My colleague Elias Simos likes to say that we are experiencing a renaissance in digital assets, including digitizing the value of non-digital assets. Decentralized solutions thrive for myriad financial and peer-to-peer hurdles, but many innovators and entrepreneurs remain stuck with old project construction models.
Some platforms such as Polkadot and Cosmos are establishing new startup models that are adapted to Web 3.0. They facilitate the creation and connection of decentralized applications and enable innovators to develop better solutions. As a startup accelerator, these multi-chain protocols provide a mechanism to naturally start and scale hundreds of new blockchains. Break down silos and open up opportunities for new actors to get involved and support emerging projects.
The most exciting projects of the next decade will use blockchain-based support systems. These alternative acceleration mechanisms will empower the next generation of entrepreneurs and their blockchain projects.
Take polkadot as an example. Usually, Accelerators support growth-oriented startups in the early stages through education, mentoring and funding. You make these resources available in exchange for a stake in the young company. While most businesses don’t get started, a small handful grow into large businesses. The Polkadot scale-up mechanism shares many of these properties of Silicon Valley accelerators like Y Combinator or Techstars by providing resources for small but promising companies. But in this version of Web 3.0, not only a select group of people can offer resources, but the entire community can participate in projects.
Introducing a proof-of-stake network is complex. Founding teams benefit greatly from access to networks, talent, governance, and operational excellence that the blockchain ecosystem possesses, similar to what an accelerator offers a startup. The Polkadot Network and Community provide all of these elements to an application or network developer and find them at the most difficult point in the value chain. s can find the right fit for their problem / solution and connect with the necessary resources before meeting the strong market demand.
Decentralized parachain process
Polkadot, the flagship project of the Web3 Foundation, and Kusama, an experimental network on Polkadot, work with two types of blockchain: relay chains and parachains. The relay chain is the center responsible for reaching consensus and completing transactions. Parachains are independent and interoperable blockchains with shared security across the relay chain and encompass a variety of decentralized projects such as Identity, DeFi, Bridges and Smart Contracts. Polkadot and Kusama each have up to 100 Parachain slots to be earned. The procedure for obtaining a slot is intended to ensure that the parachains are financed fairly and fairly and consists of two phases: crowdloans and auctions.
In the first stage, the decentralized crowdloan, “Polkadot enables Parachains to receive tokens for their Parachain offerings [subasta]“By supporters who block DOT, the native Polkadot protocol token, for up to two years for a project they support. Supporters never give up custody of tokens, but tokens are blocked and they are illiquid until the crowdloan expires – This lock shows the supporters’ belief that the parachain will be successful. Any potential Parachain project must compete for support from DOT and Kusama (KSM) token holders, much like a startup would do on a presentation day at an accelerator.
The second stage requires that all tokens blocked in crowdloans are used in a parachain auction. The teams use the blocked tokens to bid on a field and raise the bid as needed until an unknown time has passed. This auction style dates back to popular candle auctions in the 17th century, where the extinguishing of a candle flame signals the end of the auction to prevent competitors from bidding in at the last minute. Supporters of the winning projects receive native tokens for the Parachain in exchange for blocking their tokens.
This decentralized parachain process can be more promising for developers and backers alike than a traditional accelerator for Web 3.0. The resources available are critical to success.
Key differentiators of the Polkadot Web 3.0 accelerator model include:
- Backers never give up custody of their tokens.
- The backers’ blocked tokens will be returned if the project loses the auction or as soon as their access to the Parachain slot expires.
- Supporters benefit from the consequences of their actions.
- The backers do not share the opportunity cost.
- A decentralized ecosystem with no partner trust is accessible beyond the small network of an accelerator.
- Any natural or legal person can run validators to receive rewards.
- Parachains have an inherent scalability.
The ability for parachains to use a common security model Being interoperable with other projects inside and outside the Polkadot ecosystem and benefiting from a large community of enthusiasts is a benefit for developers.
The developers are currently building parachains such as Acala, ChainX and Chainlink for Polkadot. The first Parachain auction in Kusama is planned for summer 2021.
The future of the multi-system
Other platforms such as Cosmos also provide an outlook on the future of multichannels. The Cosmos Hub is the main chain and economic center that connects the blockchains, called Zones or Zonas in Spanish, through inter-blockchain communication. In return for securing services on the Cosmos Hub, transaction fees and staking rewards are distributed to holders of the native ATOM token.
Polygon and SKALE are examples of Ethereum-compatible networks that allow developers to build sidechains to support the growth of decentralized applications for the ecosystem. As of December 2020, Ethereum, Polkadot, and Cosmos, all platforms geared towards enabling developers to build applications, are the fastest growing Layer 1 ecosystems. We may see the rise in the Web 3.0 response to Y Combinator and Techstars.
By nurturing the community and fostering partnerships with key supporters, teams can test solutions, develop successful strategies, and demonstrate significant traction before a real go-to-market. A multi-chain future, underlined by alternative support mechanisms, will empower the next cohort of entrepreneurs and their blockchain projects. Interoperable ecosystems like polkadot will play a key role.
Thanks to everyone who read previous drafts and to Elias Simos for inspiring this article.
This article does not provide investment advice or recommendations. All investments and operations involve risk and readers should do their own research in making a decision.
The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.