To answer your questions:
1.) What exactly is a DappChain and How is it anchored to the Ethereum blockchain?
A DAppChain is an Application Specific Sidechain that runs parallel to a mainchain, Ethereum in this case.
Its rule-set is customized based on the use-case, and its security is maintained by the mainchain’s consensus algorithm.
DAppChains are convenient, but they require trust assumptions to be made in order to achieve their scalability goals.
Some of these can be solved by adding Plasma Cash to the DPoS sidechains.
2.) How is the distributed consensus handled?
Since all transactions happening on a DAppChain are specific to its DApp, it can run a consensus algorithm that optimizes for those particular types of transactions.
For example, in the case of a game, we can use a consensus algorithm like Delegated Proof of Stake that’s extremely fast and cheap to run.
3.) Is there a network of nodes set up? — Or does each DAppChain have to create their own?
Each DAppChain requires its own set of nodes. We plan on providing an optional “validator” service where Loom Network will spin up extra nodes to protect your DAppChain in its infancy. But this is entirely optional and up to the owners of the DAppChain.
The incentive to run a node on the DAppChain depends on the consensus algorithm it uses, and what sort of rewards it chooses to offer its nodes. You could make a DAppChain that distributes a share of profits to its node operators to incentivize people to run nodes. Or it could offer no rewards, and simply rely on the goodwill and self-interest of the people in the community who use it to run nodes to support it.
Ron, considering that we’ve addressed all of your questions in much more detail (see this, this, this, and this) and have actually released a production DAppChain App (called DelegateCall) — I would wager that what we are doing is worth a bit more than mere “hand waving” 🙂
If we were just “hand waving” — People like Vitalik Buterin (who as you know has ridiculously high standards and a low tolerance for bullshit) wouldn’t be tweeting our work and engaging in discussion with us regularly.
Also, our second production DAppChain app will be CryptoZombies, which will be hard forked very soon.
Yes, all of this info is old news to those with access to the SDK, and when we release the SDK publicly for everyone, then it will be old news to the public as well.
If you have more technical questions, feel free to join our developer only chat on Telegram and geek out.
As always, if you have more questions or didn’t feel that I was clear enough with my answer(s), let me know and I’d be more than happy to clarify.
P.S: As Yogi Berra says, It’s tough to make predictions, especially about the future — thus, it makes very little sense for us to write a Whitepaper outlining stuff when in reality things are always changing and in flux. Much like college textbooks, if we put out a Whitepaper — it would be out of date in weeks.