Appchains vs Shared L2s: State Isolation

Appchains (like those built with Cosmos SDK, Polygon CDK, or Arbitrum Orbit) excel at providing teams with full state sovereignty. This means developers control the entire stack—consensus, fee markets, and upgrade paths—enabling deep, custom optimizations. For example, dYdX migrated from a shared L2 to a Cosmos-based appchain to achieve 2,000 TPS for its orderbook, a level of performance and customization unattainable in a shared environment.

Shared L2s (like Arbitrum One, Optimism, Base, and zkSync Era) take a different approach by offering state isolation within a shared security model. Projects deploy smart contracts into a common, high-liquidity environment. This results in a critical trade-off: you gain instant composability with protocols like Uniswap and Aave (which collectively hold billions in TVL) but sacrifice the ability to customize gas tokens or modify the virtual machine at a fundamental level.

The key trade-off: If your priority is maximum performance, protocol-level governance, and fee capture, choose an appchain. If you prioritize rapid deployment, native composability, and leveraging an existing user/developer ecosystem, choose a shared L2. The decision hinges on whether sovereignty or network effects are your primary constraint.

Appchains (e.g., Polygon Supernets, Avalanche Subnets, Cosmos SDK) excel at providing sovereign, customizable state isolation. This allows a project to control its own validator set, customize its virtual machine (e.g., use a non-EVM runtime like CosmWasm), and implement bespoke fee models and governance. For example, dYdX's migration to a Cosmos-based appchain allowed it to achieve 10,000+ TPS for its order book, a performance target unattainable on its previous shared L2. The trade-off is significant operational overhead in bootstrapping and maintaining validators, security, and cross-chain infrastructure.

Shared L2s (e.g., Arbitrum, Optimism, zkSync Era) take a different approach by providing shared, secure state isolation within a single, high-throughput environment. Projects deploy smart contracts into a partitioned state space on a chain secured by Ethereum (via rollup proofs or fraud proofs). This results in immediate access to a large, pooled user base and liquidity (e.g., Arbitrum's $18B+ TVL), robust shared security, and a streamlined developer experience using familiar EVM tooling. The trade-off is less control over the chain's core parameters, potential for network-wide congestion spikes, and competition for block space with other protocols.

The key trade-off is Sovereignty vs. Convenience. If your priority is maximum control, customizability, and dedicated performance for a complex application, choose an Appchain. This is ideal for large-scale DeFi protocols (like dYdX), gaming ecosystems, or enterprises needing specific compliance modules. If you prioritize rapid deployment, access to existing liquidity, and minimizing operational complexity, choose a Shared L2. This is the superior path for most DeFi dApps, NFT projects, and teams seeking to iterate quickly within the Ethereum ecosystem's security and network effects.