Polkadot Parachain Series: Moonbeam
Welcome to the Polkadot Parachain series. Parachains are custom, project-specific blockchains that are integrated within the Polkadot ecosystem since their first auctions took place back in November 2021. Parachain auctions were held on the Polkadot relay chain to determine which blockchain will connect to the parachain slot.
In this series we’re going to talk about the leading Polkadot parachains, starting with Moonbeam.
Image source: coinlive.me
Moonbeam is a Polkadot parachain that offers cross-chain compatibility between the Ethereum and Polkadot blockchains.
It’s essentially a smart contract framework that allows developers to migrate decentralized applications (dApps) between networks without having to rewrite code or reload infrastructure.
Image source: finance.yahoo.com
Founded by Derek Yoo, a software entrepreneur who was formerly the co-founder and CTO of Fuze, a worldwide Unified Communications-as-a-Service cloud platform that expanded to 700 employees in 2022 and generated $200 million in sales with 2k clients.
In 2019 Derek launched PureStake, the company behind the Moonbeam Network, after seeing that the blockchain world was shifting toward multi-chain specialization and interoperability, which drew him to the Polkadot ecosystem.
Moonbeam was established in January 2020 after receiving a grant from the Web3 Foundation, and it was first released on a testnet in September 2020.
After Moonbeam users collectively pledged about $1 Billion in DOT tokens, the Moonbeam parachain became operational on Polkadot in January 2022.
Vision of Moonbeam
Image source: moonbeam.network
Moonbeam envisions a multi-chain future with numerous chains and many users and assets on those networks. Moonbeam’s smart contract platform offers an Ethereum-compatible environment for developing decentralized apps.
Challenge — existing smart contract platforms are designed to service the users and assets on a single, specific chain.
Solution — providing cross-chain smart contract functionality allows developers to shift existing workloads to Moonbeam and extend the reach of their applications to new users and assets on other chains.
What Makes Moonbeam Special?
Because Moonbeam provides an Ethereum-like environment on top of Substrate, developers will be able to easily redeploy their existing smart contracts with minimal fees, while also benefiting from the modern Substrate network on which all Polkadot parachains are built, as well as the shared security of the Polkadot relay chain and integrations with other chains connected to Polkadot.
Image source: moonbeam.network
Existing Ethereum Projects
Moonbeam will be able to offer projects on Ethereum that are experiencing cost and scalability issues to:
- Move some of their existing workloads away from Ethereum Layer 1 with minimum requirements.
- Implement a hybrid method in which Dapps run on both Ethereum and Moonbeam at the same time.
- Extend their reach to the Polkadot network and the other parachains that are connected to it.
Ecosystem projects that need smart contract functionality can use Moonbeam to:
- Augment their existing parachains and parathreads.
- Add new functionality that is needed but not included on the main Polkadot relay chain.
- Leverage the mature and extensive Ethereum development toolchain.
Developers of New DApps
Individuals and teams that want to try building on Polkadot can use Moonbeam to:
- Leverage the specialized functionality from Polkadot parachains while reaching users and assets on other chains.
- Compose functionality from Polkadot parachains by using Moonbeam as a lightweight integration layer that aggregates network services before presenting them to end users.
Image source: moonbeam.network
Moonriver is the name of Moonbeam’s testing network. Moonriver, like Moonbeam, offers full EVM compatibility and serves largely as a testing environment for developers to test their dApps and smart contract codes before deploying it on Moonbeam. Moonriver has its own utility token, MOVR, and operates on Kusama, Polkadot’s canary network.
Moonbeam vs Competition
Moonbeam is in the direct competition with any blockchain providing similar support for Ethereum projects. So what makes Moonbeam stand out?
Shared security model
Developers can migrate projects to Polkadot and have higher security than competing blockchains while still communicating with the other parachains on Polkadot’s relay chain. Polkadot’s “shared-security” concept is what makes it so appealing to developers, since it allows them to start projects quickly without having to invest significant time and money in developing a validation method.
Moonbeam supports any EVM bytecode language in addition to its core language Solidity, allowing developers to get more out of Substrate. This gives it a competitive advantage in attracting developers from various backgrounds.
Best Ethereum compatibility (EVM)
Moonbeam founder, Derek Yoo, stated that “to our knowledge, no other project is able to come close to this level of compatibility with Ethereum”. With Moonbeam making it possible for projects to pursue an EVM targeted multi-chain deployment strategy using a single codebase and technical implementation, gives it much better edge vs its competition. This is because it’s vital for any blockchain to be EVM compatible allowing an easy access to the Ethereum and all of its liquidity, as Ethereum is the second biggest ecosystem in the cypto space.
Moonbeam/Moonriver Total Value Locked
Image source: defillama.com (03.05.2022)
Dozens of DeFi projects are choosing to deploy on the Moonbeam smart contract platform as an easy way to reach users and assets in the Polkadot ecosystem.
Moonbeam has over $110 million in TVL with 21 active protocols, according to Defillama.com, while Moonriver, Moonbeam’s test network, has just under $370 million in TVL with 43 active protocols. This is particularly noteworthy given that Moonbeam went live on Polkadot in January 2022.
SushiSwap, Lido, Synapse, Beefy Finance, Autofarm, and Curve Finance are some of the prominent protocols on Moonbeam/Moonriver. Although it should be noted that these protocols do not reflect the majority of TVL on each network, which isn’t ideal, but perhaps more time is required.
Moonriver has also had significant annual growth in full-time monthly developers, ranking in the top 10 from December 20 to December 21.
Source: Electric Capital developer report (2021)
A chain is only as strong as its weakest link. Ultimately, the success of Moonbeam will be determined by the success of Polkadot. Polkadot competes in a crowded field of interoperable, smart contract Proof-of-Stake blockchains such as Cosmos, Avalanche and, shortly, Ethereum 2.0. It remains to be seen which project or projects will be adopted by the market.
Polkadot also has a lot to prove because it is still a work in progress, with numerous parachains still to be fully launched.
Since we haven’t covered Polkadot in a while, let’s take a look at the network’s current state.
To begin with, Polkadot developer activity remains among the highest in crypto. According to Electric Capital’s developer analysis, Polkadot has the most development activity outside of Ethereum, as seen below:
Image source: Electric Capital developer report (2021)
The first parachains were launched in December 2021, and 13 parachains had won parachain slots bonding 127.8 million DOT (11%of the total supply) by the first quarter of 2022.
In addition, 28 further parachain slot auctions are planned until February 2023, increasing the total to 41 auctions, with winning parachains being onboarded up until December 2024.
However, the parachain-induced euphoria has faded, and it will be far more difficult to restore momentum in 2022 and beyond, although users remain engaged in the ecosystem.
Number of DOT Addresses
In the first quarter of 2022, the total number of addresses holding Polkadot’s native DOT coin increased significantly, indicating solid interest in the cryptocurrency.
Image source: Messari.io
Cross-Consensus Message Format (XCM)
Polkadot developed Corss-Consensus Message Format, a generalized format for communication not only between parachains, but also between different smart contracts, bridges, and Substrate pallets.
Moonbeam was one of the first parachains to go live on the Polkadot ecosystem, and as such, it has acquired some traction among developers looking to benefit from cross-chain interoperability. The Moonbeam roadmap emphasizes the continued deployment of new integrations and collaborations, as well as the development of the network’s interoperability — particularly in terms of its Cross-Consensus Message format.
Moonbeam has established targets for the implementation of lending and borrowing applications, NFTs, DeFi projects, gaming projects, and bounty programs in the near future.
DISCLAIMER: The information contained in this article is for educational purposes only and does not constitute any form of advice or recommendation by Wheatstones, and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.