Messari Research: A Review of the Polkadot Ecosystem

“The parachain model was created with the belief that the future of Web3 will involve many different types of blockchains working together. Just as the current version of the internet meets different needs, blockchains need to be able to provide a variety of services. Parachains solve this Problems.” – Gavin Wood, founder of Polkadot

key takeaways

  • Polkadot’s first 11 parachains are live

     

  • The top 11 parachains locked 126 million DOTs over a two-year lease period (11% of total supply; $2.1 billion)

     

  • Each parachain brings unique capabilities and use cases to the ecosystem

     

  • The next major technical task is to build the Cross Consensus Message Format (XCM)

Introduction: Parachains are online

On December 17, 2021, five years after being conceived, Polkadot successfully completed a multi-stage launch and released its first parachain. Now that the parachain is live, end users can finally transact on Polkadot.

What is a parachain?

Parachains are application-specific, highly customized layer 1 developed using Substrate, Polkadot’s blockchain development framework. It has its own economy, token, governance and user mechanisms like a traditional layer 1. However, unlike traditional layer 1, parachains are not isolated. Instead, it connects to the relay chain, another major technical component of Polkadot.

What is a relay chain?

The relay chain is the core of Polkadot. It is the layer-0 base chain that contains all validators and is responsible for securing, managing, and connecting parachains. In addition to relay chain governance, parachains also have sovereign governance, which is further explained in the following analogy. A relay chain can support about 100 to 250 parachains. The parachain cap is primarily driven by the costs associated with scaling Polkadot’s cross-chain messaging (XCMP) and adhering to an optimal 10:1 validator to parachain ratio to maintain decentralization and performance quality.

Analogy to the United States: the relay chain is the federal government, and the parachains are the states. The federal government protects, manages and unites the states. In the event of a dispute, the federal government takes precedence over state governments.

Messari Research: A Review of the Polkadot Ecosystem

What does the Polkadot Token (DOT) do?

 Polkadot’s native token, DOT, is a utility and governance token used to participate in governance, pay transaction fees, gain security through staking, and gain access to parachain slots. As of March 2022, DOT is the most frequently held asset in crypto funds.

Messari Research: A Review of the Polkadot Ecosystem

For a more in-depth look at Polkadot, see our previous reports Polkadot Primer One and Polkadot Primer 2: https://messari.io/article

In addition to VC funding, Polkadot’s unique architecture combined with Substrate’s flexibility has attracted the second largest developer community. Now that parachains are live and have received a lot of venture capital funding, the fruits of the developers’ labor are available to the masses. In this report, we will delve into Polkadot’s top 11 parachains.

Messari Research: A Review of the Polkadot Ecosystem

Ecosystem Overview – Top 11 Parachains

As mentioned above, a relay chain can support an estimated 100 to 250 parachains. In order for a parachain to get the help provided by the relay chain, the candle parachain slot auction must be won by locking the most DOTs.

Potential parachains typically raise DOT through their community in exchange for their native tokens. At random times in the candle auction, the parachain with the most bound DOT wins the slot. At the end of the lease period, the lender’s bound DOTs will be returned (and they keep the parachain tokens).

After 11 auctions, 126 million DOTs (11% of total supply; $2.1 billion value) have been staked. The first batch of winners (Auctions 1-5) joined Polkadot on December 17, 2021. The second batch of winners (Auctions 6-11) joined Polkadot on March 11, 2022. Each winner brings a unique feature and use case of the Polkadot ecosystem.

Note that not all features described below are active

Messari Research: A Review of the Polkadot Ecosystem

Messari Research: A Review of the Polkadot EcosystemAcala

Acala won Polkadot’s first auction, raising 32,515,980 DOT. Acala is a decentralized finance network built on Polkadot that powers the aUSD stablecoin ecosystem. Acala has a set of aUSD-centric financial functions:

  • Acala Dollar (aUSD)

Acala Dollar (aUSD) is a stablecoin generated by the Honzon Protocol – a mechanism inspired by the Maker DAO (DAI). Users mint aUSD by creating overcollateralized debt positions using approved reserve assets such as DOT, LDOT, and ACA. The team plans to extend collateral to BTC, ETH, and other parachain native tokens. Acala launched the $250 million aUSD Ecosystem Fund along with the original 9 Polkadot parachain teams and several backing venture funds. As of March 8, 2022, $6.17 million has been issued.

  • Liquid pledge (L-Token)

Acala has a liquid staking function through the Homa protocol. Users stake their tokens and earn L-Tokens (such as LDOT), which represent the primary staked asset plus ongoing staking revenue. L-Tokens are accessible as ERC-20 and Substrate-based tokens and can be used in Acala’s DeFi protocol.

  • Acala Swap

Acala Swap is a constant product AMM DEX that supports ERC-20 and native Substrate-based tokens. Acala Swap is hosting a liquidity boot event to celebrate its launch. Users can pay the gas fee for the Acala exchange with any token.

  • Acala Token – ACA

Acala Token (ACA) is a utility and governance token used to participate in governance, transaction fees and incentivize Acala collection nodes.

Additionally, Acala has partnered with fintech unicorn Current, a community-run treasury, and Acala EVM+, enabling full-stack composability between EVM and Substrate. As of early March 2022, Acala had a TVL of $528 million. You can find the Acala roadmap here: https://acala.notion.site/d1ce5e03f5354bc0be8fcf3c18b6e5b6?v=af1ff9fa66aa4dce851da0e429ed51ca

Messari Research: A Review of the Polkadot Ecosystem

Messari Research: A Review of the Polkadot Ecosystem

Moonbeam

Moonbeam won Polkadot’s second auction, raising 35,759,931 DOT. Moonbeam is an EVM compatible cross-chain smart contract platform. Moonbeam allows developers to port their projects with minimal or no code changes, and provides a developer-friendly environment for launching new projects:

  • Ethereum-style unified account

Any parachain can provide an EVM implementation by enabling Parity and Moonbeam-designed cutting-edge pallets. However, parachains with EVM implementations require the user to have the private keys to the EVM and Substrate accounts. Moonbeam provides unified accounts – users only need a private key (EVM-style key) to interact with EVM and Substrate. The unified account feature allows users to use their existing accounts on Moonbeam and use the Metamask wallet.

  • XC-20 Assets

Moonbeam introduces the XC-20 token class, a new token class that provides native interoperability of Substrate-based assets while allowing users and developers to interact through a familiar ERC-20 interface.

  • Moonbeam Token – GLMR

Moonbeam Token (GLMR) is a utility and governance token used to participate in governance, transaction fees (80% burned and 20% allocated to on-chain vaults), incentives for Moonbeam collection nodes, and gas to support smart contract execution metering.

As of early March 2022, Moonbeam has $141 million in TVL, and the ecosystem continues to grow. Moonbeam plans to support new projects through a grant and bounty program.

Messari Research: A Review of the Polkadot Ecosystem

Astar Network

Astar Network won Polkadot’s third auction, raising 10,333,552 DOT. Astar is a multi-chain smart contract platform supporting Web Assembly (WASM) and EVM. Astar provides multiple solutions for developers to build smart contracts:

  • Across Virtual Machines (X-VM)

Today, virtual machines are disconnected and difficult to communicate, such as the ability to call Substrate contracts in EVM contracts. To unify various smart contract engines, Astar is developing Cross Virtual Machine (X-VM). X-VM allows smart contracts to execute calls and read stored data from different virtual machines and languages.

  • ZK solutions

Astar has been developing zero-knowledge scaling solutions. In the near future, Astar will implement the ZK plonk tray (plonk is known as the generic ZK Snark).

  • dApp staking

When building applications, developers often face significant fees that cannot offset the revenue. dApp staking is a reward mechanism for smart contract developers or administrators. Astar staking rewards are sent to application developers based on a dynamic reward model. Ultimately, Astar will distribute 50% of the staking rewards to developers. Astar also plans to introduce features that will allow developers to fund their projects directly from backers.

  • Astar 代 币 – Astra

Astar Token (ASTR) is a utility and governance token used to participate in governance, transaction fees, incentivizing Astar collection nodes, dApp staking, and second-layer application support.

Additionally, Astar backs Polkadot’s largest DEX through TVL ArthSwap, recently raised $22 million led by Polychain, and owns two Ethereum bridges. Astar’s TVL was $386 million as of early March 2022. Astar plans to connect with Cosmos and add many additional features.

Messari Research: A Review of the Polkadot Ecosystem

Parallel Finance

Parallel Finance won Polkadot’s fourth auction, raising 10,751,519 DOT (79% raised through parallel auction lending platforms). Parallel is a DeFi platform with a set of features:

  • currency market

Parallel’s decentralized money market protocol provides lending and staking functionality. Users who choose to pledge can participate in leveraged pledge. Leveraged pledge allows users to borrow and pledge at the same time to double their returns. how? When users stake DOT, they receive a liquid derivative token xDOT. In addition to the current staking yield, xDOT can be lent back to Parallel for borrowing fees. Users can further choose to borrow xDOT to increase leverage. The Parallel Finance platform selects the highest-performing nodes through algorithms to maximize staking revenue.

  • Auction Loan Platform

Auction lending platform to raise DOT for potential parachains. Contributors are incentivized to lend their DOTs through auction lending platforms as they receive additional bonuses from Parallel and prospective parachains, and maintain liquidity through a liquid collateralized derivative, cDOT. cDOT is available for Parallel’s DeFi protocol.

  • Parallel Token – PARA

Parallel Token (PARA) is a utility and governance token for participating in governance, transaction fees, incentivizing parallel collection nodes, and staking in security modules.

Additionally, Parallel plans to release an AMM with stable exchange functionality, a multi-chain wallet, and many additional features. As of early March 2022, Parallels Auction Loan Platform has raised $553 million and has a 22% market share.

Messari Research: A Review of the Polkadot Ecosystem

Messari Research: A Review of the Polkadot Ecosystem

Clover Finance

Clover Finance won Polkadot’s fifth auction, raising 9,752,487 DOT. Clover is an EVM-compatible cross-chain infrastructure platform that provides developers with tools to migrate and scale their applications. Clover has a range of products including:

  • Universal cross-chain tool

Clover has various wallet implementations for interacting with Substrate-based chains on Polkadot and Kusama, EVM chains, and applications on Solana. Users can send, receive, pack and unpack cross-chain assets across different networks without navigating between them (similar to Zapper).

  • Clover Wallet

Clover Wallet is a non-custodial cross-chain wallet that helps users manage, track, and interact with assets on Substrate-based chains on Polkadot and Kusama, EVM chains, and Solana. Clover Wallet is available on mobile devices, extensions and the web.

  • Clover cross-chain browser

Clover Cross-Chain Explorer is a cross-chain block explorer that provides multi-chain indexing on Substrate-based chains on Polkadot and Kusama, EVM chains and Solana. Users can search for blocks, transactions and accounts.

  • Clover Token – CLV

The Clover Token (CLV) is a utility and governance token used to participate in governance, transaction fees, incentivizing Clover collection nodes and treasury management.

Additionally, Clover plans to release cross-chain bridges, cloud service APIs, gas fee redistribution (sharing a percentage of transaction fees with developers), gas-free end-user experience, and identity-based fees, offering lower prices for reputable users .

Messari Research: A Review of the Polkadot Ecosystem

Efinity

Efinity won Polkadot’s sixth auction, raising 7,695,377 DOT. Efinity is a blockchain dedicated to NFTs developed by the Enjin team. Efinity is designed to support NFTs from any blockchain:

  • Token Standard

Efinity is introducing a new standard for interoperable cross-chain tokens. It will be compatible with Substrate-based chains Polkadot and Kusama, ERC-20, ERC-1155, ERC-721 and other chains and their standards. The token standard supports fungible tokens, non-fungible tokens, and grouped NFTs.

  • Fuel Tanks

Fuel Tanks are used for transaction fees. Developers deposit EFI into their fuel tanks to subsidize their user/player costs.

  • separate account

Discrete Accounts is easy for new users to get started without having a crypto wallet. On-chain items can be placed in developer-controlled wallets, which players can claim later when they are ready.

  • NFT.io Marketplace

Efinity and Enjin are developing a new NFT marketplace called NFT.io, with a closed beta scheduled for March. NFT.io is a cross-chain NFT marketplace that provides novel price discovery mechanisms through Efinity.

  • Efinity Token – EFI

Efinity Token (EFI) is a utility and governance token used to participate in governance, transaction fees, facilitate liquidity, reward network participants, fund fuel tanks, and increase transaction limits on Enjin’s JumpNet EVM chain.

Additionally, Efinity will roll out novel user-friendly features and leverage Enjin’s existing infrastructure. Over 100 projects are working on building apps and games on Efinity and Enjin.

Messari Research: A Review of the Polkadot Ecosystem

Composable Finance

Composable Finance won Polkadot’s seventh auction, raising 6,075,487 DOT. Composable is a DeFi infrastructure platform designed for cross-chain interoperability. Composable is building a comprehensive technology stack:

  • Cross-chain virtual machine (X-VM)

A Cross-Chain Virtual Machine (XCVM) is a virtual machine that provides an environment for developers to run cross-chain smart contract functions. XCVM connects Substrate to other networks through its innovative availability layer. It uses the routing layer to determine the best route for an instruction.

  • Mosaic

Mosaic is a cross-chain transfer availability layer that integrates with EVM-compatible chains, including Ethereum, Arbitrum, Avalanche, Polygon, Fantom, Moonriver, and more. Mosaic uses multiple guarantees to ensure the delivery of transfers, including liquidity forecasts, rebalancing of liquidity vaults, and community-run liquidity bots. Developers can build with Mosaic through the Mosaic SDK.

  • Mural

Mural utilizes Mosaic to facilitate the cross-chain transfer of NFTs.

  • Composable 代币 – LAYR

Composable Token (LAYR) is a utility and governance token used to participate in governance, transaction fees, and incentivize composable collector nodes.

Additionally, Composable is highlighted in the annual Electric Capital Developer Report for its increased number of developers. You can find Composable’s roadmap here: https://docs.composable.finance/roadmap-1/timeline

Messari Research: A Review of the Polkadot Ecosystem

Centrifuge

Centrifuge won Polkadot’s eighth auction, raising 5,435,161 DOT. Centrifuge is bringing real-world asset financing to DeFi to lower the cost of capital for small businesses and provide DeFi investors with a stable source of income agnostic to the crypto market. Centrifuge leverages a multi-pronged technology stack:

  • P2P network

Centrifuge’s peer-to-peer network provides a secure way to create, exchange and verify asset data between collaborators and tokenize assets as NFTs. Asset originators can optionally share asset details with service providers, who can evaluate the data and contribute the information to minted NFTs. The origin of the data can be verified using a cryptographic signature.

  • Tinlake

Tinlake is an application that acts as an open marketplace for real-world assets. Businesses tokenize their financial assets into NFTs and use the NFTs as collateral in their Tinlake pools. Users can access all mining pools and invest DAI in the mining pool of their choice. Each pool contains two tranches with different risk-reward levels.

  • Centrifuge Token – CFG

Centrifuge Token (CFG) is a utility and governance token used to participate in governance, transaction fees, incentivize Centrifuge collection nodes and reward network participants.

Additionally, Centrifuge leverages existing legal and commercial frameworks to securely finance real-world assets. As of early March 2022, Centrifuge has a TVL of $76 million.

Messari Research: A Review of the Polkadot Ecosystem

Messari Research: A Review of the Polkadot Ecosystem

Hydra

HydraDX won Polkadot’s ninth auction, raising 2,462,543 DOT. HydraDX is a cross-chain liquidity protocol that reduces liquidity fragmentation by accommodating many cryptoassets into one trading pool.

  • Omnipool

HydraDX Omnipool is a liquidity pool that serves all assets. All transactions in the Omnipool are denominated in LERNA (LRNA), which means that LRNA allows assets to price against each other. The amount of LRNA available in the pool fluctuates relative to total liquidity – as liquidity is increased, LRNA is minted, and as liquidity is removed, LRNA is burned. Since Omnipool mints LRNA to match each increase in liquidity, LPs are able to provide liquidity for any asset they want and incur transaction fees when purchasing those assets from the pool.

  • HydraDX Token – HDX

HydraDX Token (HDX) is a utility and governance token used to participate in governance and stabilize LRNA value.

Messari Research: A Review of the Polkadot Ecosystem

  • Interlay

Interlay won Polkadot’s tenth auction, raising 2,751,954 DOT. Interlay brings Bitcoin to any blockchain.

  • InterBTC

InterBTC is a fully collateralized and interoperable BTC-pegged derivative. To mint interBTC, users lock their BTC in a vault. The vault can be an existing vault or a vault created by the operation of the BTC owner. All vaults are over-collateralized with specific assets. Over-collateralized assets act as insurance in the event of malicious activity within the vault. If malicious activity does occur, BTC depositors will be repaid with slashed collateral at a premium. The first vault will be collateralized with DOT.

InterBTC is a decentralized and trustless BTC-pegged derivative. Anyone can be a vault in InterBTC (decentralized), the vault cannot prevent users from minting InterBTC (censorship resistant), the vault locks the collateral in a different asset (capital efficiency), if BTC is lost or stolen , the user will get collateral to repay at a favorable rate (no trust).

  • Interlay Token –INTR

Interlay Token (INTR) is a utility and governance token used to participate in governance, transaction fees and incentivize Interlay collection nodes. The team plans to tightly integrate INTR into interBTC for advanced features, better rates, and higher insurance coverage.

Additionally, Interlay plans to add new vault collateral and connect with other blockchains including Ethereum, Cosmos and Solana. Interlay aims to be a decentralized Bitcoin bank, enabling vaults to reuse custodial BTC and deposit collateral for structured financial products.

Messari Research: A Review of the Polkadot Ecosystem

Messari Research: A Review of the Polkadot Ecosystem

Nodle

Nodle won Polkadot’s eleventh auction, raising 2,475,528 DOT. Nodle is a decentralized wireless network that provides secure, low-cost connectivity and data mobility for IoT devices. The Nodle Network leverages Bluetooth Low Energy (BLE) through millions of smartphones and routers, enabling businesses and smart cities to connect IoT devices to the Internet at low cost while maintaining privacy and security.

  • Nodle Cash App

The Nodle Cash App is a mobile application that enables users to connect to the Nodle Network, the Citizens Network. After downloading the app, users must turn on Bluetooth and location services in the phone’s settings. The Nodle Cash app will detect sensors and smart devices and connect them anonymously. For the services provided, app users receive Nodle Cash, also known as NODL tokens.

  • Nodle Token –NODL

The Nodle Token (NODL), also known as Nodle Cash, is a utility and governance token used to participate in governance, transaction fees, reward participants of the Nodle network, and incentivize Nodle collection nodes. NODL is distributed to participants of the Nodle network every six seconds.

In addition, the Nodle Network has 5 million active smartphones and 30 million IoT devices per day transmitting approximately 100 GB of data in over 100 countries.

in conclusion

Going forward, Polkadot plans to hold 30 new slot machine auctions by February 2023, bringing the total to 41. Arguably the most important technical task during this time will be building Polkadot’s Cross Consensus Message Format (XCM). Today, a light client version of HRMP is being tested on Kusama. The core tenet of Polkadot’s value proposition is to ensure the successful launch of XCM for smooth cross-parachain communication. Polkadot will continue to build out its unique modular architecture and aggressively drive market share in 2022 and beyond.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/messari-research-a-review-of-the-polkadot-ecosystem/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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