Composable Finance
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Composable Finance

Composable Finance’s dual parachain strategy

Composable Finance introduces a dual-parachain strategy to maximize the use of both its Kusama and Polkadot parachains. We procured Picasso as a parachain on Kusama and Composable as a parachain on Polkadot. Our strategy enables us to optimize the utility of each parachain by leveraging our tech stack, namely the XCVM framework. As a result, Composable’s modular pallets are able to achieve their full potential. In this blog, we dive further into the mechanisms of how Picasso and Composable will synergize to accomplish our goals for the enablement of modular functionality and cross-chain interoperability in DeFi.

About Picasso

Picasso, our Kusama parachain, is Composable’s custom-built L1 serving as a cross-chain hub that houses a suite of DeFi primitives in the form of substrate pallets. Primary pallets on Picasso serve core functions necessary for any DeFi ecosystem to succeed, such as vault creation, oracle services, and bridging infrastructure. DeFi developers can utilize these primary pallets to enhance their products, enabling them to launch other unique solutions with native interoperability and modularity in mind.

About Composable parachain

Our Composable parachain is deployed on the Polkadot network, which itself serves as a crucial basis to underpin our infrastructure for modular and interoperable functionality. As the Composable Parachain continues to develop and reaches its full potential, all our infrastructure and associated projects will benefit from its advanced functionality. The Composable Parachain provides a solution to several issues that currently plague DeFi as an industry.

Instead of siloed cross-chain communication hubs, Composable brings a clear pathway for adaptive and scalable cross-chain communication across new and existing ecosystems. Our holistic approach to cross-chain communication is achieved through the Composable parachain which serves as an accessibility layer that ties together isolated pieces bolstered by the high security of the Polkadot network.

Composable x Picasso

After securing both parachains, we explored and developed strategies to leverage Polkadot while leveraging its canary network, Kusama. The idea for a dual-parachain narrative came about when we realized crypto networks are designed without a stable launch process. As such, they rely on testnets for stability and performance testing. In the case of the DotSama ecosystem, Kusama is treated as such a testnet even though its capabilities and potential span beyond simply being a testnet for Polkadot.

Furthermore, parachains of the Kusama network, such as Picasso, harness their unique value propositions. They provide the DotSama ecosystem with a novel incentivized framework that can be leveraged with the right strategy to expedite innovation. We identified valuable synergies between the two chains and believe that our strategy increases efficiency and unlocks the further potential of technology that is deployed across our ecosystem.

Development and deployment

As the canary network of the Composable parachain, Picasso serves as a rapid development and deployment hub for modular dApps. Developers on Picasso can leverage our interoperable infrastructure to streamline the development process. At the same time, Composable Labs provides grants and technical support to enable aspiring founders further to launch innovative pallets on Picasso. As such, Picasso acts as a springboard for the development and deployment of pallets that are natively cross-chain.

Graduation for dual deployment

The ‘graduation’ process of pallets from Picasso to the Composable parachain is made possible through $PICA governance — holders of $PICA may vote for the runtime upgrade of a pallet on Picasso to the Composable parachain. Picasso’s primary pallets — Apollo, Cubic, Mosaic, and Centauri — are required on both chains for this strategy to succeed and therefore, will be the first to upgrade. These primary pallets will graduate onto the Composable parachain upon a governance referendum. If necessary, a separate instance of any pallet on Picasso can be deployed on the Composable parachain.

Dual strategy explained

Identical pallets on the two separate chains will communicate with one another using IBC or XCM depending on which is available at the time and has the most efficient performance. This will enable both parachains to remain up-to-date and consistent with each other in real-time. Hence, facilitating seamless communication and transaction matching between pallets across networks. And because we are deploying Pablo, Composable’s cross-chain native decentralized exchange (DEX) on both chains, this allows for transaction matching whereby liquidity on both chains be used when one falls short.

We designed our strategy to allow pallets, builders, and ultimately end-users, to leverage both parachains simultaneously to ensure the stability and increased efficiency of cross-chain functions. This new dual parachain approach means users can operate the parachains in concert with one another, resulting in maximized efficiency instead of any redundant use of pallets. Thus, Composable becomes the contract chain, and Picasso the pallets chain. The combination of available liquidity from the Polkadot and Kusama ecosystems would greatly increase the earning power of users within the Composable and Picasso networks. This would also, in theory, increase the capital efficiency of both parachains.

The role of the XCVM

In order to understand our strategy proposal, we must also explain how Composable’s cross-chain virtual machine (XCVM) plays a role in the process, as it is a crucial component that when leveraged introduces new capabilities for cross-ecosystem functionality.

The XCVM allows users and builders on the Composable parachain to be able to immediately leverage the functionality of Picasso’s primary primitives, thus increasing efficiency in building and utilizing the Polkadot and Kusama networks. Beyond this, developers can equally leverage any pallets launched on Picasso on the Composable parachain by writing XCVM-enabled cross-chain smart contracts. A perfect example of this is how it enables the cross-network utility of Pablo, as mentioned earlier. The introduction of Pablo will have direct implications for faster transaction speeds for swaps and performance on the Composable parachain, recalling that since it will be deployed on both chains Pablo also plays a vital role in transaction matching by allowing users to tap into the liquidity of both chains.

Summary

Composable Finance has secured both a Polkadot and Kusama parachain and is in the early phases of deploying novel strategies to leverage the benefits of the dual parachain ecosystem for increased capital efficiency, liquidity, and unification. Composable plans to deploy identical pallets on each parachain which can communicate with one another by utilizing either IBC or XCM depending on which is most optimal. Composable will have contracts that expose interfaces to pallets. This means that users can leverage the value and liquidity of both chains through a singular interface. The dual parachain strategy relies heavily on the XCVM and the benefit of this cross-chain smart contracting environment.

For more information about Composable and how it is architecting the unified DeFi landscape of the future, check out our socials:

Twitter | Telegram | Discord | Website | GitHub | LinkedIn | Youtube

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