Robert, founder of Polkadot: People are overpaying for block space, while validators are still running at a loss
Polkadot co-founder Robert recently appeared on the 100th episode of Space Monkeys, where he shared insights into the development and strategy of Polkadot, including his views on block space, treasury management, open governance, and community building. He emphasized the importance of community and called for more innovative ideas and experiments. Here are some key points and information as summarized by PolkaWorld.
Throughout the interview, Robert emphasized several key points:
- Changes in Treasury management: Polkadot is about to launch OpenGov, moving towards a more open and transparent mode of treasury management where all decisions are subjected to community voting. This is a significant change as it allows every member of the community an opportunity to participate in decision-making, making the entire system fairer and more transparent.
- Acknowledgment of Bitcoin: Robert gave positive reviews to Bitcoin. Despite pointing out some issues with the convenience and functionality of Bitcoin, he still sees unique value in it.
- Focus on the development of practical products: Robert reminded everyone not to focus too much on current hot spots such as DeFi and NFT, but to develop more practical products and attract more users to the world of Web3. He emphasized this point, especially because only when more ordinary users use blockchain technology can its true value be realized. This requires developing more user-friendly and practical products, improving the user experience and appeal of the entire ecosystem.
- Block space: This is the basic product of the blockchain. Its quality, flexibility, and availability determine what can be built on it. Overpaying for block space is common in the blockchain space, but validators are still operating at a loss, making it a challenging market.
- Polkadot’s market attention: Other ecosystems are evolving features that Polkadot already has! Polkadot’s interoperability and scalability allow it to connect and support multiple blockchain networks, a goal many other blockchain ecosystems are striving to achieve. Despite having gained some attention and success, Polkadot is still in its early stages and requires a lot of work and construction.
- Ongoing enthusiasm for working on the Polkadot network: Robert mentioned that his work might never end, but he remains passionate about it and said he would continue to work and build Polkadot until new people could take over his work.
- Adjustment of the inflation rate: Regarding the future, Robert stated that the Polkadot network might adjust some parameters, such as the inflation rate, to support its long-term sustainable development.
Polkadot is a blockchain network that supports multichain and cross-chain interactions. Its goal is to become a unified framework for blockchain technology. The key goal of Polkadot is to achieve seamless interoperability between chains. This goal guides all of Polkadot’s technical and strategic decisions.
Concerning Polkadot’s development status, Robert said that significant progress has been made in the interaction, communication, and interoperability between chains. Especially in the discussion about “parachains”, he pointed out that despite ongoing technical optimization and expansion, parachains play a key role in the network. They provide a way for different blockchains to exist and operate as part of the Polkadot network.
For further expansion of the Polkadot ecosystem, Robert emphasized that the value of Polkadot lies in the collaboration and collective strength of its community. He mentioned that many developers and teams are building Polkadot together, including Parity Technologies (the main developer of the Polkadot network). However, Parity is just one participant in the ecosystem. They work as engineers with Parity, dedicated to creating and maintaining an open, transparent, and efficient network.
When discussing Polkadot network’s governance and treasury management, Robert stressed the importance of community autonomy. Previously, funds were managed mainly through council voting, but this mechanism is being replaced by OpenGov. This system entrusts all decisions to the community, allowing anyone to participate in voting, thus enhancing openness and transparency. However, it also raises some issues, such as forward-looking and retroactive budget expenditures, as well as the responsibility of project delivery.
On how to optimally operate such a treasury management system, Robert proposed a concept of a more proactive and stronger accountability system. He hopes that in the future, the community will have clear expenditure areas and interest points, such as specific projects or areas of interest, which will inspire more people to start and carry out such projects. In addition, to ensure the reasonable use of funds, he stressed establishing a strict accountability system, ensuring the allocation of funds matches the progress and results of the project, and that the funds are not used before value creation as much as possible.
One model that Robert is promoting is “retroactive funding” especially for innovative projects that require relatively small investment. This model encourages individuals or teams to test their ideas, and upon successful execution, the community recognizes their value and offers rewards. For example, if someone created a YouTube channel that attracts a large audience, the community might recognize their service to the community and reward them. This represents a shift from passive funding allocation to an active innovative spirit.
In this interview, Robert also shared some insights about block space. In blockchain, block space can be understood as the number of transactions that can be included in each block. This is an important limiting factor, as the size of each block is finite. Validators are nodes responsible for packaging transactions into new blocks, but if too much block space is offered, it may lead to insufficient income for validators to cover their costs, thus resulting in a loss. To address this issue, blockchain networks may adopt strategies to adjust the supply of block space, such as pricing block space through market mechanisms to incentivize network participants to use this resource more efficiently.
In Polkadot, it may limit the block space it offers by restricting the number of internal slots or cores to maintain the value of the network. This means that Polkadot may not increase block space indefinitely, but instead price block space through market mechanisms to incentivize holders to use this resource more efficiently. Polkadot cannot provide its services for free as this could undermine the internal incentive mechanisms of the network. For instance, validators need to be compensated. If the price of purchasing block space is zero due to over-supply in the market, this could pose problems for Polkadot. Maintaining network value through block space restriction is a challenging issue.
He also emphasized that Polkadot needs to maintain a steady growth rate to keep up with inflation. He compared it to the annual GDP growth of some major economies like China and India, arguing that if these countries can often achieve 20% annual growth over the past 20 years, then Polkadot should also be able to grow by 20% or more each year. This growth requirement is closely related to the management of block space, as an oversupply of block space could impact Polkadot’s stable growth.
The 20% annual growth Robert mentioned for Polkadot likely refers to the growth of its network value and user base, including its usage, the number and quality of applications, and the development of the entire ecosystem. He did not specifically point to growth in a particular area, such as price or a specific metric, but rather proposed a more holistic view, considering the overall growth and expansion of the Polkadot ecosystem. He mentioned this goal in the context of discussing inflation.
Typically, the value of a cryptocurrency largely depends on its supply and demand, with supply usually determined by the inflation rate. For Polkadot, to maintain the stability of its value, the growth of the network (i.e., the growth of demand) should at least keep pace with inflation. This means that more users, more transactions, and more applications need to operate on the Polkadot network to absorb the newly generated supply.
This 20% goal is not a fixed figure but a reference value. It is based on the economic growth rates of some large economies and is only used to emphasize that Polkadot should strive to maintain rapid growth. The actual growth rate will depend on many factors, including market conditions, technological progress, the level of community participation, etc.
Block space and Polkadot’s growth are also closely related. When block space is limited, the network’s processing capacity will be restricted. Therefore, to achieve sustained growth, effective management and optimization of block space are necessary to improve network efficiency, attract more developers to develop applications on Polkadot, and thereby promote the growth of the entire ecosystem. In summary, managing block space effectively is a crucial part of achieving sustained growth for Polkadot.
As for the future, Robert stated that the Polkadot network might adjust some parameters, such as the inflation rate, to support its long-term sustainable development. He hopes that the community will foster more innovation and positive perspectives, as healthy debates and diverse thoughts can bring more value to community development.
Polkadot is a continuously evolving Web3 ecosystem, with the key to its success being community participation and innovation. Moving forward, Polkadot will continue to develop and optimize its technology, providing developers with convenient tools and an environment where they can build more excellent applications on this foundation.
To watch the original video, please visit: https://www.youtube.com/watch?v=e1vISppPwe4
PolkaWorld is a Polkadot global community founded in 2019, and supported by the Polkadot Treasury for 2 years. We have gathered more than 50,000 Polkadot enthusiasts, and have always been committed to spreading Polkadot knowledge, training Substrate developers, and supporting Polkadot/Kusama ecosystem.