Which blockchain is right for your DApp?

by Ben Andre

Which Blockchain is right for you DApp?

One of the most common questions we get at Arbol is, “Why are you building on Ethereum if it can only do 15 transactions per second?” Good question — but the answer is a long one, requiring a deep dive into the use-case of Arbol. If you are building a DApp and trying to figure out which platform to build on, you can think of this as a case study and apply the same logic to your DApp.

Who are your users?

Arbol is an international weather risk marketplace built on the blockchain. Our users create insurance-like derivatives on the blockchain that pay out based on weather outcomes. They fall into two groups.

The first group is composed of weather-exposed entities. Farmers, agribusiness, solar and wind energy operations, shipping operations, tourism-related enterprises, the list goes on. Businesses in this group will use Arbol to hedge their weather risk, leading to increased stability and growth. This group runs the gamuts of both technological sophistication and access to financial resources, as both very large and very small organizations can use Arbol for hedging weather risk.

The second group is that of the financiers. These include insurers, banks, hedge funds, investors, really anyone looking to earn a return by financing a weather derivative. This group tends to be more technologically sophisticated and have access to more resources.

Will your users have the inclination and the resources to adopt Web 3.0?

Adopting Web 3.0 means running a wallet application and managing your private keys. For the users of a DApp like Bitcoin, or an ICO, adopting Web 3.0 was more or less okay. Users of these DApps are, for the most part, either technologists or technologically sophisticated finance people. For a DApp like Gitcoin, adopting Web 3.0 is also ok. Gitcoin’s users are mostly software developers, they are fine with Web 3.0. I think the argument can be made that they would gain more users if they were able to abstract away Web 3.0, but doing so would conflict with their open source mission, as abstracting away private keys requires more centralized resources and control.

Arbol’s financier group will likely have some members comfortable with using Web 3.0 — hedge funds, technology investors, the same types of people who use Bitcoin but insurers and banks may be slower to adopt to Web 3.0.

There might be an avenue of escape here if Coinbase or some other entity develops a good custodial service, but I don’t see that happening for quite some time. See my rant about the adjacent subject of exchange APIs.

Arbol needs a network that has some means of abstracting away private key management. Ethereum has the largest ecosystem of apps and auxiliary services — included among them is Upvest, which uses a three-way private key management arrangement between the user, the DApp, and Upvest itself to create an experience for the user similar to that of a traditional web app. The user simply logs in with a password. Our users are used to that experience already, so adoption won’t be a problem.

Will your users do lots of small transactions or a few big ones? Can they wait a day or two if the network is being slow? How important are system fees?

Currently, we think that agricultural entities will be using Arbol a few times a year and that their transactions will not be time-sensitive but if you are doing something where a few hours can make the difference, you probably don’t want to build on Ethereum right now.

Once we start doing microtransactions for very small farmers, we may decide to build on Stellar or a platform focused on lowering system fees.

How important are privacy and identity to your DApp?

Most projects will require KYC compliance and that certain transaction data not be publicly available and therefore encrypted. The Corda network makes a compelling argument for a network that builds identity and data privacy into the platform as a system-level feature. Ultimately, we may build on Corda, but for now, the Web 3.0 adoption issue takes precedence and there is no Upvest-like solution for Corda, as far as we know (please get in touch if you know of a project that does this!).

Do you need to access data on the conventional internet?

Arbol calls out to a variety of weather data authorities. Oraclize, and soon Chainlink facilitate this on Ethereum. Many networks have no way to access data on the conventional internet.

Conclusion

If your project needs a Web 3.0-less user experience, needs to call out to external data sources, does not need very fast transactions and low system fees, and can deal with evolving solutions to privacy and identity problems (encryption and KYC) for the time being, then Ethereum is probably right for you.

Arbol makes automated payments based on weather outcomes using smart contracts and third-party weather data.

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Arbol makes automated payments based on weather outcomes using smart contracts and third-party weather data.

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