Talk about Polkadot’s limitations with Parachain Teams
Today we have invited the early builders of the Polkadot ecosystem to discuss the topic of today. Although we are a member of the Polkadot ecosystem, we have to admit that the Polkadot community is not that active at the moment. Although Polkadot ranks at the top of the list in terms of Github activity, we don’t have well-known Dapps compared to other ecosystems. Today we will talk about the limitations of Polkadot together. But we are not trying to discredit Polkadot, it is more like introspection, and we are trying to find out our limitations and learn from others, hoping to improve our ecosystem.
Our guests today are Lurpis from Bifrost, Ruby and Marvin from Phala, xiaojie from PolkaWorld, and Zhouyang from Polkadot Ecosystem Research Institute.
1, Very hot applications are still deployed on Ethereum, we missed Defi and NFT Summer, why don’t developers choose Polkadot？
Marvin: We are all currently attending a conference in Amsterdam, Europe, and Parity has organized a special closed-door meeting with the Parachain projects and the Parity team to discuss the bottlenecks in the ecosystem. Polkadot has been live for more than two years, and now is an excellent time to reflect on it. To sum up, there are two main points.
First: Polkadot is building the layer 0 platform for parachains. Developers in Polkadot have been using Substrate SDK, which is the development service of the infrastructure platform. Polkadot has been making a technology stack. And those applications that can explode the market must be codable, that is, a good application and idea must be able to be copied quickly. So that some local developers with business ability can quickly go to the mold and go online so that the application can explore the market. The logic of Dapp and platform are very different. The Defi boom we missed requires the ability to be replicated and scaled up quickly in a secure and reliable manner. Currently, Polkadot’s native infrastructure is far from having such capability. Its native technology framework is indeed very flexible, but this is only limited to developers in the system. If more developers, say 100 or 200, came over now, Polkadot would have some limitations in terms of language and technical capabilities. Our technical threshold is very high, and so is that of the chain， while the copy and paste of EVM Dapp or solidity contracts are very easy. This is very detrimental to the fast-growing Dapp innovation.
Second: The strategy Polkadot carried out is very conservative. What is the solution to the threadhold posed by our technology? Rust and pallets are actually not the only things that prevent applications from thriving on Polkadot. For example, Cosmos also uses WASM, Solona uses rust, and its model of smart contracts is complicated. But Solona’s “ Bankroll ”power solves part of the problem. However the Parity team is more secure and cautious, and more concerned about compliance, so they don’t go for “aggressive” strategies.
Also, I don’t think we missed the NFT Summer. If you study the Solana ecosystem, you will find that its NFTs are not that impressive and durable. Although Opensea merged its NFT trading, the trading volume and the activity were not that good. On the contrary, Kusam has done a very good job in terms of NFT, Metaverse, and other data native projects. They are very promising. So we are not left behind in terms of NFT. We just a chance to have them be known in all the markets.
Lurpis: I strongly agree with Marvin’s point. The technical threshold is a very important reason.
I think the difference between the positioning of the Polkadot ecosystem and the market is also a very important reason. Many community members suggested that the development could be much more effective with some small changes, but left unsolved, because Polkadot is positioned as Layer0, and parachain as Layer-1, The work, Polkadot has done, is more about helping parachain to deploy on it. 2020 August Defi Summer burst, while Polkadot just made its announcement to start parachain auction, which did not start until 2021 August. At that year, there was no way for the Polkadot ecosystem to incubate applications. So first of all, we were at the wrong timing.
Secondly, the development threshold for parachains is relatively high. Parachain comes with Pallet, but it still takes a very long time to provide a good development platform for development on Pallet, such as to be compatible with EVM, Wasm, etc. The pallet is for the internal structure of the parachain, and does not directly corelated to the application developers. Of course, there are some teams deploying projects with pallets, such as Zenlink, that is to say, they will deploy a pallet on each parachain, which is energy-consuming. Because they are not standardized Pallets, each chain must be customized.
It takes a long time to build pallets such as Wasm and EVM for developers. After the team develops the corresponding pallet, it needs to go through strict testing and launch the test network. For example, the browser developed by Moonbean in cooperation with Etherscan cost a lot of manpower and resources. Until the parachain infrastructure is ready, there is no way for the application development team to come in. So for Polkadot, Defi summer has already happened when the infrastructure of parachain is not yet perfect. At this time there are developers who want to Fork popular applications, but no parachains ready to deploy
Then, Marvin mentioned that Money Power could solve the technical barriers to some extent. But I think even if there is enough capital, there is still no way to set up any application before the pallet is completed. Our infrastructure poses a very big limitation.
I think we must advance the infrastructure to solve the above problems. Kusama’s parachain has been live for about a year now, Moonriver already supports EVM and has a lot of applications live, and Karura will soon support EVM+. If Defi Summer happens now, Polkadot will be able to catch it.
2. The community complained that the development progress can’t keep the space of the market, why?
Lurpis: It is indeed slow. Parachain needs to develop its own pallets for its developers. if Parity could write pallets for EVM and modularizes them so that projects can deploy them directly, which may be a solution to speed up the layer1 development.
Marvin: Polkadot is a Layer0 protocol, serving the security and consensus for Layer1s. It usually takes about 5 years to accomplish all, and now it’s been 3 years already. And XCMP is not fully online yet, although cross-chain transfers are possible. Polkadot is considered fast in progress as a layer0 project, compared with ETH2.0, to see it at a glance. Polkadot’s technology will be proven in the next 1–2 years. But the development of Polkadot Layer1 is slower, whose counterpart should be Solona.
Cosmos layer1 was launched early around 2018, while the part of Lay0 was slowly upgraded and developed, but it is actually not too powerful and has been always stitching and patching
In this case, the requirements for being a Polkadot layer1 are very strict. First of all, it has to endure the pain of continuous improvement of the basic tech, and, at the same time, compete with other layer1 ecosystems.
We have also discussed whether we can promote to accelerate the development through some strong policies and so on. I doubt. Because the protocol needs brilliant individuals or small elite teams to lead, there is no way to speed up by increasing the number of developers. 3–to 5 people with elite brains are better to advance their development than 20+ average developers.
In addition, Parity’s development team is not small and the community developers are generally brilliant. while layer0 and layer1 are so much different in terms of development. And layer1 needs agile development, while layer0 must ensure security with vision and plans. Polkadot has suffered more in experiencing the pity of missing out so much Dapps in the past two years.
Rudy: I’ll add to that because they’ve been very comprehensive. Polkadot is like a very pure engineering student. It takes them 5–10 years to get experimental data ready for a paper. Public chains such as Solona are more of a finance student, do a two-year master’s degree, pitch a good project, and then their like will rocket up the ladder. They are two different styles of development routes. In addition to the technical barriers mentioned earlier, and the ability to “bankroll”, I am skeptical of Polkadot‘s support for ecological projects.
When we at Phala support our own eco-projects, we give them full support in many ways. Of course, Polkadot initially support projects a lot. As the ecosystem grows and there are more and more projects, it is difficult to give good support to each project. I think, first of all， the resources are skewed a bit, and the process is long when it comes to solving technical problems!
Those of us who have been involved in the lot auction can understand how much competitive pressure this process is. While other ecosystems are spending their energy on developing the ecology, we are on the inside roll. We should have been spending that energy on developing technology and creating a better business model.
After our parachain went live we hoped we could test as much as possible to help find bugs together and move the technology forward. But there were many issues that were left unresolved, which can be very damaging to the community’s confidence. This is why many community members are lost, they are very active when bidding for Kusama and less enthusiastic when it comes to Polkadot. At this point in time, if other ecosystems emerges, developers will be lost to others.
Zouyang ： I don’t think we missed it. We found AMM from Defi Summer, decentralized lending, etc. Last August some emerging public chains managed to cold start by way of incentives. The way they leveraged was DEFI. so did their DEFI Summer come just last year? I think DEFI summer is a process that every public chain has from zero to one. It is a process of discovering the value of DEFI products by going from zero to one. So it is not a matter of timing.
Second: I think NFT Summer is still far from here.
The development of NFT is still very early, he is only some simple applications of the picture. There are no very complex applications yet. And I think the market for NFT is much larger than the market for Crypto. In our real life, Crypto is equivalent to money, and all other assets other than Crypto can be NFT, and most of life is these tangible and intangible assets rather than money. So Crypto is a small part of crypto assets, and the real big part is in the NFT section.
In the NFT section, we can also subdivide it further. The first section is the Crypto native product.
It is an asset that extends from the crypto asset space. The other one is celebrities in traditional industries, famous companies, etc. They want to cash in on their influence in the form of NFT. This piece will also be a big market. And as of now, this piece of the market has basically not started. Only a small number of projects are trying. But I think it will be a big market. Because the characteristic of these NFTs is that they are more compliant. They can be traced. This is also very much in line with Polkadot focus on compliance and prudent behavior.
xiaojie from PolkaWorld：
Let me briefly summarize the points made by the guests. We raised this discussion because we see Metaverse, NFT, Game-Fi and other applications are particularly hot in other ecologies, but we don’t see these products FOMO up in Polkadot ecology, so why are we always missing out? After the above discussion, the main points of the guests are the following.
First: technical bottlenecks. the development threshold of Polkadot is relatively high.
The Layer 0 protocol is facing Layer1 developers, and it is difficult for ordinary developers to participate in the development directly.
Polkadot, as a Layer0 protocol, has not completed its development itself, causing Layer1 developers to mainly use EVM to attract application developers at present.
Second: the Parity team is very cautious and pays more attention to compliance and lacks aggressive strategies.
Third: Layer1’s infrastructure is not well developed.
Fourth: Lack of good marketing. The Foundation and the Parity team have not supported Layer 1 and the community enough.
But at this point, we see a good way forward, and the Foundation is hiring a professional marketing team to improve this issue
Fifth: The Polkadot ecosystem has its own timing, and we haven’t missed it. We just haven’t ushered in our own timing in DEFI, NFT, Metaverse, and other tracks.
3. In addition to the reasons discussed above, is the token price one of the reasons why good projects are not flooding into the Polkadot ecosystem?
Lurpis from Bifrost：
The impact of the token price is more significant. Of course, the Parity team, as a technical school, may have their own view that we just need to do a good job with the technology. This is the more typical thinking of the technology team, they think that firstly get the technology right, then the ecosystem, and after that the token price can be good. But for our industry, the performance of the token price is still very critical.
If the price of the parachain is very good and crownload is particularly profitable, then people will say that it is parachain Summer. however, it is obviously not. The optimistic point is that the ecosystem of parachain is now starting to grow and the Parity team is also starting to focus on marketing, and it is also a good time to promote it.
The Defi summer we are talking about is also because of the coin price. 2018’s Uniswap represents the rise of AMM; Maker Dao represents the stable coin, which was created in 2015; the lending product we can take AAVE as an example, which was created in 2017. when Uniswap was first launched the AMM pool was only a few hundred dollars, and no one came to play. AAVE liquidity was also very small at the beginning.
People didn’t really care what kind of product it was. They really exploded in August 2020, when first there was the expectation of Bitcoin halving, and second, there was new money coming into the market. It was when this money started trading on decentralized exchanges and leveraging in decentralized lending that the foundation for DEFI summer was created. By the time it peaked, the token price of all these projects was insane and that’s when everyone really felt the DEFI summer boom. By this time it had been brewing for two years. When you have a certain foundation and accumulation, your marketing will be able to capture the attraction, resources, and so on.
To sum up, my point is that we have to respect the technology lifecycle. In the case of the lifecycle as the foundation, only then will there be marketing and the performance of the token. So I think there is a high probability that we can have our own Defi summer.
Marvin from Phala:
There are two indicators of Polkadot ecosystem. One is the parachain and the other is the relay chain network. We can take the Solana, which is considered to be the hottest, for comparison. In terms of token price alone, Solona has the biggest drop. You can go to CMC and study the price of Solona tokens. And most of them are down from 10 times. The overall drop in the price of Polkadot is around 3 times. Also, I think Polkadot’s price is still relatively firm. Part of the reason for this is that parachains are constantly transfusing blood. The parachain slots are helping Polkadot stabilize the token price. Para chains are coming up to a year and each project needs to buy KSM and DOT to continue renting slots. However, our parachains generally don’t have a high enough TVL this is a rather obvious problem.
In addition, the parachain has been bleeding into KSM and DOT, it will very much affect its own performance. For example, ASTAR has been performing very well in all aspects. And the market, community growth, and application development are all doing very well, but it doesn’t look very good from the token price.
In the Polkadot ecosystem, parachains must initially transfer their benefits to the holders of the relay chain, which makes it difficult for parachains to perform well in the early stage, but as the parachain applications are growing, their value will be beyond our expectations.
Ruby:
We often get trolled about token prices when we are working on projects and communities. But as an official, there is no direct response to these. Of course, the token price is a good way to attract continued community growth. If your token price doubles, it’s much more effective than if you spend tens of thousands of dollars on the market. But it is not a decisive factor. If you’re a Holder of a project, you definitely want to look at their roadmap. If you are a long-term holder, you definitely want to look at its long-term development and then bet on a future. If you are a short-term speculator, you definitely want to look at the short-term ups and downs of the token, look at its liquidity scale and other various indicators, and then get involved in the market cycle. This I think depends on personal preference. For example, an infrastructure project will definitely not make a lot of effort on the token price, but more on the technical vision to support his business logic.
So token price is not a sufficient condition, but it will be a key factor. I personally will definitely look at the price of the token, not only the price, but also bet on a long-term future. For example, I myself will share Phala information every day, but its token price performance is not very good. It’s not down much, and it’s not up to much either. What I am betting on is its future.
Zhouyang.
I think the token price is a very important factor. A developer choosing an ecosystem will consider whether the ecosystem has users or will give them financial support. If not, it is hard to motivate developers. So I strongly agree with the view that public chains need to spend a lot of effort on incentives in the early stage. Because in a certain time, the attention of capital and most people is very limited, and they will focus on the more mature ecosystem. What makes others come to you? There must be a special incentive. Many public chains have used funding incentives to quickly grab DEFI as a grip and make TVL up before successfully completing a cold start. If the coin price does not perform well, the subsequent funds will not follow in at all. it is a chain reaction.
But the macro market is not quite right for incentives at the moment, so it also depends on the timing. It’s not that when the technology is ready, it’s going to go to business and market right away. It also needs to look at the macro-financial market. Because the cryptocurrency market is also funded by the traditional industry. This part of the money will be influenced by traditional financial policies. We can clearly feel that cryptocurrency funding is losing money recently and liquidity is decreasing. This is a very obvious situation, and it is not quite the right time to spend a lot of effort on the market. Instead, it is more appropriate to polish the infrastructure and get the product good. When the decrease slows down, or when the macro level, such as interest rate hikes and tapering are nearing the end, and the whole financial market starts to warm up, then we can consider making a big push to promote the market and do public chain incentives. So it is important to wait for the right time.
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