How to Choose the Right Blockchain for Your Application

#Introduction

Blockchain technology is revolutionizing how enterprises build and deploy applications. But with well over 1,000 blockchains available, choosing the right one for your application can be daunting. This paper provides factors to consider so that you can make an informed decision that sets your application up for success.

#What is a blockchain?

At its core, a blockchain is a decentralized database managed by a network of computers called nodes. These nodes validate and record data through consensus mechanisms and are incentivized with cryptocurrency tokens.

Many blockchains also enable smart contracts - self-executing code that defines rules for adding data. Developers use smart contracts to build decentralized applications (dApps) that are deployed on the blockchain. dApps on the same chain can interoperate, creating powerful network effects - a major benefit of building in web3.

#Why is choosing a blockchain important?

Selecting a blockchain can be a defining decision for your web3 application. There is no one-size-fits-all. And once your web3 application is deployed - it can be difficult to switch chains without substantial cost or user friction. Each blockchains optimize and trade off on different criteria, and these trade-offs significantly impact the cost and user experience of applications on these blockchains. Furthermore, blockchains often invest in different types of use cases, marketing strategies, and developer tools, which can impact the type of dApps in their ecosystem.  

#Key Considerations for Enterprises

#1. Infrastructure: Balancing the Blockchain Trilemma

Blockchains make tradeoffs between scalability, security and decentralization, known as the "blockchain trilemma". Platforms optimize for different use cases:

• Solana, Aptos, Avalanche: Prioritize scalability and cost-effectiveness. Ideal for consumer payments, gaming, and loyalty.

• Ethereum: Optimizes security and decentralization. Best for large financial transactions requiring immutability.

• Layer 2s (Base, Optimism, Arbitrum, zkSync): Improve performance and cost by batching actions, while inheriting security of the underlying chain.

Choose a blockchain with infrastructure suited to your application's needs, as you would with any critical infrastructure decision.

#2. User Engagement: Evaluating Active Wallets

A blockchain's daily active wallet count is a key vitality metric, reflecting:

• Number of active users and developers
• Technology and platform quality
• Total value locked (TVL)

More active wallets indicate a thriving ecosystem to fuel your application's adoption and network effects.

#3. Costs: Managing Transaction Fees

Transaction (gas) fees, paid in crypto, incentivize nodes to process and add data to the blockchain. For applications with high data volume, these costs are critical, as fees are often passed to users.

Solutions like Magic's gas subsidy and ERC-4337 account abstraction can help, but fees on certain chains may still be prohibitively high. Minimizing costs makes your application more accessible and cost-effective to operate.

# 4. Developer Ecosystem: Leveraging Tools, dApps, Community

A robust developer ecosystem provides valuable building blocks for your application, including:

• Developer tools, documentation, tutorials
• Regulation and enterprise-friendly features
• Peer insights and support
• Financial grants and co-marketing opportunities

A thriving developer community accelerates your project's buildout and lays the groundwork for future growth and innovation.

#5. Interoperability: Harnessing Cross-Application Synergies

A major web3 benefit is composability - the ability for dApps on the same blockchain to interact and build on each other. For example:

• Web2 Loyalty: United partners with Chase and Marriott to enable point transfers, requiring complex database integrations.
• Web3 Loyalty: Magic customer Kalder builds loyalty programs for merchants like Godiva and Farfetch on the same chain, which acts as an out-of-the-box shared database for cross-brand loyalty offers.

While cross-chain bridges exist, it's much easier to collaborate with dApps on the same blockchain. Consider which applications you want to integrate with when choosing yours.

#Checklist for Choosing a Blockchain

1. Infrastructure: Scalability, Security, Decentralization
2. User Engagement: Active Wallets
3. Costs: Transaction Fees 
4. Developer Ecosystem: Tools, dApps, Community
5. Interoperability: Across dApps & Blockchains

#Conclusion

Selecting the right blockchain for your web3 project requires carefully evaluating the factors most critical for your application. By assessing each platform’s infrastructure tradeoffs, user engagement, costs, developer ecosystem, and interoperability, you can choose a blockchain that aligns with your project’s goals and sets you up for long term success. 

Need help choosing a blockchain or launching your web3 initiative? Talk to a Magician.