Discussion with Peter Mauric of Parity on what makes Polkadot the only blockchain network ready for the global web 3 phenomenon.
The consensus seems to be that we know what mainstream blockchain adoption will look like – or at least we know what it will be called – and the word for mainstream blockchain adoption (predictably) doesn’t contain the word blockchain in it. It’s Web 3.
Polkadot Network, founded by Gavin Wood, former Co-Founder and CTO of Ethereum, is built with Web 3 in mind offers a framework for a Proof-of-Stake (PoS) consensus mechanism which can be used to roll out independent parachains which work interoperably, allowing for easier scaling. Polkadot’s software development toolkit, Substrate, created by Parity Technologies, helps blockchain developers build custom blockchains to meet their specific needs.
In Mid-January, Moonbeam became the first operational parachain, so the vision which has captured the blockchain world’s imagination for the past two years is finally becoming a reality.
The good news doesn’t end there for Polkadot. A recent research report by the Crypto Carbon Rankings Institute (CCRI) recently named Polkadot the blockchain network with the lowest electricity consumption and total carbon emissions per year, out of a group of six POS networks, including Solana, Tezos, Avalanche, Cardano, and Algorand.
This month, they launched the Polkadot Pioneers Prize, a fund of 993,286 DOT, worth roughly $18 million, to promote Polkadot infrastructure improvements, including research and development on zero-knowledge research and web 3.
With all this progress, it’s easy to see why their utility coin, DOT tokens, have been up in value this week even as other altcoins struggle.
We had the chance to interview Peter Mauric, Head of Public Affairs at Parity Technologies, makers of Polkadot Network, to discuss how they are bringing real, enterprise-level global scalability to blockchain and the world.
Peter Mauric, Parity Technologies
What advantages is Polkadot providing that are unique?
“The ability to build something fit for purpose. Something that is going to be much more scalable, and much, much more optimized for whatever you want to accomplish.
As an example, there are many, many, many different supply chains around the world, industry, by industry, or even company by company. If you look at Apple's supply chain, it could look nothing like Sony's supply chain. So building a single solution for all supply chains and trying to force all supply chain implementations into the same smart contracting environment is always going to be a fool's errand. It's going to cause more headaches than not in the development process.
Once you have it live, imagine having to pay gas for every sort of step a material goes through on your supply chain, it's just not cost-efficient whatsoever. So you can build a parachain that has no smart contracts and is built specifically to accomplish your goals for your business case. And then again, because you as a parachain have secured your consensus by becoming a parachain, you have reserved your throughput on the Polkadot Network, you can have a blockchain that doesn't have any Gas, or any tokens associated with it at all. You can get the benefits of a trustless decentralized network for tracking and managing any number of business cases that don't necessarily need to have crypto tokens associated with them and don't need the Gas model. It can be developed in any way you would like to fit that use case.
There is the ability to build a private blockchain network for lots of trade secrets in the way some of these supply chains operate. And if it was on a public network, everyone would know your competitors would know. You can build a parachain with privacy, you come up with privacy features, basically making it a private network for all of those confidential trade secret functions of how your network works. But you are still able to communicate data and value out to the public Polkadot Network and have your chain interact with the broader web 3 worlds, which is a huge differentiator that we don't see really anywhere else in, in crypto.
And then the third piece is, it's not like you're just going to be building a blockchain from scratch. That's very, very hard, takes a lot of expertise, you'll have to hire quite a large team of blockchain experts to do that. And there aren't many of them out there. Hiring in this industry is very hard, especially right now when there's less talent than there are jobs.
So we've built a blockchain framework called Substrate, you could also call it an SDK. It's certainly the most powerful and customizable blockchain-building framework in the world.
When we were building Polkadot, we realized that we're going to need a lot of teams around the world that are able to build their own custom blockchains. We knew because we're the foremost blockchain development software development firm In the world, that's built in Rust. We were innovators in bringing Rust programming to blockchain, we think there are probably around 1000 to 1500 Rust developers in the world that are good enough to do that sort of work and we employ 150 of them. So we know that people out there aren't going to be able to get their hands on 150 Rust developers. So we used everything we've know we know from having built Ethereum, having done tons of enterprise work in between, and now having built Polkadot Build Substrate, which is just a highly advanced blockchain building framework or SDK that an enterprise or regular crypto startup can pick up and say, get their idea down and built in weeks or months instead of years.
The networking, the overall sort of base-level Rust code that supports all these different what we call palettes or what you might think of like as a module that you can plug and play with different consensus protocols, different architectures. There's a toolkit in Substrate that allows you to connect your web two systems or your non-blockchain systems to your blockchain. So you could have all their internal systems at an enterprise, those can easily be piped into your blockchain implementation via Substrate. So it really greatly reduces the engineering overhead for enterprises to build their own custom blockchain versus having to do it from the ground up,” Mauric said.
So, what if I’m Epic Games CEO and we want to put Fortnight on Blockchain? What would Polkadot have to do in order to scale up to something where you've got millions of concurrent users on a daily basis?
“Polkadot is the only viable solution at this point in time for something of that scale because you would want to have their own dedicated chain in order to host those users. So I would say the actual game is not going to be hosted on a blockchain and it would still run sort of in the hosting environment that it is now, I don't know if we're ever going to see games of that scale fully hosted on a blockchain. It's a huge amount of data and graphics being delivered from some server somewhere, not from a blockchain.
But obviously, the character interactions, the skins, the guns, the items that you pick up and buy and trade, back and forth – that's all clearly the place for NFTs. That makes a lot of sense, right. So I would say in that case, Epic Games would build their own parachain that's optimized for two things, FTS, and throughput… They wouldn't have any Gas model at all…
In smart contracting environments, like Ethereum, your users become a slave to the token, because you have to have the token in order to interact with the network, that's never going to work for mainstream adoption.
And if a game company integrated NFTs into their game, and then turned around and said, oh, but you guys have to buy this token now. Dead, like not gonna happen.
So they would be able to build a parachain that's optimized for high throughput. The trading of NFTs would basically be the base level of what they would need to be able to allow their users to transact and trade in a blockchain environment actually own their weapons and their skins and then also be able to transfer those to future versions of the game, or other sorts of iterations of or like variants of Fortnight that could be built using those resources.
No blockchain in the world could handle the amount of potential throughput for all the users in Fortnight at peak time, all trading their NFTs. That's just a fact, if that's potentially millions of transactions a minute or maybe even a second, that's still a little bit likely down the scaling roadmap for the entire industry. Not just Polkadot, although Polkadot is inherently more scalable, then most of the solutions out there. And in that case, on Polkadot, you would potentially have your base chain with all the logic built in, and then there's this concept of on-demand roll ups for high throughput periods.
So you would basically just connect one of those to the parent chain and run it so that when you're going through high capacity, like you're running a certain segment of that in a roll up, and then bringing it back down.
These parachains are layer one blockchains. And they can have all of the other additional scaling products. So there's several projects in the Polkadot ecosystem that are building out all that primitive infrastructure that will allow you as a parachain to just plug in, you want 50 side chains for different stuff going flip a switch, and they're able to turn those on. You want roll-ups on your parachain to do specific functions? Flip a switch and turn those on. So all of those scaling solutions will also be available on top of these parachains, which are already pushing more throughput than most layer one blockchains today,” Mauric said.
So what are the best use cases to look at on Polkadot that could include that kind of massive scale?
“On the DeFi side, there's a chain called Moonbeam that's the EVM compatible parachain on Polkadot so sort of catered towards attracting existing Ethereum and Solidity developers to build or expand their products and go multichain on Polkadot. But then some of the more sort of potentially gaming-focused examples. One is BitCountry, which is a Metaverse company that is going to be dabbling in a lot of these things like more Metaverse side of things Then like plugging NFTs in Fortnight, I'd say the one that's very interesting for the traditional gaming world coming to crypto use case is a project called Efinity. So it's a pretty well established Ethereum team and they're very heavily going in the gaming NFT direction,” Mauric said.
Some people react with skepticism to any NFT project not founded on Ethereum. Is that a limiting point of view?
“Yeah, I mean, this is there's this there is a certain I don't know – I want to call it arrogance, or is it Ethereum maximalists? When we first started Ethereum, we were the group of people that were not thrilled about the way the Bitcoin community was reacting to any other projects that tried to build interesting things with this technology that wasn't Bitcoin But over time people are incentivized by their bags to advocate for one final solution for a technology that is in its literally in its infancy. If history repeats itself, Ethereum will not be the ultimate, final iteration of this technology,” Mauric said.
If we continue at the rate NFTs have grown since 2021, do you think Ethereum could be a limiting factor to growth in 2022?
“Correct. And even in Ethereum 2, it's not clear that Gas price issues will be completely solved. The fact that there's Gas at all is going to be a problem for onboarding millions and billions of new users all at once. Like, if you really want mainstream adoption, you're going to need to let people use the thing without a token, which when you bring that up to Ethereum people, they're like, no, no, no, but the token is how I get rich, and we're like, but this isn't about you…,” Mauric said.
What great things can we expect out of Polkadot in 2022?
“In January, the first parachains on Polkadot actually went live with Moonbeam… So we are really just starting the final phase of Polkadot launch, where these chains are gonna actually start to host end user applications for the first time in 2022. So we'll be really excited to see the products that these teams deliver, the things that people build on top, and users actually getting their hands on Polkadot for the first time after a couple of years of really intense interest, and five or six years of actual development time.
The rollout has been an extremely long process because Polkadot is that much more complex than the next closest protocol. We're launching 100 layer one blockchains and we're launching them in parallel. Both general purpose chains like EVM style environments, for Ethereum developers these DeFi optimized environments for more advanced financial applications. So we're going to see a lot of excitement around the actual end user products finally being available,
So these networks that are launching now now are the final step in us getting this technology stack up and live. So yeah, really excited to see and use your applications. Of course, there has been a lot of excitement around the Moonbeam ecosystem.
Acala is another one of the very early parachains that are launching with all these DeFi primitives built into the core of the blockchain itself. And they have some very exciting products. They're launching with a fintech company called Current here in the United States which has 3 to 5 million users in the United States... And they have a debit card sort of thing. So Acala with Current is planning to launch a product where their users will be able to leverage DeFi from their FinTech banking interface, which is very exciting.
I think one of the really tangible adoption directions that DeFi can and should take… Like hybrid finance, where we have a big FinTech audience, they want DeFi yields, but they don't want to deal with any of the DeFi stuff. So basically, running Acala in the backend of Current’s interface and giving their users access to those products is going to be a pretty exciting thing to watch.
There are two or three really huge projects coming to fruition in the next weeks and months that I would just say, everyone keep a close eye out. I'd love to be able to say more now, but unfortunately, I can't. But we're talking about very significant, mainstream adoption of these technologies by big companies and institutions in a tangible way. So we are excited to reveal all that when it's ready,” Mauric said.
Are regulators in the US likely to slow the development of blockchain technology in 2022?
“I think regulation is good. I want more regulation. We are quite compliant on the Polkadot side of things. We always have tried to do things the right way. But regulation and DeFi regulation and blockchain broadly is really necessary. Because there are a lot of teams that basically just flout the rules, as if they don't matter, to gain an advantage. And that needs to be put to an end because it creates perverse incentives for teams to break the rules because they see that they can succeed. So I think that it's there's a lot of obvious cases out there have a lot of projects in the top 10 that are all ignoring the reality that, you know, they issued a token, they're running this network or have helped launch this network and need to play by the rules, and they're not,” Mauric said.
So many NFT projects that have sprung up in the past couple of years. Do you see them possibly facing major regulatory issues?
“Really major. Yeah, and you have major layer one blockchains, whose foundations are investing in their ecosystem, and taking equity stakes in the companies building on their network, which is literally illegal in the regular world. And it should be illegal in blockchain. You should not be allowed to do that. And add the top 10 or the top 20 (projects), like half of them are doing that. So that sort of thing needs to be put to an end immediately. But they're not seeing the signal that it's wrong. And I guess they're just getting bad legal and regulatory advice, because they're still doing it,” Mauric said.
Do you expect there to be a shakeout with a lot of these projects that maybe have got more enthusiasm than they do foresight?
“Making predictions is a fool's errand… XRP is getting sued by the SEC, and is still in the top 10. So I don't know. I would hope that there is some cleaning up of some of the mess that people have created for all of us trying to do things the right way. But the market is not rational. And Ripple is still a top 10 Crypto asset,” Mauric said.
Summary
It’s a rare thing to speak with a project that lives up to its hype, especially a project as anticipated as Polkadot, but they have the vision and the tech-savvy to get there. As Mauric suggests, stay tuned for further parachain launches in 2022 as they seem to have a full docket of upcoming news.
Ethereum may have given us DeFi, but at this rate, we have to wonder – by the time Eth 2 is fully operational, how many enterprise use cases will Polkadot already have running at scale?
