chain security. The smart contract module CosmWasm used by Archway is quite customizable, which means that most developers can solve their individual needs without full chain customization.

However, the beauty of building on the Cosmos network is that the end result is not a zero-sum game. Since CosmWasm is a module, dApps deployed on Archway can then be transferred to their own Cosmos native chain with minimal effort.