Author: MIDDLE.X from PAKA Fund
Translation: Mingshi Song
Til today, there is no smart contract platform more successful than Ethereum. However, Ethereum has been criticized for its low transaction speed and high gas fees. The lack of scalability of Ethereum has become a bottleneck in blockchain’s large adoption. Polkadot is considered as one of the solutions. Polkadot Network uses a sharded model where shards - called “parachains”, allow transactions to be processed in parallel instead of sequentially, bringing reliable communication and interoperability between parachains without additional trust assumptions.
Polkadot’s relaychain only serves as a hub for cross-chain communication, so the relaychain does not support smart contracts, which is a space left to parachain entrepreneurs. Astar, Moonbeam, and Acala are all pioneers on this track.
Competition between smart contract platforms
We know that for the blockchain field where open source culture is prevalent, technology is not the only key differentiator. The most important differentiator is ecosystem. Only the public blockchain with self-growing ecosystem can build network effect and keep prosperous. Therefore, beside technical advantages such as scalability, interoperability, smart contract platform needs to compete in ecosystem development.
The ecosystem of smart contract platforms usually consists of three roles, DApp Developers, Liquidity Providers, and Users. What strategy should be adopted to build the ecosystem? With limited resources, which role of the ecosystem should be prioritized to meet their needs? We can make an analogy with some multi-party Web2.0 platforms: if we want to make a car-hailing platform, should we prioritize the expansion among drivers, or passengers? If we want to make a heterosexual dating platform, should we prioritize advertisement among males or females? If we want to make an e-commerce platform, should we prioritize attracting more buyers? Or merchants? Or products?
Luckily, this is not a circle of chicken laying eggs and egg incubate chickens. In most cases, there is a standard answer to the question, and in actual operation, we must also find the first push of the flywheel effect.
No business strategy can be separated from financial calculations, so the answer is:
Whichever party is relatively cheaper, acquire first.
Whichever side is more patient, acquires first. (Patience means being willing to wait longer while the other side hasn’t onboarded)
For smart contract platforms, let’s analyze the roles.
DApp Developers: For many DApp developers, multi-chain deployment is part of their strategy. DApp developers are willing to deploy on new platforms as long as they provide compatibility and smooth migration experience.
Liquidity Providers: DEX is the key DeFi application on smart contract platforms and liquidity is critical for DEX. For liquidity providers, funds are not reusable and there is an opportunity cost for their choice between platform. This problem can be solved by enabling cross-chain liquidity, and there are already Zenlink and HydraDX doing exploration in this area on the Polkadot platform.
Users: Users are the most costly and impatient group of people to acquire. If users visit and find no apps available, they will quickly leave. So it is unwise to prioritize user acquisition. The wise strategy is to build the ecosystem and pave the way before expanding users.
We can quickly identify that DApp Developers are the breakthrough.
Astar’s strategy
Astar Network, formerly known as Plasm, is a smart contract platform developed on Substrate which natively supports EVM, WebAssembly, and layer2 scaling solution. In the competition of attracting more DApp developers, I believe that Astar’s design is extremely competitive.
Astar’s strategy includes both Ethereum DApp migration and native WASM DApp incubation.
First, Astar has implemented the X-VM(Cross Virtual Machine), which allows smart contracts to execute calls and read storage data from different contract engines (eg. EVM, WASM) and languages (eg. Solidity, Ink!, Ask!) within the same blockchain. This also allows Ethereum DApp developers to easily migrate and adopt Astar.
Secondly, Astar seperate the role of DApp Developer and DApp Operator, allowing DApp’s operating rights to be traded. The developer is the default operator, but the developer can sell the operator rights to someone else at any time. This design gives DApp developers a new option. If a developer only wants to develop an application and does not want to run and maintain a DApp, they can choose to transfer it to someone else after deployment, and focus on developing new DApps. For those who want to profit from running a DApp, they can buy the DApp and earn revenue from it. The revenue of DApp consists of two parts, one is the revenue from DApp’s own economic design, and the other is the DApp Staking reward of Astar platform.
Third, Astar incentivizes DApp operators through DApp Rewards. Astar Network’s block rewards is divided into two parts, 50% to collators and 50% as DApp Staking rewards. Similar to the NPoS consensus mechanism, ASTA holders can nominate DApps with their ASTAs. 80% of the DApp staking incentive (40% of the total inflation incentive) will be distributed to DApp operators in proportion to the nominations received by DApps. And the remaining 20% (10% of the total inflation incentive) will be distributed to DApp nominators in proportion to the number of ASTAs nominated.
It is important to note that Dapp Staking is not a short-term subsidy, but a long-term incentive. Astar believes that DApps, like other roles on the chain, are long-term contributors to the value of the network. Developers who build DApps and bring users to the platform deserve a steady stream of revenue from the platform.
Summary
Deploying DApps on Astar Network will have the following advantages.
The ability to interoperate with applications on other parachains in the Polkadot ecosystem through the Astar parachain.
DApps developed with Solidity can be easily deployed on Astar with no changes.
DApps developed with WebAssembly can also be easily deployed on Astar.
The ability to sell the rights to operate a Dapp at any time for monetization.
DApp Staking rewards are available on the platform, and the better the DApp, the more rewards are possible.
With the above advantages, Astar Network will have a great ability to attract DApps. Based on the flywheel effect, Astar Network will have the ability to attract more liquidity providers and users, and take the lead in the growth of the platform ecosystem.
In addition to technical excellence, excellent strategic design is the key to success. Astar Network is going beyond the goal of being the “Ethereum on Polkadot”. Futhermore, Astar is on its way to become a more scalable multi-chain smart contract platform that will realize the vision of Web 3.0. Shiden has already won the third slot in Kusama’s first round of auction, and has started producing blocks on July 7. We will see how Astar will evolve.