This post builds on the concepts first introduced in Crypto, Web3 and Narrative Gravity.
Blockchain technology in its current form, isn’t ready to break the corporate stranglehold on the web just yet. Despite the promise and the progress made, we have yet to see significant real world adoption of the technology.- Polkadot litepaper
Polkadot, Kusama and their underlying Substrate operating system have driven innovation in the rapid development, deployment and interoperability of application specific blockchains, forkless upgrades, security as a service, collective coordination, treasury funding and onchain governance.
Whilst most of the noise around the ecosystem has been focused on well funded projects, we are beginning to see the green shoots of exciting community initiatives such as Wag Media’s bounty based publishing model, whilst the ChaosDAO incubated GM parachain is aiming to be a place for radical experiments, whilst Kusama native Shokunin Network is seeking to simplify funding for contributors through optimistic orgs based anonymous time delayed proxies.
With the release of Gov2, the next generation of Substrate’s on-chain governance and the articulating of an emergent reputation organisation in Polkadot Fellowship, the core team are leaning further into their attempts to pioneer the adoption of on-chain governance, sovereign networks and the scaling of decentralised models of contribution.
In its original proposed form, Polkadot is effectively feature complete so it is worth considering the question that were key members hit by a proverbial (or actual) bus, what would be uniquely possible with the delivered technologies to date?
Further, with the parachain experiment now in full swing, just what has been achieved? After the excitement and noise around the initial auctions on both Kusama and Polkadot, how should we assess the relative progress and adoption of the project through the lens not of price, but of its founding ideals?
There are plenty of issues that are not necessarily due to the capabilities of the technology, but more, down to the fact that adoption of on-chain governed blockchains is by definition based on getting a bunch of people - to research, discuss and vote on emergent roadmaps.
It is said that technology is easy, but people are hard - and so it is that we can see symptoms of this malaise in certain areas:
- the challenges of accessing and activating Kusama and Polkadot’s sizable treasuries
- aligning project teams and metrics in terms of assessing and valuing relative contributions
- the continued addiction of ‘Web3’ project teams to the perverse business models that the ecosystem aims to replace.
This post aims to deconstruct progress so far and is intended to be honest in its objective appraisal of what has been created so far, with a view to further opening discussions about how the great potential of the assembled talent and tools can be leveraged to drive real world impact - a topic that will be unpacked in a later post.
In its current form of relays and parachains the ecosystem has vast potential, however despite strong developer adoption, well known voices in the ecosystem are beginning for the first time to discuss openly the challenges they are facing.
Substrate’s core thesis lies around the idea of application-specific blockchains…
Almost 100% dApps on Astar and Moonbeam are fork projects from the Ethereum ecosystem or making something that Ethereum can do at this moment.
The solution then presented revolves around driving Ink! experimentation, adoption and use cases that can in turn demonstrate Substrate native smart contract projects.
This approach signposts the lack of a coherent DotSama narrative, which has led to a steady drift towards attempting to differentiate the ecosystem’s capabilities in nuanced terms when compared to other L1 chains - Polkadot is better than Ethereum in X, Y and Z ways, using a lexicon, terminology and context that effectively establishes the debate on the terms, territory and culture of the incumbent.
“DeFi with lower fees, its NFT 2.0, networks of DAOs, better smart contracts, SoulBound 2.0”
Although it makes intuitive sense to begin education where people already are, it is also a huge mistake to think that this does much more than reinforce the cultural cache of the established market leader rather than carving out a new cultural reality created by the ecosystem’s assembled talent, technology and financial firepower.
Even Web3 has become so pervasive as to effectively become meaningless, used as short-hand for anything that may involve a token, whether its a protecting a users data, a global multi-national delivering the next generation of running shoe or your favourite TikTok star peddling some meme coin.
Although the term was originally coined by Gavin Wood, it has ended up being co-opted in a way that has not led to any particular narrative gravity to the DotSama ecosystem.
The reason for that is the simple truth that these technologies are also belief systems. It is not simply a battle of whose tech is best, it is also about the financial and then emotional bonds that hold a network’s participants together, and ultimately the vision they are striving for.
So can Polkadot be a better Ethereum? No. Ethereum will always be the best Ethereum. Just as Ethereum is not a better Bitcoin, it’s like arguing that a shark is better than a tiger.
Can you reimagine the Web? Sure, but then wouldn’t it be something entirely new, and not simply Web… 3?
And so this really cuts to the fundamental question - if we assume Web3 is simply a set of principles and not just a marketing slogan to be slapped on a can of Coke, just where are we all aiming, and how might the ecosystem get there?
This simple sounding question is actually fiendishly difficult to answer but thanks to this thread from Shawn Tabrizi, it is something that is being actively considered:
I wanted to create a thread where we as a community can collect places where Polkadot is identified to be a leader in the Blockchain ecosystem.
Of course, not every metric out there will place Polkadot at the top of every category, but I think it would be good to collect the places where we have ranked highly among our peers in the blockchain industry.
The final sentence is most instructive as it seeks to define the metrics and context that matters.
The blockchain industry is at its core a marketing machine with deep roots and alliances in the incumbent financial system - self-serving in its own interests which are generally rooted in the same broken and corrupting advertising system that Web3 seeks to replace.
As long as we (the believers in creating Web3 - the principles, not the slogans) indulge in these industries, play their games and align with their incentives the hope of realising something genuinely new will be swallowed by the narrative gravity of the media and financial industry complexes.
In its current form, Polkadot is not yet definitively the best at anything - certainly not if we are to define ‘best’ as being the focal point of of a global cultural movement in the way that first Bitcoin and then Ethereum have done, irrespective of their own challenges.
However there is reason for hope - the ability for that departure is there when we consider that Polkadot is not just the biggest bet yet on a multi-chain world, it is also concretely a bet on the governance, coordination and decision making of sovereign on-chain collectives, in a way that neither Bitcoin or Ethereum are or are ever capable of.
The ability to propose, debate and enforce collective decisions at local and supra-national scales is at the core of Substrate and yet in its current crop of generic smart contract parachains, this super-power is seen simply as a function, rather than its raison d’etre, leading to the construction and communication of a schizophrenic and incongruent worldview, at odds with the technologies intrinsic potential.
In many ways the current categories echo the tensions we see in modern global market economies, with Common Good Parachains (CGPs) providing the (proto) societal bedrock and Free Market Parachains (FMPs) designed to innovate on top or in parallel depending on your preferred visual metaphor.
For many crypto has also been a story of this tension between economic ideologies, with many believing free markets and hyper-capitalism hold all the answers, whilst others lean towards a more cooperative, dare we say socialist approach.
This ideological schism has taken hold in many projects and has the tendency of crowding out a more reasoned centre ground, leading to the sort of extreme token tribalism that is already whipped up by advertising media and individual economic incentives.
So lets dig into the existing parachain models:
These networks are often, but not always initiated by startups, funded through private sales and venture capital before being marketed to retail investors via crowdloans.
These projects rely primarily on investment raised through relatively traditional funding rounds as well as holding a large share of the initial token allocation giving them startup level exit potential and also a certain level of control over the project’s direction.
In general FMPs are not expected to request or receive treasury funding from the relay, however this seems to be a fluid decision as a number of DeFi projects have received large grants from the Kusama treasury to bootstrap liquidity and money markets.
They are generally governed in a centralised fashion, with the intent to progressively decentralise the operations, contributions and project over a period of years. Something that is simple in theory, but incredibly hard to deliver in practice.
Most FMPs have a single lead team who generally shape and deliver the core roadmap and an associated foundation which exists to separate the legal interests of the developers and the assets of the blockchains to which they contribute.
Centralised teams seem like a common sense approach for blockchains, however what is gained in short term leverage, is lost when it comes to the long term potential of these new social systems to attract, inspire and sustain emergent collective intelligence through credibly neutral systems.
They onboard to a relay via an auction process, where teams effectively compete against other FMPs to secure a slot with a 1 year lease on Kusama or 2 years on Polkadot.
The FMP model benefits well capitalised teams communicating a predetermined use case through Web2 channels - digital marketing campaigns, paid media and sponsorships with crypto influencers and publishing networks that cover both high profile publications and a long tail of highly networked but low quality sites to drive SEO and affiliates.
In general this approach leads to placement in more ‘mainstream’ publications, as certain stories pick up momentum or are seen to be from credible sources and thus worthy of featuring, which in turn leads to a recursive model of trends seemingly validated by trusted sources, when in fact it is really the result of massive information asymmetry between the journalists of establishment media, specifically those with a mandate to present unbiased and objective reporting and the new marketeers of crypto-media.
FMPs ultimately support DotSama’s underlying security model since they drive demand for the relay’s service through the acquisition and subsequent lock up of the relay token for lease periods.
As a bootstrapping mechanism for driving initial awareness of Kusama and Polkadot, FMPs have been invaluable, but looking at the bigger picture, the FMP model alone is ill suited to driving any real or sustainable long term value accrual to its security provider, other than through the speculative boom/bust cycles of crowdloans, auctions and a race to initial listings and token liquidity.
In general for smart contract projects the FMP thesis is that the expansion of their economic influence will be through a platform for DApps approach with the issuance of many L2 tokens that aim to accrue value to the L1 token through fees and/or burning in a manner similar to Ethereum and other general purpose blockchains.
Given an FMP’s basic incentives, investors and the resulting make up of their communities, projects are defined relative towards CEX listings, liquidity provision and token price as shorthand metrics for a project’s success.
In this respect it is not surprising that many of the core projects are explicitly focused on expanding the same general territories of financial engineering, or to address issues faced within this same domain that is made up primarily of speculators.
In general metrics that matter here are all short term in nature and often easily gamed - total value locked (TVL) being one of the dominant measures for assessing relative adoption.
All things being equal the crowdloan campaigns conducted by FMPs are currently DotSama’s primary marketing funnel.
With a focus on selling a pitch to retail investors there is a requirement for easy comparisons to already existing success stories, leading to an inevitable drift towards a copy/paste culture that does not create trends, but rather rides on the back of them.
Whether it is chains for DeFi, NFTs, DAOs or Metaverses, or even Ethereum 3.0, these projects are not well suited to driving forward Substrate’s original appchain philosophy.
As we illustrate above, even the leading FMP teams realise there is an issue, however their assessment of the core issue is different and naturally related to their own interests.
These networks are generally developed from within Parity/W3F alongside more explicitly mission oriented organisations such as non-profits when compared to their FMP peers.
CGPs are generally either incubated within a well resourced organisaton such as Parity, or funded through grants from the relay.
CGPs upgrades are governed via the relay rather than token holders.
They are generally organised around a single core team with some community input.
CGP onboard to the relay via governance proposals, rather than conducting crowdloans and competing for leases as with the FMP model. As a result, their slot status is down to the continuing benevolence of DotSama holders whose continuing support both via treasury funding and lease renewal will dictate how viable this model can be over the long term.
Since they do not lock up DOT/KSM for their slots, they also don’t directly drive demand for the relay token nor accrue any value to the relay, other than that the addition of new functionality. They are not marketing focused projects and so they do not impact awareness or attention in the way a FCP might.
They do however expand the basic public utilities of the relay ecosystem and in turn, in principle should be advancing technological capabilities that FMPs are not - in the same way public funded R&D in universities has created foundations for the private sector.
This can in turn then begin to spur value accrual in other areas of the ecosystem, which in turn leads back to more demand for parachain slots in the FMP model - creating a virtuous cycle, at least in principle.
CGPs were intended to be an onramp for DotSama’s public utilities, namely shared public resources that benefited all and would not necessarily be serviced by FMP since their offerings would not be marketed as innovative solutions to attract outside capital and attention, but more to deliver the basic functions of a sovereign and interoperable network economy.
CGP should could be seen as an entry point into Substrate, allowing basic experimentation before developers or contributors moved on to more bespoke offerings provided by FMP.
In practice this should see really weird and wonderful tests, uses and oddities that rework or rethink Substrate’s basic but powerful tooling as a way of advancing the emerging technology which is not yet ‘market’ ready.
It is worth noting here that without a balancing force, FMPs natural tendency is to move towards active competition with relay based CGPs, whose existence or even implied existence can threaten the marketing machines of FMPs, especially generic platform based approaches, who are reliant on driving retail demand for their offerings - and rely on a certain monopoly power over certain areas of messaging - even if it is to the ultimate detriment of the broader ‘public’.
Given DotSama’s large institutional holders with vested interests in the success of FMPs, there is clearly a natural tension between the role of CGPs to drive onboarding into the technology stack and the representation of the public good, and the financial incentives of FMPs concerned about their use cases being diluted or godforbid being swallowed by CGPs.
DotSama is in its teenage years, busy figuring out its place in the world, and just how to orient its capabilities to deliver on the principles laid out for Web3.
The technology is brilliant even in its most basic forms and it all works - but just what it is truly useful for, is still entirely up for grabs and therefore all thoughts, questions and perspectives are welcome and encouraged.
We believe that the relay, parachain relationship, paired to evolving on-chain governance and the funding of contributors offers the perfect playground to balance the unresolved tensions between CGPs and FMPs.
In a following post we will introduce Network Public Parachains (NPPs) - an experimental new Substrate philosophy, design template and narrative foundry born from insights gained through ongoing applied research and development of on-chain governed and treasury funded blockchain networks such as Decred, Edgeware and Kabocha.
These networks are primarily motivated with aligning the core economic interests of a relay, a parachain and importantly contributing teams in order to create conditions for the sustainable and scalable funding of creative work through the assignment, leveraging and expansion of open source IP to develop original on-chain narratives.