Thanks @coco, I will provide some clarifications.
The value of DOT is tied to its demand. Demand can come from 3 sources:
- staking
- transactions
- usage in the economy, typically as collateral
Most people simplify too much an think value generation can only come through transactions, but that is wrong. Locking up the tokens productive manners (= demand) creates value and therefore gives value attribution to the token (mirrored in a reduction of floating supply)
Currently, DOT has almost nothing to do other than getting staked. As I outline in DOT Alignment & Demand Drivers, parachains don’t have a reason to “capture” (make users deposit) DOT. There is no game theoretic alignment that makes parachains want to capture DOT and put it to productive use. So DOT in its current condition has fairly limited utility.
My overall direction is to find ways to leverage DOT in the Polkadot economy so that its usage and utility increases.
DOT can only be valuable when the parachains/services building on top of Polkadot attribute value to it. Right now, DOT usage in the economy is disincentivized through staking. So we need a mental shift, a paradigm change. We need to find ways to remove the disincentive to use DOT.
Elastic Scaling and Polkadot Hub are partial answers, but not sufficient:
- Elastic Scaling burns DOT for coretime, but compute and DA are economic races to the bottom, so while I expect to see increasing DOT utilization incoming here, it is not an economic driver we can overly rely on.
- Polkadot Hub will increase transaction volume (and DOT burn), propably significantly, but since we have so much supply of compute in Polkadot, it will take a very long time before we max out and drive significant volume. Still, Hub will be a strong source of DOT capture.
The unanswered question is how we can give good reasons to parachains to use DOT.
I invite you to reread the proposal with the understanding that “capturing” DOT means that parachains convince users to deposit DOT to put it to economic use. I think it will lead to a very different reading of the proposal.
Cheers