The state of DotSama

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

The current state of DotSama

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.

Edgeware has successfully coordinated a group of strangers to conceive, develop and launch its Kusama parachain Kabocha with aims of experimenting with identity and rights management.

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.

Better than Ethereum?

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?

So what is Polkadot best at?

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:

1. Free Market Parachains (FMP)

Initiators

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.

Funding

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.

Governance

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.

Organisation

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.

Onboarding

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.

Positioning

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.

Value accrual

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.


Success
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.

Narrative
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.

2. Common Good Parachains (CGP)

Initiators
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.

Funding
CGPs are generally either incubated within a well resourced organisaton such as Parity, or funded through grants from the relay.

Governance
CGPs upgrades are governed via the relay rather than token holders.

Organisation
They are generally organised around a single core team with some community input.

Onboarding
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.

Value accrual
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.

Positioning

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.

Success

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.

Narrative

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.

An opportunity to consider alternatives

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.

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I think it would also be good to add to this thread the Messari report that was just released today: https://messari.io/report/state-of-polkadot-q3-2022

(crazy timing)

Still processing all of these reports and forming thoughts, but wanted to make sure that this content is also included in a “state of” report at this time.

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While I agree that smart contract platforms may not be the appchain vision, I disagree that the current FMPs (smart contract platforms included) are not well suited to drive forward the appchain vision.

Launching an appchain requires a considerably larger engineering effort compared to an app and launching an FMP also requires spending considerable effort on tokenomics, liquidity, and building a community of supporters (with sizable bags). Apps are able to launch faster, iterate more quickly, and ignore tokenomics while taking advantage of the users, smart contract infrastructure, and low gas on existing FMPs and CGPs.

Realizing the appchain vision requires broad support for cross-chain messaging and documentation for applications which simply doesn’t exist today for XCM. As HRMP turns into XCMP, wallets and applications will enable Polkadot users to seamlessly move assets into and out of appchains and contract apps.

Once this is realized, I expect we see smart contract apps with big communities start to migrate to their own chains. Wallets are already making it easy for users to interact across multiple chains (shoutout Talisman, Nova, SubWallet) so migrating users will be as simple as highlighting the feature that is offered only on the appchain. If the user already trusts the brand, they won’t care about the network (see: DyDx and the Moonsama ecosystem).

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The appchain vision cannot be realized without robust utilization of cross-chain messaging. Everyone in the Polkadot ecosystem has bought into the XCMP standard to accomplish this, and the near-term focus should be on driving and measuring adoption of HRMP and rapidly utilizing the features coming in XCMP v2 and v3.

With remote execution (via XCM) we can enable scheduling future transactions, creating private transactions, or even something as simple as things as deposit my assets in XYZ pool or vault when it gets to the other side. While the value of the Polkadot ecosystem depends on XCM, we use it for one use case in a single direction - bridging to the chain with more (exit) liquidity.

Edit to add:

This is a great report as well - and highlights the number of cross-chain messages as a key metric for the health of the Polkadot ecosystem.

Hi,

These chains you’ve categorized as not well suited to drive adoption of Polkadot have actual demand and make up about 2.5 million daily users and if a chain forks whats happening on the best platform to Polkadot perhaps their intention is to tap into this user base for varied reasons. The design choice of one’s application is also based on their needs and capabilities to be an relaychain, appchain, parathread, dApp on L1 or L2 or even L3.

Olympus DAO a single DeFi protocal on Ethereum has a self sufficient treasury worth $263,355,173 with about 120,000 users and renting trust from Ethereum.
We saw on Moonriver when ROME (a fork of OlympusDAO) emerged and ultimately securing a $23,000,000 treasury of stables with about 16,000 locked on-chain users. They referred to their treasury as the single source of non-mercenary liquidity on Dotsama. Well the project flopped due to governance and other issues but as you can see we cant really say these replicas are irrelevant.

I believe that’s subjective because there are people or groups out there who perhaps a single JPEG did not just change their lives financially but paved the way into exploring blockchain tech and even building new applications/use cases.
I mean look at Moonsama its an NFT project, that launched on Moonriver, went Multichain and now is considering building their own application specific blockchain on Polkadot.

These are bringing value on to Polkadot whether its more users, more $DOT holders/stakers/explorers, more fees, more side projects, more XCM interactions etc

I cant come to a conclusion for my remarks. I will wait for your next piece to understand your point of view, however I hope you get the point that we need to encompass everyone towards the goal of having web3 built on Polkadot.

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This is really well-written Rich Well done!

The below quote stood out for me

I think the real risk to Polkadot - which has been discussed at length in various places - is the fact that we have so many eth clones here. That’s not how we are going to convince people to use us.

My unpopular opinion. Arguably we have failed so far

We need a much more convincing argument and that can only happen with a much more powerful demonstration of XCM (more than just token transfers) and to a more significant extent substrate and ink and how it is more powerful/flexible than solidity

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Yeah definitely - was this messari report their own independent research report or funded by DOT? i’m not entirely sure how this works but yeah the timing was pretty crazy. Its a much deeper quantitivate analysis than the above, but really it draws pretty similar conclusions:

1. Relay chain value accrual

In Q3, Polkadot’s revenue was $115,000 with a circulating P/S ratio of 19,945x. For comparison, Avalanche’s revenue was $2.3 million with a circulating P/S ratio of 665x, and the Cosmos Hub’s was $142,000 with a circulating P/S ratio of 4,965x. By traditional standards, each of these base layers have abysmal metrics. The poor revenue-centric metrics paired with high valuations highlight the difficulties in valuing base-layer protocols.

Joel Monegro’s original fat protocol thesis has come in and out of fashion, but the ability for an on-chain governed chain to begin accruing assets aligned to its operations from other chains to secure longer term value/s alignment will do another circle back I think.

Check Joe Petrowski’s thoughts on statemine re KSM/DOT treasury, its future location and features in this issue.

Quoting from that:

  • One of the advantages of a Treasury on Statemint is that it could hold other assets. Users should be able to make requests for other assets, and governance should have the ability to manage asset holdings of the Treasury and acquire other assets.
  • The Treasury should be able to hold:
  • Its Relay Chain’s native asset
  • Fungible assets registered on Statemint
  • Non-fungible assets registered on Statemint
  • Native assets of other chains under the same consensus system (member parachains)
  • Native assets of bridged chains (e.g. DOT in Kusama Treasury)
  • Treasury shouldn’t be limited to holding other assets, it should be able to spend them

2. Auctions as primary adoption / marketing / demand driver of KSM/DOT

Polkadot’s financial and network activity largely reflects native Relay Chain activity. Closely correlated KPIs like active accounts, new accounts, revenue, and token transfers all experienced double-digit percentage declines. The declines were likely driven by the expected declines in parachain slot auction participation and bear market woes.

3. The good news of XCM growth

This was maybe less well stated in the post, but will be tackled more in an upcoming one and this relates to the innovation XCM (and XCMP) enables as a technology - the composability between parachains, however this adoption is really just a first phase of testing, and we’ve yet to see anything really novel emerge as a result of this unique relay/parachain capabiltity.

This again returns to the issues of ETH clones and therefore the expectation of novelty to emerge through the cross-collaboration / fertilisation of relatively commoditised functions.

What this technology really needs is for genuinely new parachain models and concepts that break out from the ETH bubble and then the novelty and composability will be using entirely new lego blocks.

hey matt - thanks for the response.

I guess i’d respond to this with an open question about what we consider an appchain to be.

My own personal view is a relay is currently the best possible example of a true ‘appchain’ - by virtue of its aim to address one specific problem and to attempt to align its core incentives and mechanisms to that core aim.

In terms of emerging definitions, I believe an appchain has:

  • one core value accrual mechanism (rather than the swiss army knife approach of many L2 tokens etc)
  • one core problem it addresses that is a DotSama specific issue, not a general crypto marketing / ETH issue.
  • some general thesis as to how the above scales and enables all sorts of new things to emerge, whilst retaining the radical simplicity of an appchain.

Launching an appchain requires a considerably larger engineering effort compared to an app and launching an FMP also requires spending considerable effort on tokenomics, liquidity, and building a community of supporters (with sizable bags).

Yes it does, but given the above definition of appchain, the question can also be asksed if any of this work, is actually essential and more just the resource requirements of a particular marketing proposition and fundraise structure…

If the GM parachain can be created by the team in a day, and if Kabocha can be created by a bunch of strangers fumbling around in the dark with a decidedly limited approach to the above points “tokenomics, liquidity and community”, then I would argue these factors are less important than you’d think or certainly more a function of the speculative nature of crypto network’s needing to drive hype, and race to liquidity for early investors and retail to lock in their returns.

The appchain vision cannot be realized without robust utilization of cross-chain messaging. Everyone in the Polkadot ecosystem has bought into the XCMP standard to accomplish this, and the near-term focus should be on driving and measuring adoption of HRMP and rapidly utilizing the features coming in XCMP v2 and v3.

Absolutely agree. But as I make the point on @shawntabrizi’s comment, XCM is just another tool, the magic will come through the recombination and remixing of original concepts at a very basic level.

The main issue i have with this general thesis is rooted in the lack of originality with the incumbent FMPs as the source materal for this novelty to emerge.

So the technology has great potential, but the raw material needs to be more interesting - else its rubbish in, rubbish out.

My unpopular opinion. Arguably we have failed so far

I think this can be both a pragmatic and an optimistic position rather than one that should be ‘unpopular’. These are new technologies and they enable new things, therefore its intuitive that the eventual use cases / narratives / adoption should itself be novel.

That’s the bull case for substrate / relays / parachains / XCM etc.

We need a much more convincing argument and that can only happen with a much more powerful demonstration of XCM (more than just token transfers) and to a more significant extent substrate and ink and how it is more powerful/flexible than solidity.

Agree. Again as noted in other replies to @matt and to use a dangerous cooking analogy, XCM is just a ‘whisk’, we need more interesting ingredients, else it’s just Big Mac’s all the way down…

I also tend to think that the !Ink / smart contract innovation by FMPs will become vital, but it is not the core driver of innovation, rather something that depends on invention by a more novel parachain structure that offers a different substrate native approach to value accrual and narrative formation.

hey @Kratist0s thanks for replying.

These chains you’ve categorized as not well suited to drive adoption of Polkadot have actual demand and make up about 2.5 million daily users and if a chain forks whats happening on the best platform to Polkadot perhaps their intention is to tap into this user base for varied reasons. The design choice of one’s application is also based on their needs and capabilities to be an relaychain, appchain, parathread, dApp on L1 or L2 or even L3.

Just to be clear on the sources you quote:

  • 2.5m wallets are active daily across web3. Flat wallet count likely means relatively constant GDP in the ecosystem. We need more products to attract new users to bring in more GDP.
  • Binance, Solana, Polygon, & Ethereum wallets represent more than 80% of those daily active users.

You are talking generally across the existing L1 ecosystem, whereas the thrust of this post and critique is that Polkadot via its parachain / relays model is fundamentally a different bet, than the current thing and that FMPs are not suited to driving fundamental innovation within this model, but tend towards the copy/paste culture since they are dependent on marketing to retail investors with pre-ordained use cases.

Further, given Substrate’s focus on on-chain governance (one of its primary differentiators), these models also cause issues with actual governance, and there is a vast chasm between a centralised distribution attemping to move to community development in the theory and the practice.

Olympus DAO a single DeFi protocal on Ethereum has a self sufficient treasury worth $263,355,173 with about 120,000 users and renting trust from Ethereum.

How is it self-sufficient? What is its basic value accrual mechanism?

We saw on Moonriver when ROME (a fork of OlympusDAO) emerged and ultimately securing a $23,000,000 treasury of stables with about 16,000 locked on-chain users. They referred to their treasury as the single source of non-mercenary liquidity on Dotsama. Well the project flopped due to governance and other issues but as you can see we cant really say these replicas are irrelevant.

Is this the kind of success we are aiming for then? Twitter thread.

I believe that’s subjective because there are people or groups out there who perhaps a single JPEG did not just change their lives financially but paved the way into exploring blockchain tech and even building new applications/use cases.

I agree with you that people experiment with crypto, and then are drawn deeper - often through speculative means, but my point is really two fold:

  • when those speculative games are just forks, its not even as if there is innovation there…
  • dotsama is also uniquely suited to driving forward contributor based models that enable people to become part of a real economy, rather than players in another casino… where the house (insiders) always wins.

I cant come to a conclusion for my remarks. I will wait for your next piece to understand your point of view, however I hope you get the point that we need to encompass everyone towards the goal of having web3 built on Polkadot.

I do not have a crystal ball, im just digging deep into the basic incentives, and pushing a few buttons with a view to how we can improve things, thank again for your comments, will publish some new stuff soon.

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Okay first of all that twitter thread you shared from DCFGod is a misrepresentation of what happened. I’d prefer you check WagMedias coverage on the issue but I dont want to stray away from the topic.

In my view what you call FMPs and these clone projects from L1’s are one of the factors that could drive innovation and adoption of Polkadot but first they have to be here in some form and experience this environment. You can look at it as a way of onboarding entities similarly used by others in the space and with time these projects always build up value and seek to expand where now the option of an app chain becomes easy for the team to consider and it also becomes easier for Parity or others in this space to reach out for talks/awareness. I spoke to the team that is handling Etihad NFTs (major airline in the middle east) which launched on Polygon and I asked them why Polygon? The answer was because they share similar environmental policies and goals.

Projects can evolve to align with Polkadot/Substrate.

If projects dont seem substrate enough we could have an upgrade program where protocals buiilt on L1s or L2s get considered maybe through a vote for technical/or even financial assistance to upgrade as appchains/improve governance etc

I expect a project ilke Origin Trail (thats from Ethereum) to perhaps evolve with parathreads for its clients that could then go to appchains, same thing for Aventus, Efinity etc

A project like RMRK…its already on Kusama which uses $KSM on it’s market place could be onboarded on Polkadot as an appchain?

Tokenomics, liquidity, and community are the most important factors for attracting project funding, which will be required for any parachain that wants a chance at not only sticking around, but truly advancing Polkadot’s long-term vision. Launching an application rather than parachain allows project teams to focus on building a community of actual users (not just tokenholders) and defer tokenomics, liquidity, and appchain discussions until after product-market-fit has been proven.

Ultimately I think we agree on the broader belief that the current FMPs and CGPs are poorly suited to advance the appchain vision themselves (at least the ones with meaningful traction), but I do believe that they help accelerate the realization of that vision by providing infrastructure for application builders that will eventually become appchains themselves.

I don’t think anyone would argue this point if we are defining success as having accomplished Polkadot’s appchain vision. However, I think that “we’re early” applies here and believe that the broader market conditions also cloud the lens that we are using to judge this.

I’d love to know what you view as the other “tools” are - it might offer us new ideas for ecosystem success metrics.

If you point me to it i’ll happily read.

Of course, projects need to try Substrate before they understand it, so its a process - the main point is not to remain objective about what is/isn’t working - the issue with marketing of chains, is they are all successful, right until they fall apart, due to a lack of oversight and objective reporting - and of course the incentives. Not all projects will fail, so I agree, experimentation is essential - but so is digging deep and questioning certain narratives.

I’m not sure what the point is you’re making here?

As part of the following posts, there is some stuff that relates to this idea - effectively a fully on-chain parachain farm, incubating and stewarding projects from smallest ideas, to relays. The challenge I see is the tension between well funded teams and those that are more focused on slower and more sustainable growth.

Bruno has been pretty consistent with not wanting RMRK to be a parachain and this makes a lot more sense for their model. Tho if he’s about, maybe he could explain in his own words why its not an option.

Ok - so this is going somewhere interesting. Ultimately it’s a sustainability of funding issue right?

Tokenomics, liquidity, and community

We can reduce this to driving hype, listing and speculation tbh - everyone is very aware that there is no real ‘use’ of these tokens to merit the valuations, other than with the AMMs that churn the system around, but that’s really not creating value.

The major question here is really one of the key aspects of the next post I’ll be sharing - is there another way to sustainably fund the development of these blockchains and their contributors without resorting to private sales and a race to liquidity ahead of any meaningful development or traction.

It is this that I believe is best placed to fulfil the long term vision - else the incentives always drag in one direction.

I’m just not that bullish on DApps > parachains, I think they are two different beasts considering Substrate’s governance focus - parathread to parachain makes sense, tho maybe im misunderstanding the point.

Do you have an example of an existing DApp that you think might/could make this move?

Who would you say has meaningful traction? Interested to know what you think that traction looks like too?

I’m pessimistic about the next cycle wrt to us seeing the same kind of speculative bubbles we saw in the last 10 years. Things are very very different, worse than 2008, and unlike then, governments can’t print their way out.

In a nutshell this is for me the bear case on casino clones and the bull case for Substrate as an employer of contributors around the world.

That’s a great question and one I’ll respond to in the next post as it deserves a longer answer

2 quick cents here.

IMO Polkadot should differentiate on the product lvl, and less on the metrics lvl like performance, decentralization etc.

From product view, there could be unique things impossible elsewhere, and they could be endorsed.

Few examples off the top, that might not be possible on ETH:

  1. time triggers, recurrent operations → OAK network
  2. ordering customizations and encrypted mempool - MEV minimization → Mangata

Other things like unique setups that are possible only on appchains, e.g. a DEX chain where treasury gets distributed to the staking rewards, so native token holders could legitimately capture value through staking. So the Unichain could finally solve the question of fee switch, and token holders would rather provide service to the Dapps participate in staking and capture value this way. This is impossible on ETH and it has legal advantages (or rather smaller legal risks).

Other things like every parachain can be jurisdictionally compliant, but still within one cohesive ecosystem, e.g. one OFAC compliant and one non-OFAC compliant, but sharing the same security set. This should have some performance and reliability consequence, because on ETH is making things just more uncertain when you don’t know if your tx will be included.

Maybe the direction should go to the fact that liveness has been separated from the security, so what liveness customization will bring what benefit to overall eco? in the very least it can squeeze more economic efficiency so that not all dApps need 24/7 liveness and can charge less fees.

In general there’s better pricing of dApp when it’s not sharing the same layer with other dApps + dApps can capture the whole revenue flow and not leak it to the infrastructure validators first.

We can have several parachains with different MEV management, one with MEV minimization, one with MEV democratization, both co-existing could create interesting dynamics.

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this is a very interesting point… its maybe even a potential future path, for resilience, you want certain core functions / services to have duplicate / local instances

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