Statemint as a trusted intermediary and settlement chain for token transfers

Ecosystem
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I am picking up a sentiment in the community that matches with a growth blocker that I am observing for DeFi parachains.

Channels bind resources

Having to open channels between 2 specific parachains just to list their tokens limits scalability. A lot!

If one wants to list a token on a DEX within Ethereum, it is easily possible, as everything runs on the same chain. The same token listing within Polkadot is an incredibly complex effort, requiring 2 teams to put attention and resources into making it possible. It is very much a permissioned phenomenon. For retail users, this smells incredibly like centralization, and to some extent, this is true.

Additionally, each channel requires monitoring and can be the source of bugs and other time sinks.

As a result, HAVING to open channels is a blocker for ecosystem growth, as it severely limits the throughput of token listings that can be performed on a DEX.

Statemint will become the default solution

Statemint will be for parachains what Tom was for Myspace. Your first friend in the ecosystem.

With the recent efforts to establish StateSwap as the go-to solution for external assets, I think it will create a strong gravitas for any kind of asset in the ecosystem. In terms of liquidity and volume, it could become the Uniswap of Polkadot.

As such, it would be reasonable to assume that any chain would first want to connect to Statemint, and in consequence, the Substrate developer ecosystem would streamline the process.

This leads me to conclude that it would be economically advantageous for any chain that wants to list a lot of tokens, to accept token registrations on Statemint as canonical and trust any asset on Statemint that originated on another chain just as much.

If a chain can accept 100 assets from Statemint, it would far reduce the effort as if the same 100 tokens would have to be brought in from 20 chains by orders of magnitude.

As such, this configuration would unlock so much economic potential that I think this is how things will play out. Statemint will become a trusted intermediary and settlement chain for token transfers.

Would be happy to hear comments on this train of thought here or in this Twitter thread.

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I will prefer to solve the underlying cause: open channel is hard.

I had an old pallet design somewhere that I cannot find any more but basically it is easy to implement a pallet to permissionlessly accept HRMP channel requests & make requests to other parachain.

The monitoring / technical implementation effort should be on similar level doesn’t matter how many channels are there assuming they all following a same standard / using same XCM related code.

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Great post!

Not only is Statement-as-a-Hub beneficial for parachain developers, but it should also make it easier for end-users to access ecosystem dApps. Right now, end-users must manually bridge (via XCM teleport) their tokens to the parachain on which a dApp has been deployed. For example, in order to use DOT on StellaSwap, a user will typically withdraw DOT to the Relay chain, then manually bridge DOT to Moonbeam, where it lands as xcDOT.

This is a complicated mental model, even for current Web3 users, as the user needs to determine which parachain StellaSwap is deployed on, and then visit a separate web app to manually bridge tokens so that these tokens can be accessed by the DEX. All first-time users will likely require a tutorial to explain this, which represents significant friction compared to Ethereum DEXs, for example.

Additionally, Statemint-as-a-Hub will make it easier for institutional custodians and central exchanges to support onboarding liquidity into the Polkadot ecosystem. Instead of having to run the node infrastructure of each parachain token they list, custodians will only need to integrate with Statemint to onboard any form of liquidity.

This reduces the development effort necessary for custodians to support Polkadot on-/off-ramps for all tokens. In other words, the same code can be used to handle all current and future parachain tokens. Thinking about the implications for end-users, this may increase the availability of Polkadot on-ramps, and ecosystem tokens, for both institutional and retail end-users. Specifically, we believe more custodians will list ecosystem tokens.

All of this is detailed in a report that is currently underway, led by @polkadotcurry, and that references key stakeholders who are directly involved in Statemint-as-a-Hub and StateSwap. Once finished, we expect to release it as a public forum post, sometime in the next couple of weeks.

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No web2 applications requires user to know if they are dealing with AWS or GCP. The fact we have poor UX is just a UX issue. While aggregate everything into Statemint could solve it, but why spend all the effort if we could just build a better dApp?

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Re: “Statemint-as-a-Hub” - This is an important, timely topic. I do not believe there has been much previous discussion, so a few members at Parity spent some time gathering some information from key stakeholders to collect a view around the potential impact:

  1. By function and purpose, Statemine/t is a “blockchain to support generic assets in the Polkadot and Kusama networks.” “Statemint is a very basic chain that only provides an interface for representing assets and some primitive functions for handling them.” Because of this, Statemint is well positioned to be an accessible, cost-effective, settlement chain for token transfers.
  2. Therefore, Statemint is viable as a hub of many assets that off-network sources can integrate with at a high return on investment, which would increase ecosystem liquidity overall.
  3. In recent research interviews, Builders in the ecosystem have identified “low liquidity in the ecosystem” as a current priority issue.
  4. Supporting clear in/outflows of network liquidity beyond DOT is critical in shaping how the network and resulting activity will evolve in the years to come.
  5. Statemint already has integrations with Central Exchanges (USDT via Bitfinex) and is working on integrations with other high volume, value sources like Custodians and Bridges this year.
  6. Like all aspects of the ecosystem and network, I believe we all care about Decentralized Application success but do not see Dapp User Experience as the driver of this effort. Currently, there are Dapps with well known asset flows that are doing quite well. The most active are largely those that have direct integrations with Central Exchanges for their native token (like GLMR to Moonbeam for use in StellaSwap).
  7. The expectation is that direct integration with strategic sources will continue as required by individual ecosystem team’s assessment of tradeoffs in their own business model.
  8. Additionally and in parallel to direct integrations, Statemint can provide an option for all (including newer or less proven ecosystem teams) to list their assets to gain access to many more sources and accounts in one single, native integration.
  9. We should expect UX updates to support the potential high volume and aggregate value that these new sources provide through Statemint.
  10. Like everything else, there are tradeoffs: “For retail users, this smells incredibly like centralization, and to some extent, this is true.” The earlier we can recognize the purpose (ecosystem success), intent (increased liquidity) and potential of a direction (multiple new high volume and value liquidity sources), the greater the chance we can realize the best collective outcome.

Thanks for posting @alice_und_bob. Looking forward to hearing more points of view and feedback on this topic.

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