A multi-pronged future that will spur innovators and entrepreneurs

My colleague Elias Simos likes to say that we are experiencing a renaissance in digital assets, including the digitization of non-digital asset values. Decentralized solutions to a variety of financial and peer-to-peer obstacles are flourishing, but many innovators and entrepreneurs are still stuck with the old project building models.

Some platforms such as Polkadot and Cosmos are establishing new startup models that are suitable for Web 3.0. They facilitate the creation and connection of decentralized applications and enable innovators to develop better solutions. These multimodal protocols act like a startup accelerator, providing a mechanism to natively start and scale hundreds of new blockchains. It breaks down silos and gives new market participants the opportunity to participate in and support new projects.

The most exciting projects of the next decade will use blockchain-powered support systems. These alternative accelerators will empower the next generation of entrepreneurs and their blockchain projects.

Take polkadot as an example. Typically, accelerators support growth-oriented startups in the early stages through education, mentoring and funding. You make these resources available to the start-up company in exchange for equity. While most projects fail, some grow into large companies. Polkadot’s scaling mechanism adopts many of the hallmarks of Silicon Valley accelerators like Y Combinator or Techstars by providing resources for small but promising companies. But in this version of Web 3.0, not only a selected group of people can provide resources, but the entire community can participate in projects.

Building a proof-of-stake network is complex. Founding teams benefit greatly from access to the network, talent, governance and operational excellence of the blockchain ecosystem – much like an accelerator does to a company that is starting a company. The Polkadot Network and Community offers an application or network developer all of these elements and hits them where they are most difficult in the value chain. Entrepreneurs can find their problem / solution appropriate and connect to the necessary resources before meeting the strong market demand.

Decentralized parachain process

Polkadot, the flagship project of the Web3 Foundation, and Kusama, an experimental network on Polkadot, operate 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 layer-one blockchains with shared security via a relay chain and encompass a variety of decentralized projects such as identities, DeFi, bridges and smart contracts. Polkadot and Kusama each have up to 100 Parachain slots available and you need to earn them. The process of earning a slot is designed to ensure that parachains are funded fairly and equally and consists of two phases – crowdfunding and auctions.

In the first phase, the decentralized community, Polkadot allows Parachains to obtain tokens for their Parachains. [auction] Bid ”from supporters of the DOT key, the native token of the Polkadot protocol, for up to two years for a project they support. Backers never give up managing the tokens, but the tokens are locked and illiquid until the joint account expires; This lock represents the supporters’ belief that the parachain will be successful. Any potential Parachain project must compete for support from DOT and Kusama (KSM) token holders, just like a startup would on an accelerated offering day.

In the second phase, all tokens that are blocked from crowdfunding must be used in a parachain placement auction. Teams use blocked tokens to bid on a slot and raise bids as needed until an indefinite time expires. This style of auction dates back to the popular candle auction of the 17th century, where an extinguished candle flame signaled the end of the auction to avoid competitors coming in with high bids at the last minute. Supporters of the winning projects receive native Parachain tokens in exchange for blocking their tokens.

This decentralized parachain process could be more promising to both developers and proponents than a traditional accelerator for Web 3.0. The resources available are critical to success.

The main differences in the Polkadot Web 3.0 acceleration model include:

• Backers never give up custody of their tokens.
• The backers’ blocked tokens will be returned if the project loses the auction or if its access to the Parachain location expires.
• Supporters have skins in the game while being isolated from the consequences of their actions.
• The lawyers do not bear the opportunity costs.
• A decentralized and trustworthy ecosystem of partners accessible beyond the accelerator’s small network.
• Any person or organization can run the Validator to receive the rewards.
• Parachains are scalable.
• The ability for Parachains to share a common security model, interact with other projects inside and outside the Polkadot ecosystem, and participate in a large community of enthusiasts is a boon for developers.

Developers are currently building parachains such as Acala, ChainX and Chainlink for Polkadot. The first parachain slot auction in Kusama is scheduled to take place in the summer of 2021.

Connected: How much conspiracy is behind Kusama’s parachain auctions?

Multi-directional future

Other platforms such as Cosmos also provide a glimpse into the omnidirectional future. The Cosmos Hub is the main chain and economic hub that connects blockchains, known as zones, through inter-blockchain communication. In exchange for guaranteed services on Cosmos Hub, transaction fees and staking rewards are distributed to the creators of the native token ATOM.

Polygon and SKALE are examples of Ethereum-compatible networks that allow developers to build sidechains to support the development of decentralized applications for the ecosystem. As of December 2020, Ethereum, Polkadot and Cosmos, all platforms geared towards enabling developers to build apps, are the fastest growing Layer 1 ecosystems. Maybe we’ll see Web 3.0’s answer to Y Combinator and Techstars.

By growing the community and fostering partnerships with key supporters, teams can test solutions, develop successful strategies, and demonstrate significant traction before the actual rollout. . A multi-pronged future punctuated by alternative support mechanisms will empower the next group of entrepreneurs and their blockchain projects. Interoperable ecosystems like polkadot will play an important role.

Thanks to everyone who read the previous drafts and Elias Simos for the inspiration on this article.