Multi-chain future will accelerate innovators and entrepreneurs

My colleague Elias Simos likes to say that we are experiencing a renaissance of digital assets, including the digitization of the value of non-digital assets. Decentralized solutions for countless financial and peer-to-peer barriers are booming, but many innovators and entrepreneurs still rely on the old model of building projects.

Some platforms, such as Polkadot and Cosmos, are establishing new startup models suitable for Web 3.0. They make it easier to create and connect decentralized applications, and enable innovators to build better solutions. These multi-chain protocols are like a startup accelerator, providing a mechanism to initiate and naturally expand hundreds of new blockchains. It breaks silos and provides opportunities for new entrants to participate in and support emerging projects.

The most exciting projects in the next decade will use a support system that supports blockchain. These alternative accelerator mechanisms will empower the next generation of entrepreneurs and their blockchain projects.

Let’s take Polkadot as an example. Typically, accelerators support early-stage, growth-driven startups through education, mentoring, and financing. They provide these resources in exchange for equity in the nascent company. Although most companies have failed to take off, a few companies will grow into large companies. Polkadot’s extension mechanism has many features of Silicon Valley accelerators (such as Y Combinator or Techstars) by providing resources for small but promising companies. But in this Web 3.0 version, the entire community can participate in the project instead of just providing a select group of people.

Leading the proof-of-stake network is complicated. The founding team has benefited a lot from the network, talent, governance, and operational excellence of the blockchain ecosystem—just like accelerators provide startups. The Polkadot network and community provide application or network developers with all these elements to meet with them in the most challenging places in the value chain. Entrepreneurs can find their problems/solutions and connect necessary resources before meeting strong market demands.

Decentralized parachain process

The flagship project Polkadot of the Web3 Foundation and the experimental network Kusama on Polkadot run two types of blockchains: relay chains and parachains. The relay chain is the hub responsible for reaching consensus and completing transactions. Parachains are independent and interoperable first-layer blockchains that share security through relay chains. They contain various decentralized projects such as identity, DeFi, bridges, and smart contracts. Polkadot and Kusama will each have up to 100 parachain slots and must acquire them. The process of obtaining a seat is designed to ensure that Parachain obtains funds in a fair and equitable manner. It has two stages-crowdfunding and auction.

The first stage, decentralized crowdfunding, “Polkadot allow Parachain provides tokens for its parachain [auction] From the supporters who locked DOT (the native token of the Polkadot protocol) as the project they supported for up to two years. Supporters will never give up the custody of the tokens, but the tokens are locked and lack liquidity until the crowdfunding expires; this lock-in shows that the supporters believe that the parachain will succeed. Every potential parachain project needs the support of competing DOT and Kusama (KSM) token holders, just like startups did on the accelerator launch day.

The second phase requires that all tokens locked in crowd lending be used for parachain slot auctions. The team uses the locked tokens to bid for a position and raises the bid as needed until the unknown time expires. This type of auction can be traced back to the popular candle auction in the 17th century. The expiration of the candle flame marks the end of the auction to prevent competitors from entering at a high price at the last minute. Supporters of the winning project will receive the native tokens of the parachain in exchange for the tokens that lock them.

For developers and supporters, this decentralized parachain process may offer more hope than the traditional accelerators of Web 3.0. Available resources are critical to success.

The main differences in Polkadot’s Web 3.0 accelerator model include:

• Supporters will never give up custody of their tokens.
• When the item fails in the auction or the access to the Parachain slot expires, the backer’s locked tokens will be returned.
• Supporters have skins in the game and are not affected by the consequences of their actions.
• Supporters do not share the opportunity cost.
• In addition to the small network of accelerators, you can also access a decentralized and trustless partner ecosystem.
• Any individual or entity can run a validator to get rewards.
• Parachain has inherent scalability.
• Parachain can use a shared security model, interoperate with other projects inside and outside the Polkadot ecosystem, and utilize a large community of enthusiasts, which is a boon for developers.

Developers are currently building parachains for Polkadot, such as Acala, ChainX, and Chainlink. The first Kusama Parachain Slot Machine Auction is scheduled to be held in the summer of 2021.

related: How much conspiracy is behind Kusama’s parachain auction?

Multi-chain future

Other platforms, such as Cosmos, also provide a glimpse into the future of multi-chain. Cosmos Hub is the main chain and economic center, which connects the blockchain called Zones through cross-chain communication. In exchange for the security services on the Cosmos Hub, transaction fees and pledge rewards will be distributed to the pledgers of the native token ATOM.

Polygon and SKALE are examples of networks compatible with Ethereum. They provide developers with the opportunity to build side chains to support the growth of decentralized applications in the ecosystem.As of December 2020, Ethereum, Polkadot and Cosmos, all platforms gear Enabling developers to build applications is the fastest growing first-tier ecosystem. We may see that Web 3.0’s response to Y Combinator and Techstars is on the rise.

By cultivating the community and promoting partnerships with key supporters, the team can test solutions, formulate winning strategies, and demonstrate considerable appeal before it is actually released. The multi-chain future emphasized by alternative support mechanisms will empower the next batch of entrepreneurs and their blockchain projects. An interoperable ecosystem like Polkadot will play a key role.

Thanks to everyone who read the early drafts and Elias Simos for inspiring this article.

This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should research on their own when making a decision.

The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.