Why the 'Build It and They Will Come' Appchain Strategy Always Fails

Appchains are a solution in search of a problem for 99% of projects. Teams launch sovereign chains like Celestia rollups or Avalanche subnets before validating user demand, creating massive technical debt and liquidity fragmentation.

The primary failure mode is premature optimization. Developers prioritize theoretical sovereignty and customizability over the immediate network effects and security of established L1s like Ethereum or Solana.

Evidence is in the data: The total value locked (TVL) in major appchain ecosystems like dYdX Chain or Cosmos zones is a fraction of their native application's liquidity on shared L1/L2s, proving users follow utility, not architecture.

The Execution Network is commoditized. Rollups and appchains compete on L1 security and VM performance, but these are solved problems. Optimism Bedrock and Arbitrum Nitro prove execution is a feature, not a moat.

The User Network is the real moat. A chain needs wallets, indexers, and explorers. Solana's Phantom and Helius create a user onboarding flywheel that new chains lack.

The Capital Network is non-negotiable. Native assets need liquidity and bridges. Without deep pools on Uniswap or secure bridges like Across, an appchain is a ghost town.

Evidence: Cosmos appchains with IBC but low TVL demonstrate this. They built the execution layer but failed to bootstrap the capital and user networks, resulting in stagnation.

The initial liquidity gap is the primary failure mode. Developers launch a chain with a novel feature, but users and capital remain on established L2s like Arbitrum or Base. Without deep liquidity, the first DEX pools have 50% slippage, making the chain unusable for its intended purpose.

This creates a negative feedback loop. High slippage repels users, which starves fee revenue for sequencers and validators. Projects like dYdX V4 face this exact validator incentive problem. The chain's security and performance degrade, accelerating the exodus.

The bridge becomes a one-way exit. Users bridge in via LayerZero or Axelar, experience the poor UX, and bridge out. The canonical bridge's TVL stagnates or declines, a public metric that signals failure to the entire market.

Evidence: The Cosmos ecosystem demonstrates this. Despite IBC, liquidity remains fragmented. Osmosis dominates as the hub, while many app-specific zones struggle with sub-$1M TVL, proving that interoperability alone does not solve the bootstrap problem.

Shared security is a validator subsidy that lowers the capital cost to launch a chain, but it does not create sustainable demand. Projects like dYdX and Aave chose to build appchains for sovereignty, not because shared security from Cosmos or a rollup stack like Arbitrum Orbit was the missing ingredient.

The critical failure is liquidity fragmentation. A new chain secured by EigenLayer or a Celestia DA layer still needs its own native liquidity pools. Users will not bridge assets from Ethereum or Solana unless compelling, exclusive applications exist first—a classic chicken-and-egg problem.

Evidence from major ecosystems shows security is not the bottleneck. Avalanche Subnets have shared security, yet the only notable adoption came from a single gaming studio, not a thriving multi-app ecosystem. The barrier is application utility, not validator sets.

Appchain bootstrapping fails because it ignores the user's primary goal: executing an outcome. Developers build isolated liquidity and UX silos, forcing users to manually bridge assets and navigate fragmented interfaces. This friction kills adoption before it starts.

Intent-based architectures solve this by letting users declare a desired outcome (e.g., 'swap X for Y at best price'). Systems like UniswapX and CowSwap then source liquidity across chains via solvers, abstracting the underlying execution. The user gets a result, not a transaction.

Aggregated bootstrapping leverages existing networks. Instead of building from zero, new chains must plug into Across, LayerZero, and Axelar from day one. This turns the chain into a composable module within a cross-chain intent flow, not a destination.

The evidence is in adoption. Protocols deploying with native Across or Stargate integrations see 3-5x faster TVL growth. The winning stack is an intent-solver network atop a cross-chain messaging layer, not a standalone appchain.