Why are we building on Moonbeam?
We often get asked, why Moonbeam? So, we have taken this opportunity to share with you our thesis on why we feel Moonbeam is one of the top ecosystems to develop your dApps -
Polkadot — Layer 0 of Web 3.0
Multichain Future
With increasing popularity of blockchain networks, we have reached the stage of adoption where the amount of users utilising decentralised technology is exceeding the functionality of the technology itself. This has resulted in regularly congested networks and a demand for scaling solutions. Many of the roadblocks we are experiencing could easily be solved with scaling solutions such as bridges, parachains and other features that create seamless transitions for Web 3.0 users and depend solely on a shared vision of a multichain approach to the next wave of blockchain adoption.
As a result, there has been an emergence of blockchains such as BNB Chain, Polkadot, Avalanche, Solana, Cosmos that are quickly catching up and solving some of the problems that accompany building on Ethereum. Each of these solutions has a different approach to solving the problems of today’s blockchains
- BNB Chain: Hard fork of the Go Ethereum (Geth) protocol, and shares many similarities with the Ethereum blockchain. However, BSC developers have made changes in the number of POS validators to improve scalability at the cost of decentralisation.
Over the last quarter, BNB chain has realised the limitations of its approach and is exploring a multichain ecosystem with their network via BNB Chain Application Sidechain (BAS). This will let developers port data and assets from BNB Chain, reducing strain on the network’s limited transactional resources. - Avalanche: Avalanche team had realised the challenges of building and scaling a single monolithic chain. The team has therefore taken a unique approach by building 3 main chains called XPC chains.
The X-Chain: This is known as the “Exchange Chain”. It has a DAG architecture and implements the full Avalanche Consensus and can facilitate exchange of assets.
The P-Chain: “Platform Chain” is a linear blockchain that implements the Snowman Consensus. It facilitates the creation of subnets and coordinates all the validators in the system
The C-chain: “Contract Chain” is another linear blockchain as well, implementing the Snowman Consensus. It implements the EVM, where Solidity, Vyper smart contracts are executed.
Subnets: Subnet refers to a subset of the Avalanche validators, with a blockchain requiring exactly one subnet to be validating it. This means that a subnet validator must run a full node (costing ~ 2000 AVAX). These subnets will be composable allowing developers to build these chains according to the application/use case requirements. - Cosmos: It is a decentralised network of independent parallel blockchains, each powered by BFT consensus algorithms like Tendermint.
Cosmos SDK: is a generalised framework that simplifies the process of building secure blockchain applications on top of Tendermint BFT. It comes with a set of useful developer tools for building command line interfaces (CLI), REST servers and a variety of other commonly used utility libraries.
The connection between blockchains is achieved through a protocol called Inter-Blockchain Communication protocol (IBC). IBC leverages the instant finality of Tendermint consensus (although it can work with any “fast-finality” blockchain engine) to allow heterogeneous chains to transfer value (i.e. tokens) or data to each other.
Polkadot
Polkadot is the next-generation blockchain and layer-0 protocol that unites multiple specialised blockchains into a unified, scalable network. This “blockchain of blockchains” promises to create a secure ecosystem where multiple “parachains” can interact with each other through a “central relay chain”.
The Layer 0 protocol consists of a series of state channels that validate data based on user-defined functions. Alongside the hardware, servers, and systems, nodes and any device connected to the nodes are also part of this layer.
At the centre of the system, we have the relay chain, which is responsible for the shared security and connecting the parachains. Parachains can be launched by anyone who rents a “slot” on Polkadot’s ecosystem. Each parachain is like a “shard” of the original chain. This shared security model allows developers to focus on building their blockchains and the respective use cases rather than trying to create a decentralised validator base as compared to networks like Cosmos and Avalanche.
Even though the number of parachains have been limited to a 100 slots with each slot being offered for a period of 96 weeks. This limitation has been introduced to only have the best applications and networks such as Moonbeam, Acala, running on top of the Polkadot security layer and infrastructure.
Polkadot offers other options to accommodate building as part of their ecosystem.
- Parathreads are parachains that connect to Polkadot using a pay-as-you-go model. They provide a lower barrier to entry for blockchains that may not need continuous connectivity to the network. Chains can switch between being parachains and parathreads depending on their needs and on the availability of slots on the Relay Chain.
- Substrate is a framework for building customised blockchains. These blockchains can be run entirely autonomously, which means they don’t depend on any external technology (even Polkadot) to run.
Moonbeam — EVM of Polkadot with the Largest DApp Ecosystem
Moonbeam on Polkadot and its sister ecosystem of Moonriver on Kusama sit at the intersection of cutting edge technology offering layer-1 infrastructure and cross chain communication on top of Polkadot and simultaneously offers the familiarity for both end users and developers of using DeFi, NFT, gaming applications built on other EVM networks.
The ease of accessing applications directly via their MetaMask wallets will bring in the blockchain native users onto the Moonbeam ecosystem and the low cost transactions can help onboard new users that were apprehensive about using dApps due to high gas costs. With entirely new use cases being built for on the Polkadot network either on Moonbeam or another application specific parachains we can expect another set of users being introduced to web3. One of the best parts is that Moonbeam succeeds with the success of all these parachains in the network and stands to gain more adoption.
The key ingredients that drive our bullish sentiment about the network include:
- Boost in network activity after EVM launch on blockchain networks
Users and developers have gotten acquainted with how the Ethereum network works over the last 3 years. As we can observe on every 3rd generation blockchain network that even the UI/UX is designed in ways to resemble the initial applications launched on Ethereum. Networks like Avalanche (C-chain), Polygon and NEAR (Aurora) were able to gain traction and attract liquidity to the tune of 10s of Billions of dollars because of ease of creation of applications on EVM compatible networks.
- Increasing EVM based developers via ecosystem activities like development workshops, hackathons
It is important to note that this data above was captured in early December 2021, when Moonriver had only been live for about 3 months. So the developer activity that was achieved in the first 3 months was significant enough to rank Moonriver among the top 10 for all networks in terms of dev growth, and Moonriver has been a major factor behind Kusama being at #8 (since it was inclusive of their growth)
The majority of research and resources, workshops and hackathons pertaining to smart contract development are available for Solidity. This had led to an explosion in developers having learnt or learning Solidity. All this brainpower and development skills can be easily ported to the Moonbeam ecosystem to experiment and build new applications in the domains of DeFi, NFTs, DID and GameFi.
Polkadot by its nature will also offer these developers an additional opportunity to integrate with other parachains through XCM and build tools which weren’t possible before.
- 4+ years of security in smart contracts helps create secure systems
Security is a major requirement in the blockchain ecosystem. Hacks and exploits have led to an outflow of about US$1.5 billion+ dollars in the last 2 years. At the same time, we have been able to attain maximum information about how to create secure contracts on EVM compatible systems, have been able to set up a robust auditing network for Solidity code and resources on mistakes to avoid in creating new blockchain applications.
All of these factors help in faster development and iteration cycles, creation of new financial primitives, untapped application ideas can be brought to life quickly. Moonbeam has the potential to become the Idea and experimentation hub for the Polkadot network. Once validated these ideas and applications can be built on other parachains as well.
XC-20: Opportunity for Vulture interoperability
- Bringing in Acala USD (aUSD) and more tokens
- Being the 1st stableswap in prod can make us the hub for all chains
As the narrative shifts to a “multi-chain” future, Moonbeam and the Polkadot ecosystem have been sketching this for over two years.
XCM, which started as an approach to cross-chain communication, has evolved into a format for Cross-Consensus Communication that is not only conducted between chains, but also smart contracts, pallets, bridges, and even sharded enclaves like SPREE. XCM enables truly shared security with no need for any trusted bridging assumptions, something that other chains have been trying but they need to rely on bridges to enable this for their ecosystem.
Moonbeam is the first fully Ethereum-compatible parachain on Polkadot. Moonbeam combines the best of both worlds:
- Polkadot’s scalability & interoperability.
- Ethereum’s ease-of-use & developer community.
Users, developers, and infrastructure providers already familiar with Ethereum can easily use, deploy, and build on Moonbeam while benefiting from the scalability and interoperability of Polkadot.
Moonbeam’s developer-oriented approach aims to provide a better user experience for Solidity developers of the past, present, and future. Any developer can use Solidity or languages compiling to Solidity bytecode to build or deploy projects on Moonbeam. Furthermore, it provides support for MetaMask, Remix, and Truffle through its Web3 RPC endpoints.
One has to distinguish the other Ethereum-compatible solutions from Moonbeam. So, for example Solana and NEAR cannot provide the same level of heterogeneous sharding and compatibility into their platform’s core like Moonbeam. The standardizing on H160 accounts and ECDSA signatures lets users hold tokens on Ethereum and Moonbeam by using the same address that they currently use on Ethereum.
While Moonbeam has talked in detail about the reasons that would act as reasons for the ecosystem’s success here, one thing that we would like to discuss in detail is the XC-20 standard.
Moonbeam is going to represent the landing ports for most teams going multichain due to their EVM capabilities, this will drive more assets and liquidity.
Moonbeam is already being seen as one of the most interoperable places for developers to build due to the XCM capabilities internal to Polkadot as well as their relationships with Axelar, Nomad, Multichain, Connext, and LayerZero but even though XCM makes it possible to move assets between Polkadot parachains, there are some practical differences between Substrate-native tokens on other parachains and the ERC-20s deployed to Moonbeam’s EVM. To bridge this gap, Moonbeam introduced XC-20s. XC-20s are a new type of interoperable token that conform to the ERC-20 standard but are also Substrate-native assets. All fungible assets created in this format are able to move to other Polkadot parachains, and remote parachain tokens are able to move to Moonbeam as XC-20s. This is possible through a special precompile that is added to Moonriver and Moonbeam ERC-20s, making them accessible by the underlying Substrate architecture, translating EVM code to Rust.
The XC-20 standard allows Substrate tokens such as KSM, DOT or other parachains’ assets to make their way to the Moonriver and Moonbeam EVM environment. They then become regular ERC-20s from the perspective of the EVM, allowing them to be used in DeFi or other applications. The connection can work in reverse, too, allowing native Moonriver ERC-20s to be transferred to other parachains. Some setup is still required in order to activate this cross-chain interaction, such as opening an HRMP channel between Moonriver and the target chain.
Moonbeam is uniquely positioned to capture a large amount of developer traction in the DOT ecosystem due to their ecosystem growth as well as the maturity of their EVM.
The DOT ecosystem, though the token launched over a year ago, is just at the beginning of its launch cycle as XCM is launched in early May.
If anyone has looked at the L1 landscape, besides Solana & Terra, every one of them has made strides due to having an EVM, Moonbeam is that for DOT.
The Moonbeam Foundation has also created a grant program for projects that add value to the Moonbeam ecosystem, such as DEXes, lending and borrowing protocols, infrastructure providers, oracles, NFTs collections and marketplaces, and many more.
So, if you’re ready to take the leap into this multi-chain future with Moonbeam and Vulture Finance, join our community and stay up to date with the latest developments and exciting opportunities. It would help us and your friends, if you could share this blog with them :)
