Economic / game theory questions & discussion of core sales / polkadot 2.0

A lot of questions here, so I think it is best to respond by establishing the foundational ideas, and then perhaps letting you arrive to the answers yourself.

First, I think we can agree that blockspace has inherent costs and value. Same can be said with any cloud computation, however in Web 2.0 a lot of cloud computation is offset by other profit models. For Blockchain/Web3, computation is quite a bit more expensive, since there is the redundancy required to run multiple nodes, create and verify new blocks, etc…

So the costs need to be paid by someone, and it seems a lot of your questions revolve around who is going to pay those costs, and what that might mean for adoption and onboarding into this ecosystem.

Fortunately, the underlying philosophy of Polkadot is to make accessing blockspace as flexible as possible, and thus there should be many avenues for teams to acquire it no matter their specific situation.

Here are some of the options, non-exhaustive:

Direct Purchase

As you noted above, the most obvious way to access blockspace would be a team to directly purchase it. This does work well for high quality and established teams, which have the financial capital to acquire blockspace for themselves. I don’t think there is much to argue against this model as clearly blockspace is a market, and those who are willing to buy it should be able to.

With this model, it is possible that all costs for using a parachain are obfuscated from the user. Chains could literally provide free transactions to their users and pay for the blockspace themselves, assuming they build the right system to support that.

Funded by Users

If a team does not have the capital to purchase blockspace themselves, then end users who find value in using the parachain can pay the costs. This is pretty much the same thing as paying for Gas costs to execute a smart contract on Ethereum. This has been described since the beginning of parathreads:

I write about it a bit more here: On-demand parachains - #13 by shawntabrizi

Basically the idea is that getting a block published will cost some amount of DOT. If the Parachain provides an increasing reward in their own token for a block submitter, then users are incentivized to submit blocks on behalf of the parachain and arbitrage the difference in costs between the two.

Or, perhaps it isn’t even you directly paying them with your token to compensate, but the user extracting their own value from the creation of a block, and them paying the blockspace costs to ensure those actions are executed.

In either case, you can be a team which only has great engineers and a great idea, and users who are excited to use your platform will pay the costs needed for your chain to run.

Governance Allocated

Finally, we must remember that the ultimate controllers of Polkadot are the token holders and the governance system in Polkadot. It is already an option that governance can be used to allocate blockspace for chains. This hasn’t been explored as much, but it has happened already with Encointer.

But, if you have a world changing blockchain idea, and you are providing an amazing service to all the users of Polkadot, then you are perfectly capable of opening a proposal to ask for blockspace, and let the Polkadot token holders vote on whether you should get that.

With this model, you can imagine the creation of non-profit chains, charity chains, carbon-offset chains, identity chains, and more. The hard part of these products is that founders of these chains need to understand their role in the ecosystem, and what it means to receive free blockspace from Polkadot. Usually this means:

  • Not having a separate native token. Using DOT for all functionalities, and thus providing your services to all DOT holders.
  • Delegating ultimate governance and decision making to DOT token holders.
  • Not capturing significant value to the founders of the token. i.e. not creating some kind of for-profit business or ponzi on top of free blockspace.

Beyond these different models, we must remember that we are still very early in the development of blockchain and Web3 technologies. We should expect that amount of high quality blockspace will increase exponentially over time, and the costs of this blockspace will also go down proportionally.

I think Polkadot has focused on keeping things flexible, and allowing the end developers to decide which of the options is best for them. As we see in just these three models, you can either: hide DOT costs completely from the user, have users decide if they should pay the DOT costs relative to your own native token / on-chain value, or base your entire chain around DOT and provide a new set of services and features to all DOT holders.

This kind of flexibility doesn’t exist in other ecosystems that I am aware of, and I think will actually be more friendly and stimulate more adoption to those onboarding into the Polkadot ecosystem.

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