For a large-scale company to build in the blockchain space, picking the right tech stack is a pretty big deal.
“If you pick the wrong one, it’s very hard to switch,” podcast host Garrett Harper says. “You need that consistency and to know that it’s going to be able to scale in the future to support your business.”
Eclipse founder Neel Somani says that some of the largest players looking to get into the crypto space, particularly game studios, have told him that they plan to build their apps directly on Ethereum, where gas fees often act as a barrier to entry.
“And in my head I’m like, ‘What are you doing?’” Somani says. “No one’s going to use it ’cause it’s going to be so expensive. But they’re very risk-averse.”
Speaking to Blockworks on the Lightspeed podcast (Spotify/Apple), Somani suggests that layer-2 rollups offer the best building platform for businesses. “They don’t have to pick a specific vendor if they’re on their own rollup.”
“If you’re on your own rollup, then that’s a little bit less of a risk for you. Since, theoretically, your chain is still running, you can move elsewhere.”
Celestia chief operating officer Nick White says the successful launch of layer-2 chains like Base has “increasingly validated” the modular thesis.
“Enterprise users are actually the perfect customers for rollups and for modular blockchains,” according to White. “They want the things that rollups provide. Specifically, they want more control and they want more customizability.”
Rollup as custom ‘dedicated instance’
White notes that enterprises have the money and the user base to take full advantage of rollups, without having to worry about being “fragmented from an existing ecosystem.”
“Base doesn’t need Ethereum,” he says. “It doesn’t really need to be part of Ethereum to get users.” With an already existing user base, established companies can focus resources on development, White says. “In return, what they get is this dedicated instance that is customized for their app, providing a really good product experience.”
White adds that dedicated rollups give enterprises more direct control over their product. They can “bake in KYC [know-your-customer],” and make services free by paying fees on behalf of customers, for example, he says. “There’s all these different customizations they can do.”
Building on a Cosmos-based appchain would also offer plenty of customization possibilities but introduces undesirable complications, White explains. “They’d have to issue a token. They would have to run more of the infrastructure themselves,” he says, which, in the current unclear regulatory environment, is a “legal gray area.”
“They’d rather just avoid that.”
“That’s the beauty of doing a rollup,” White says. “You don’t actually have to issue a token. You don’t have to run a [layer-1]. In some ways there’s still risks, obviously, but it’s less risky.”
“We’re going to increasingly see more and more enterprises going the route of rollups.”
Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.
Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.
Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.