Helping dApp Developers Capture Value: Understanding Archway's Economic Model
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Helping dApp Developers Capture Value: Understanding Archway's Economic Model
Archway's economic model represents a paradigm shift in blockchain development, correcting inherent flaws in existing Layer 1 protocols.
Navigating Web3 tides with focused insightsWritten by: Lera Salazar
Compiled by: TechFlow
Recently, Archway has been frequently mentioned in Cosmos-related communities.
Archway is a solution that helps developers launch dApps and capture the value they generate for the underlying network. The Archway mainnet is now live, and its airdrop program has also been launched.
For readers who are not yet familiar with Archway’s product mechanisms and functions, this article offers a friendly and easy-to-understand introduction to Archway's key products and the problems it solves, providing valuable reference for further exploration and investment decisions.
In recent years, blockchain technology has seen the emergence of numerous Layer 1 protocols, each competing to attract developers and build a thriving decentralized application (dApp) ecosystem. However, the internal economic dynamics of existing Layer 1 protocols often favor the base protocol over the dApps themselves.
Archway is a Cosmos-native Layer 1 blockchain that introduces a groundbreaking approach to addressing these challenges. By combining economic innovation with new core SDK modules, Archway provides a sustainable and incentive-aligned protocol that empowers developers to build, deploy, and grow applications while preserving both the economic benefits of dApps and the structural advantages of appchains.
Why Current Incentive Structures Are Flawed
In the Web2 era, application-centric platforms (such as Google) captured most of the value, while underlying protocols (like TCP) played a secondary role. However, Web3’s “fat protocol” thesis shows that Layer 1 protocols accumulate more value than the dApps built on top of them. This shift in value creation has led many widely used applications to consider launching their own Layer 1 or appchain to capture more of the value they generate.
How Archway Changes This Paradigm
Archway positions itself as a more attractive Layer 1 for developers—not only offering a Cosmos-native Layer 1 but also enabling developers to capture the value they create. By leveraging the Cosmos ecosystem and its interoperability protocol IBC, Archway connects to over 50 chains, enabling seamless integration for dApps and appchains. This eliminates the need for developers to create and maintain their own resource-intensive standalone blockchains. Economically, dApps no longer need to rely on creating single-use tokens or charging users extra fees to capture the value they bring onto the chain.
Explaining Archway’s Economic Innovations
Archway introduces several economic innovations that differentiate it from existing Layer 1 protocols. By integrating the x/rewards module, Archway calculates and distributes rewards directly to smart contracts, ensuring developers retain the value they create. Additionally, Archway implements a protocol-managed minimum Gas price (mPoG), protecting the chain from attacks while providing developers with consistent and verifiable rewards.
Developer Inflation and Incentivized Development
Developer inflation refers to a fixed percentage of total inflation allocated to reward developers of contracts actively used on-chain. This incentivizes continuous development and maintenance of well-performing dApps. Developer Inflation Tokens (DIT) reserve a portion of newly minted ARCH tokens from inflation and distribute them to developers based on gas consumed by their contracts. This innovative mechanism aligns incentives and ensures developers are consistently rewarded for driving value within the Archway protocol.
Gas Rebates and Contract Premiums
Archway adopts a modified version of the Ethereum gas model, where 50% of the minimum gas fee is burned and the remaining 50% is distributed to the contract creator or a designated wallet. This mechanism reduces the supply of ARCH tokens when a developer’s contract is used, aligning incentives with usage and rewarding value creation.
Furthermore, Archway introduces contract premiums, allowing creators to set their own usage fees in addition to gas fees. This composable fee layer enables builders to incorporate traditional business models and monetize their dApps or web infrastructure tools. It brings sustainability to end-user-focused dApps and builders of web-based goods and services, creating a more predictable and flexible economic model.
Smart Target Parameters
Archway’s dynamic formula, known as Smart Target Parameters (STP), automatically adjusts relevant parameters based on predefined targets. This flexibility allows the Archway DAO to optimize and fine-tune various economic factors, ensuring goals are met and enabling the protocol to adapt to evolving demands.
Archway’s economic model represents a paradigm shift in blockchain development, correcting inherent flaws in existing Layer 1 protocols. By providing a sustainable and incentive-aligned ecosystem, Archway empowers developers to create and maintain dApps while capturing the value they generate. By bridging the gap between standalone dApps and appchains, Archway sets a new standard, paving the way for a vibrant and thriving dApp ecosystem.
For more information about Archway’s economic model, refer to its whitepaper: https://archway.io/whitepapers
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