Building on Polkadot: Choosing between a Parachain and Parathread
Parity recently announced the release of Rococo V1, a “Parachain Testnet” for projects and developers to test their Parachains and see how well they can interoperate between each others. Although this release focuses on parachains there is another alternative to these that can sometimes be more interesting: parathreads. These are my thoughts on their differences and which option is best for which project.
Disclaimer: We have the advantage of being in a highly dynamic ecosystem and the content of this article may become outdated over time. Although I will try to keep it up to date you may want to do your own research as well.
If you are new to all those terms let me try and explain them below for you:
- A parachain is a blockchain connected to the Polkadot network. It rents a dedicated slot to be able to interoperate with other chains.
- A parathread is… the same. However, it does so without having to rent a slot and rather pay for the resources it uses when it needs them.
If you come from the cloud computing or backend development world it may help you to think of parachains as servers you rent with committed resources (you pay for 6 months or a year of use, or more) versus serverless functions. Both will let you run your own (decentralized) applications but have their own specificities, and thus their own billing systems.
Speaking of billing, the ways to acquire a parachain or a parathread are extremely different and you’d need to understand these as well when choosing between each option.
Typically, you’d get a parachain by winning an auction for a slot offered by the Polkadot chain. Since there are a limited number of slots offered and so many projects hoping to get one it would be fair to expect the bids to be of an important value — thus it could require lots of financial resources to get a slot; this is why many projects are looking at the opportunity to crowdfund the money to get their slots by asking their community to participate (in the exchange of tokens for instance), see this article for more details.
When it comes to parathreads, the mechanics are still a bit unclear but it would be fair to expect them to not require getting any kind of slot. We already know that some parachain slots will be reserved to chains dedicated to the support of parathreads — meaning that dedicated chains will support parathreads and relay their data to the Polkadot network.
So which one shall I use?
From my perspective it boils down to a costs versus benefits analysis.
It seems like getting a parachain slot will require you to either have access to considerable amounts of money or a big community ready to help you in exchange for some tokens you’d give away. However, you’d then have a slot for 6 months, a year or even two and wouldn’t need to pay any other fees to the network to use its interoperability features. If you expect your chain to require to produce lots of inter-chain traffic it could be a huge costs saver to have a slot. This would be the case for decentralized finance platforms (for example Acala) or non polkadot chain bridges (for instance Darwinia).
On the other hand, opting for a parathread could be a better solution if you do not have the resources or community yet or if you’d like to test an idea you have. Not only that but there are some specific classes of projects for which I believe it doesn’t make sense to have a parachain slot, namely this would be the case of platforms for which most of the traffic happens on their own network and doesn’t require much interoperable actions. This would be the case for chains targeting specific use-cases such as identity, social networking, IoT or gaming.
But keep in mind that choosing one of the options does not mean you cannot opt for the other one in the future. For instance, you could choose to convert your parachain to a parathread once your slot expire or if you do not manage to renew it. Vice versa, you could start as a parathread and then switch to a parachain once the economics makes more sense or once you have a bigger community or once that your chain is generating more revenues in the form of transaction fees or inflation; for a majority of the existing and upcoming project this may very well be an optimal strategy.
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Eliott Teissonniere is a polymath, engineer and entrepreneur. He used to be the CTO of BitNation, a governance and crypto company which was rewarded by the NetExplo prize from UNESCO in 2017, made the world’s first marriage dApp on Ethereum and leads Nodle’s Blockchain and Engineering teams for which he co-invented various pending and granted patents. He was featured in various medias for his work on decentralized governance and blockchains such as Decrypt, CoinTelegraph and CoinDesk; and spoke at various high profile events such as the Paris Blockchain Week, the Stanford Blockchain Conference and presented in front of the European commission with past European deputies on the subject of Covid-19 tracing via the Blockchain. He is a mentor at the Berkeley Blockchain Accelerator and advises various crypto and technology startups via his company Nuclei Studio. He cofounded in 2020 the Governance Research Institute to research new governance models for companies, communities and governments.
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