
<p><a href="https://www.phala.network/" target="_blank" rel="noreferrer noopener">Phala</a> is a decentralized computing cloud. They offer computing power comparable to existing cloud services and protect the privacy of managed programs.</p>



<p>In this written interview, we discuss the latest developments, news, and utility of Phala.</p>



<h3><strong>Q: What are Phala’s special features and how does it differ from its competitors?</strong></h3>



<h4>Phala&#8217;s Features</h4>



<p>As a decentralized computing cloud, Phala has all the features that meet the needs in the Web3 world: fast, powerful, composable, secure and trustless; especially in the field of Metaverse, dApps, and games.&nbsp;</p>



<p>Phala is committed to providing a universal decentralized computing network that can be freely combined with decentralized smart contracts, storage protocols, and data indexing services.</p>



<p>Many people got to know Phala because of its distinctive privacy feature and innovative ‘blockchain and secure enclave’ architecture. However, data privacy is just one of the basic features mentioned in Phala’s white paper.&nbsp;</p>



<h4>Phala&#8217;s Vision</h4>



<p>Our vision is to become the world’s largest P2P computing network, that is, a standard decentralized computing cloud based on Web3.&nbsp;</p>



<p>Different from the general privacy protocols and other Web3 cloud services in the market, and on the ‘blockchain and secure enclaves’ architecture, Phala enables its powerful computing ability to other storage protocols by composability. All computation on Phala Network runs in the secure enclave. The secure enclave guarantees the security of computing load, which includes the correctness of program execution, as well as the confidentiality and privacy of data.&nbsp;</p>



<p>Phala is free from keeping storage and computation in one place; the low resource occupancy and higher operating efficiency are accomplished.</p>



<h3><strong>Q: Can you introduce your team to the readers? What relevant experience do they have and what projects have inspired them in their designs?</strong></h3>



<p>Phala has an international team and also gradually transfers its governance to its on-chain community. Here is some background on Phala’s council members.</p>



<p><a href="https://www.linkedin.com/in/marvintong/" target="_blank" rel="noreferrer noopener">Marvin Tong</a>, Co-founder of Phala Network, Investment Advisor of <a href="https://www.paka.fund/" target="_blank" rel="noreferrer noopener">PAKA Fund</a>, Co-organizer of Privacy Computing In China. Former Senior Product Manager at Tencent and Didi.</p>



<p><a href="https://twitter.com/bgmshana" target="_blank" rel="noreferrer noopener">Hang Yin</a>, Co-founder and Lead Developer of Phala Network. Former Senior Software Engineer at Google, leading projects of Mandarin speech recognition, voice search, and Gmail intelligent semantic assistant, with profound experience in artificial intelligence; B.S., Computer Science and Technology, <a href="https://www.fudan.edu.cn/en/" target="_blank" rel="noreferrer noopener">Fudan University</a>.</p>



<p><a href="https://www.linkedin.com/in/joe-petrowski-73538929/" target="_blank" rel="noreferrer noopener">Joe Petrowski</a>, technology integration lead of <a href="https://web3.foundation/" target="_blank" rel="noreferrer noopener">Web3 Foundation</a>. Joe also hosts the ‘Relay Chain’ podcast that covers people and projects in the Polkadot ecosystem.</p>



<p><a href="https://www.linkedin.com/in/jonas-gehrlein/" target="_blank" rel="noreferrer noopener">Jonas Gehrlein</a>, Ph.D., <a href="https://www.unibe.ch/index_eng.html" target="_blank" rel="noreferrer noopener">University of Bern</a>, who works as a research scientist at the Web3 Foundation in charge of researching economic problems in the Polkadot ecosystem. Before joining W3F, Jonas did his Ph.D. in Behavioral and Experimental Economics, working on projects which explore human decision-making. Before that, he obtained a master’s degree in quantitative economics from the <a href="https://www.uni-konstanz.de/en/university/" target="_blank" rel="noreferrer noopener">University of Konstanz</a>.</p>



<p><a href="https://www.linkedin.com/in/zora-meckbach/" target="_blank" rel="noreferrer noopener">Zoé Meckbach</a>, M.Sc. in Information and Cybersecurity. Polkadot Global Head Ambassador of Events. Blockchain technology and cybersecurity advocate. She is the COO of <a href="https://www.mhit-service.de/" target="_blank" rel="noreferrer noopener">MH-IT &amp; Service GmbH</a>, an IT services and consulting company in Germany. Before joining MH-IT, she worked for Google as an applications analyst.</p>



<p>As loyal community members of the <a href="https://polkadot.network/" target="_blank" rel="noreferrer noopener">Polkadot</a> ecosystem, Hang Yin and Marvin were attracted by <a href="https://twitter.com/gavofyork" target="_blank" rel="noreferrer noopener">Dr. Gavin Wood</a> ’s Web3 vision in early 2019, and they have been non-stop exploring the Polkadot community ever since. In the same year, they published <a href="https://files.phala.network/phala-paper.pdf" target="_blank" rel="noreferrer noopener">the first edition of the Phala Network White Paper</a> and outlined Phala’s prototype.</p>



<h3><strong>Q: How did you achieve your funding requirements? Was it from an exclusive token sale or private funding? When was it?</strong></h3>



<p>Phala raised funds privately when we established in 2019, and we unlocked in September 2021.</p>



<h3><strong>Q: What is your vision for Phala and the next steps on your roadmap?&nbsp;</strong></h3>



<p>As mentioned before, Phala’s vision is to become the world’s largest P2P computing network, that is, a standard decentralized computing cloud based on Web3.&nbsp;</p>



<p>To achieve this goal, so far, there are two killer products in the Phala universe. The one is <a href="https://wiki.phala.network/en-us/general/development/fat-contract/" target="_blank" rel="noreferrer noopener">Fat Contract</a> and the other is <a href="https://www.phalaworld.com/" target="_blank" rel="noreferrer noopener">Phala World</a>.&nbsp;</p>



<p><strong>Fat Contract</strong>: a kind of decentralized program instead of the smart contract, which supports real-time computation-intensive tasks and has access to all the services even when they are out of blockchains. We are expected to publish V1 in Q1.</p>



<p><strong>Phala World</strong>: a Metaverse game-mode based on the <a href="http://phala.network/" target="_blank" rel="noreferrer noopener">Phala Network</a> blockchain. It raises a new concept &#8211; ‘Play to Build’ &#8211; which combines user behavior, characters, communities, and sci-fi stories on the Phala blockchain; integrating strategy, development, MMORPG, and other game types. Phala are also collaborating with <a href="https://www.rmrk.app/" target="_blank" rel="noreferrer noopener">RMRK</a> and <a href="https://bit.country/" target="_blank" rel="noreferrer noopener">Bit.Country</a> to develop NFT and metaverse gaming infrastructure.</p>



<p>Other than the above, Phala will carry out 2022 work with the following:&nbsp;</p>



<ul><li>Launch a chain bridge which is able to build a connection between the Polkadot and Ethereum ecosystems</li></ul>



<ul><li>Launch Render Service for 3D NFT, a decentralized servers farm that can be applied to the Metaverse and NFTs, or provide services at Web3 back-end by using Fat Contracts</li><li>Complete the Web3 Analytics development, provide users a decentralized and customized data analyzing tool</li><li>Collaborate with <a href="https://livepeer.org/" target="_blank" rel="noreferrer noopener">Livepeer</a>, <a href="https://thegraph.com/" target="_blank" rel="noreferrer noopener">The Graph</a>, <a href="https://www.pokt.network/" target="_blank" rel="noreferrer noopener">Pocket Network</a>, and <a href="https://www.arweave.org/" target="_blank" rel="noreferrer noopener">Arweave</a> and build a Web3 cloud hub</li></ul>



<p>You can find more details here: <a href="https://medium.com/phala-network/phala-network-roadmap-of-2022-f857ba765938" target="_blank" rel="noreferrer noopener">Phala 2022 Roadmap</a>.</p>



<h3><strong>Q: Why did you choose Substrate? What do you expect from leasing your own parachain?</strong></h3>



<p>Phala can focus on developing special capability by using Substrate to liberate productivity from the complicated underlying technology. Substrate has achieved most of the general functions in development as an architecture of blockchain, such as P2P connection, configurable consensus algorithms, common encryption algorithms, database storage, transaction management, etc.&nbsp;</p>



<p>It is easy for Phala to connect with Polkadot and enjoy the convenience brought by interactivity and shared security from this protocol. Without shared security, the value of cross-chain will weaken a lot. Polkadot has solved the security issue by SPREE and that is the main reason why we chose Polkadot.&nbsp;</p>



<h3><strong>Q: Are people who participate in the crowdloan of Phala rewarded? What does the reward structure look like?&nbsp;</strong></h3>



<p>Yes, all the contributors who help Phala win a Polkadot slot in the bid will be rewarded, as we promised. Taking the time of this interview into consideration, the slot bid will be finished in two weeks.&nbsp;</p>



<p>We want to give the community a simple and clear plan and use as much of the bonus budget possible to reward all community members.&nbsp;</p>



<ul><li>Phala Network joined Crowdloan to bid for a slot between #7 and #14, and the auction cap is 3 mln DOT.</li><li>The total reward budget is 10% of PHA’s total supply (100,000,000 PHA). Part of the PHA reward will come from the future on-chain treasury, guaranteed by the Secure Mining rate in the tokenomic paper.</li><li><strong>Basic reward</strong>: If Phala wins, every DOT that supports Phala in the Polkadot slot auction will be entitled to 24 PHA as rewards (<strong>DOT: PHA = 1:24</strong>).</li><li>The ONLY extra reward is <strong>Old Gangster Bonus</strong>. Contributors from the previous Khala Kusama auction and between #6 and #11 Polkadot slot auctions will have a 10% extra reward, on top of the basic rewards. This includes those who have over 300 PHA on Khala’s address before block height #902400.</li><li>We also prepare 1,500 whitelists of Phala World for Phala Crowdloan contributors.</li></ul>



<h3><strong>Q: What are your plans for Khala Network on Kusama? Why did you do the&nbsp; crowdloan on Kusama and lease the parachain?&nbsp;</strong></h3>



<p>Khala has implemented its mainnet on Kusama, as the parachain to serve creative and growth blockchains and DeFi services. The Secure Worker Mining mechanism has been running steadily for over 7 months.&nbsp;</p>



<p>Back in 2021, Khala Network was born as the pre-mainnet of Phala Network to test its tokenomics and technology. Instead of having two tokens, the Phala community decided to share the same PHA token on both sides. It immediately raises a problem: How can a single token power two blockchains at the same time?</p>



<p>When Khala was launched, to test the mining subsystem and the tokenomics, 1% of the token was allocated to Khala and dedicated for Secure Worker Mining. 69% was reserved for mining on Phala.&nbsp;</p>



<p>From the <a href="https://wiki.phala.network/en-us/learn/tokenomics/tokenomics/" target="_blank" rel="noreferrer noopener">tokenomic whitepaper</a>, we have a different set of parameters for the two chains to define the mining subsidy budget, staking requirements, and reward schedule.</p>



<p>Compared with Phala, Khala has a much smaller subsidy allocation and faster halving schedule. This is because the basic assumption is that Khala is for testing and Phala is for production usage. There&#8217;s also a community understanding that Khala will be kept for small scale testing, or can even be shut down once the test is finished.</p>



<p>However, Khala can’t just be a testbed. We have seen innovative projects built natively on Kusama with prosperity. The real native projects on Kusama may grow to an ecosystem full of vitality different from Polkadot. Phala Networks, as the Web3 Cloud, should provide computing resources everywhere where demanded. We definitely don&#8217;t want to miss the growing Kusama ecosystem.</p>



<p>If we want to treat the Phala parachains on Kusama and Polkadot equally, it&#8217;s a good time to reconsider the mining tokenomic and the allocation between Khala and Phala. We are going to propose a way to unify Khala and Phala’s tokenomics.</p>



<h3><strong>Q: What is the main use for the Phala token (PHA)? Is it governance or does it have additional features?</strong></h3>



<ul><li>Trusted computing resources: on-chain storage, off-chain storage, etc.</li><li>Security guarantee: to be a gatekeeper, one must stake a certain amount of PHA. The stake would be fined and taken if he/she betrays gatekeeper rules.</li><li>Governance: stakeholders who own a certain amount of PHA would be able to join Phala DAO to further participate in community governance.</li><li>Other payments: settlements for other services or products such as Fat Contract, Web3 Analytics, and cross chain bridges for permissionless chains.</li></ul>



<h3><strong>Q: Why should users stake Phala? What are the possible rewards for stakers?</strong></h3>



<p>Secure workers utilize specific Secure Enclave hardware that ensures confidentiality, security, and performance of blockchain computation. Miners, also referred to as ‘Workers’ in Phala’s blockchain, provide computing power to the Phala Network.&nbsp;</p>



<p>With the design of Phala Tokenomics, <strong>70% of the total</strong> supply of PHA is mining rewards for workers. Through the design of Phala’s reliable mining economic model, it can effectively motivate miners to work online and ensure the continuous supply of computing power. A user can be a worker or gatekeeper to get mining rewards or just delegate to an owner mining pool.&nbsp;</p>



<h3><strong>Q: How secure is Phala? Have you been audited and by whom? Are the audit results available for public reading?</strong></h3>



<p>Since Phala hasn’t launched its mainnet, the bridge in Phala pre-mainnet (Khala Network) has been audited by Certik. The Khala Ethereum Bridge (on Phala Network’s pre-mainnet, Khala Network) has passed an audit by <a href="https://shield.certik.foundation/shield-services" target="_blank" rel="noreferrer noopener">CertiK,</a> the world’s top blockchain security company.&nbsp;</p>



<p>The Khala Ethereum Bridge, as an important tool on the Khala chain, lets users swap ERC20 PHA to K-PHA, allowing PHA from outside the Khala network to be transferred into Khala accounts as K-PHA. This enables participation in Secure Enclave Mining or other campaigns on Khala.<strong>&nbsp;</strong></p>



<p>Khala Ethereum Bridge audit report: <a href="https://www.certik.org/projects/phalanetwork" target="_blank" rel="noreferrer noopener">https://www.certik.org/projects/phalanetwork</a></p>



<p>About PHA Token audited: <a href="https://github.com/Phala-Network/prelaunch-token/blob/master/audit/PHAToken-SmartContract-Audit-Report.pdf" target="_blank" rel="noreferrer noopener">https://github.com/Phala-Network/prelaunch-token/blob/master/audit/PHAToken-SmartContract-Audit-Report.pdf</a></p>



<h3><strong>Q: Are there any exciting updates, announcements, or partnerships coming for Phala in the immediate future that you can disclose today?</strong></h3>



<p>In a recent announcement, Phala joined Blender Developer Fund. The partnership will further engage Phala with Blender’s powerful technology to provide Web3 rendering services for the Metaverse.&nbsp;</p>



<p>We’re trying to expand on use cases for Phala’s decentralized computing cloud and Fat Contract. There will be more and more partners to be announced on the way.&nbsp;</p>



<p>Phala will launch the first cross-chain router between Substrate and EVM which is called SubBridge. Technically, it will connect with Celer&#8217;s cBridge to open up the EVM ecosystem. In the future, it will support more Substrate and EVM eco projects.</p>



<h3><strong>Q: Where is the best place for the community to interact with you?</strong>&nbsp;</h3>



<p>They can find us on Telegram, Discord and other social media profiles. We welcome anyone to join our community at any time: <a href="https://linktr.ee/phalanetwork" target="_blank" rel="noreferrer noopener">https://linktr.ee/phalanetwork</a></p>



<h3><strong>Q:&nbsp;Why is Staking Rewards the best partner for your project?</strong></h3>



<p>Staking Rewards is a leading data provider for staking and crypto-growth tools which is user friendly and simplifies portfolio and calculator tools.</p>



<p>They are trusted by top crypto institutions and 400k+ monthly users, tracking 261 yield-bearing assets over 37k+ providers. As a partner of Staking Rewards, we can display the Phala ecology in multiple directions. We can break the barriers between ordinary users and Phala&#8217;s high-threshold mining technology, and let more people know about Phala. Users can participate in Phala&#8217;s ecology to gain benefits.</p>



<p>At the same time, Staking Rewards already has mature docking process and technology and the team is very professional and efficient. We are also very confident to cooperate with them.</p>



<h3><strong>Conclusion</strong></h3>



<p>Phala Network&#8217;s profile on Staking Rewards: <a href="https://www.stakingrewards.com/earn/phala-network/" target="_blank" rel="noreferrer noopener">https://www.stakingrewards.com/earn/phala-network/</a></p>


Interview With Decentralized Computing Cloud Phala Network on Web3, Metaverse, dApps and Games


<h3>PackagePortal is a Web3.0, supply chain blockchain platform that enables online retailers to scan shipping labels with their mobile device. This provides authentic delivery confirmations and direct consumer reviews. </h3>



<p>Users are incentivized with cryptocurrency to provide feedback on products, delivery experiences, verified reviews and surveys. PackagePortal’s user data provides retailers with incredible new data points and insights into the consumer experience and their logistical operations.</p>



<p>In this written interview with J.G. Whitley, we discuss the latest developments, news, and utility of PackagePortal.&nbsp;</p>



<h3><strong>Q: PackagePortal</strong><strong> is a decentralized logistics protocol of the Zilliqa ecosystem. </strong><strong>What is PackagePortal&#8217;s main point of difference compared to other protocols and who are your main competitors?&nbsp;&nbsp;</strong></h3>



<p>Big techs mine user data to be sold to the highest bidder. PackagePortal inverts that model and equips users to mine crypto with their data. Consumer data is valuable and we want creators to own and control that value. Our platform also puts consumers in control of the delivery experience by enabling them to give the last word in the fulfillment process.&nbsp;</p>



<p>We don’t have any direct competitors offering a solution to the problem we’ve solved with delivery confirmation and we have a US utility patent pending on that IP. </p>



<p>There are, however, companies like TrustPilot, Fetch Rewards, and The Shop App who offer surveys, reviews, rewards or order tracking. None of them do it like us, and none of them offer the robust value capture and compelling incentive that our platform provides.</p>



<h3><strong>Q: Can you introduce your team to the readers? What relevant experience do they have and what projects have inspired them in their designs?&nbsp;</strong></h3>



<p>Our US based company is led by founders JG. Whitley (CEO) and Gabriel Chaney (CTO), both based in Phoenix, AZ. Gabe is a full-stack developer with over a decade of experience leading engineering teams through product launches and startup acquisitions.&nbsp;</p>



<p>I’m an entrepreneur from the e-commerce logistics space. Having owned a retail delivery company for the last ten years, I learned of smart contracts from one of my delivery drivers in January of 2018. By the end of that year, I was exploring ways to apply my domain expertise to the blockchain, and Gabe and I got started in the summer of 2019.&nbsp;</p>



<p>In those first few months, we were joined by two engineers both located in Boston, MA. Collectively, the team all went full-time in June and we’ve made amazing progress in the past year.</p>



<h3><strong>Q: How did you achieve your funding requirements; was it from an exclusive token sale or private funding?</strong></h3>



<p>Being a US entity seeking to do real business means that we’ve never conducted any token sales whatsoever; no ICO or private sales, we simply bootstrapped for two years and launched a liquidity pool on a DEX. In the spring of 2021, we had a huge growth spike of users and token holders. We were able to conservatively liquidate a small percentage of treasury tokens for operational funding. </p>



<h3><strong>Q: How can users interact with PackagePortal? What are the main apps that they can explore and use? Do you have any advice for readers using PackagePortal?</strong></h3>



<p><strong>​​</strong>Users are able to download the app today from the app stores, and instantly create a non-custodial wallet simply with their email address. They can then start to complete surveys to begin earning, and confirm deliveries as they come to earn more tokens.&nbsp;</p>



<p>Users can claim XPORT (ecosystem tokens) and swap them to PORT (public tokens) in the mobile app, and never worry about gas. They can easily stake PORT to earn more, or swap it to other cryptos.</p>



<h3><strong>Q: Are there already concrete plans for when PackagePortal will be adapted? What will the first mainstream use-case be?&nbsp;</strong></h3>



<p>Our global user base is expected to grow significantly over the course of this year, and we have a number of partnerships and integrations being actively developed to ensure mass adoption is within reach.&nbsp;</p>



<p>Our frictionless onboarding process that allows non-crypto natives to set up a wallet and interact with the blockchain is creating a wide open door to anyone around the world who shops online.&nbsp;</p>



<h3><strong>Q: Where will users come from? Will external logistic providers compete to partner with PackagePortal?</strong></h3>



<p>Our user profile is anyone who shops online but even if you don’t have packages being delivered often, you can still earn by completing daily 10 second surveys. Because our platform is so easy to use, word of mouth has been phenomenal. Crypto natives have a way to introduce others to token ownership without needing to risk funds or have technical prowess.&nbsp;</p>



<p>We anticipate lots of user growth coming as we onboard merchants to the platform, and they in turn begin to market us to their customers. The more shoppers a merchant signs up for the more data they get access to, and it becomes exponentially beneficial for them to integrate and advertise us, creating a whirlwind effect of growth.</p>



<h3><strong>Q: What do you think the future of logistics will look like? How decentralized can the experience and self-monetization of user data really be?</strong></h3>



<p>I think that the actual <em>delivery services</em> will remain centralized to some extent for a long time still. That’s because of operational oversight of warehousing, line hauls, and sortation crews. However, the data surrounding delivery should be broken out of the silos controlled by delivery companies, and be placed in the hands of the buyer and seller, not the transporter.&nbsp;</p>



<p>As for the monetization of one’s own data, I believe this to be the natural evolution of life adapting to technological innovations. The existing internet is entirely structured for user data mining and selling to advertisers. However, technology being introduced today is allowing us to divert value created to the creator. Some things in the crypto world are short lived trends; self-monetization of user data is not one of them.&nbsp;&nbsp;</p>



<h3><strong>Q: How secure is PackagePortal? In its current state, what type of information and checks can users access? What are its limitations?</strong></h3>



<p>We underwent extensive probing last year and introduced high level security protocols at the app level. We also recently had our smart contracts audited by Soken Security, and just completed extensive penetration testing by Bishop Fox to gain Google’s official approval to integrate Gmail order imports.&nbsp;</p>



<h3><strong>Q: What is the benefit of the PORT token? Does it have governance rights or other utilities? How does this compare to XPORT and MPORT tokens?</strong></h3>



<p>Firstly, PORT acts as a membership token that merchants must have in order to access consumer data. Retailers will pay us a monthly fee, but they will also acquire the token to be held as a perpetual license.&nbsp;</p>



<p>PORT is also the rewards token for users of the ecosystem. App users earn XPORT for completing surveys and rating deliveries, and they can then convert XPORT into PORT, right in the app. Since PORT is publicly traded (and XPORT is not) users can stake, swap, or sell those tokens as they wish.&nbsp;</p>



<p>XPORT and MPORT are both internal rewards tokens with no external market value. MPORT is locked until all XPORT has been mined. They both exist as a public unit of measure that is privately owned by a user. We will soon introduce ways for these tokens to be redeemed directly for Bitcoin and other non-blockchain prizes.&nbsp;</p>



<h3><strong>Q: What does the future of staking look like within PackagePortal? Will users be able to stake XPORT and MPORT?&nbsp;</strong></h3>



<p>There are no plans for staking XPORT and MPORT. However, PORT staking will continue into the future. The Dock Contract that offers 19% APY was set to go for one year and will expire in December of 2022, so make use of it while it lasts. The Buoy Contract will continue indefinitely and we plan to deploy more buoys on other blockchain networks, enabling users to stake PORT natively on their favorite chain.&nbsp;</p>



<h3><strong>Q: Are there any exciting updates, announcements, or partnerships coming up in the immediate future that you can disclose today?</strong></h3>



<p>We’re super excited about the Gmail integration launching in a few weeks, because this will auto import all tracking numbers and orders for a user, making it very easy to track deliveries and confirm them.<br><br>We’re also energized by our Lightning Network integration, which will allow users to convert XPORT into Sats. Both of these features are coming this summer. Afterwards, we’ll turn our attention towards developing a PackagePortal plugin for Shopify.</p>



<h3><strong>Q: Where is the best place for the community to interact with you?&nbsp;</strong></h3>



<p>Twitter is the best place to stay informed on official news and updates. Telegram offers official and non-official chats, with other approved groups for various languages.&nbsp;</p>



<h3><strong>Q: Why is Staking Rewards the best partner for your project?</strong></h3>



<p>Staking Rewards is the de facto aggregator for its namesake. We are proud of our platform and want people to learn about our product and our staking options, so this partnership is quite harmonious for us.&nbsp;</p>



<h3><strong>Conclusion </strong></h3>



<p>PackagePortal presents some very exciting opportunities. If you&#8217;re an online merchant or retailer that would like to know what your shoppers think when they get your package, then reach out to PackagePortal for a chat: <a href="mailto:inquiry@packageportal.com" target="_blank" rel="noreferrer noopener">inquiry@packageportal.com</a>.</p>



<p>Staking Rewards profile: <a href="https://www.stakingrewards.com/earn/package-portal/" target="_blank" rel="noreferrer noopener">https://www.stakingrewards.com/earn/package-portal/</a>. </p>



<p>How to stake $PORT: <a href="https://www.stakingrewards.com/journal/how-to-stake-your-packageportal-port/" target="_blank" rel="noreferrer noopener">https://www.stakingrewards.com/journal/how-to-stake-your-packageportal-port/</a></p>


Interview With J.G. Whitley, Co-Founder and CEO of PackagePortal


<p>On 10.01.2022, Staking Rewards&#8217; Co-Founder Mirko Schmiedl sat down with the Founder and CEO of <a href="https://akash.network/" target="_blank" rel="noreferrer noopener">Akash</a>, Greg Osuri. Greg is a die-hard Cloud Software Architect, who describes himself as an Entrepreneur, Citizen, Optimist, and Distributed Systems Nerd. Inspired by the closed, competitive moat of web 2.0 cloud services, he started Akash in 2017 to create an open market for cloud services; the first decentralized and open-source cloud.</p>



<h2>Highlights of the interview.</h2>



<ul><li>How Akash is positioned to challenge the cloud computing market dominated by AWS and GCloud</li><li>How stakers &amp; node providers can participate and utilize Akash</li><li>Why Akash has one of the highest <a href="https://www.stakingrewards.com/earn/akash/" target="_blank" rel="noreferrer noopener">staking rates</a> in the industry (30%+)</li><li>Decentralized cloud computing vs cloud storage</li><li>Akash roadmap and big vision</li></ul>



<p>In this written summary of the conversation, we recap the key takeaways concisely.</p>



<p>If you would like to experience the nuances of the conversation, make sure to watch the full 1:44hr <a href="https://www.youtube.com/watch?v=tOnFXB7L0DY" target="_blank" rel="noreferrer noopener">video interview on YouTube</a>.</p>



<h2>Like every episode of Staking Mondays, we start with some punchy lightning round questions.</h2>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=177" target="_blank" rel="noreferrer noopener"><strong>First crypto investment outside of Bitcoin and Ethereum?</strong></a></h3>



<p>Greg invested in $ATOM when Tendermint released the Cosmos Hub in 2016/2017.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=260" target="_blank" rel="noreferrer noopener"><strong>Most inspiring crypto personality?</strong></a></h3>



<p>Greg was inspired by a lot of people who make crypto special for him. Those include Hal Finney, Vitalik Buterin, and Jae Kwon (Founder of Cosmos/Tendermint). Greg highlighted Stefan Thomas (former CTO of Ripple), who is a good friend of him and helped him a lot over the years. Also, Anatoly Yakavenko (Co-Founder of Solana), whose work solidified his faith in Proof of Stake since 2018.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=355" target="_blank" rel="noreferrer noopener"><strong>Most exciting decentralized cloud project outside of Akash Network?</strong></a></h3>



<p>Greg finds projects like Sia, Arweave, and Handshake very exciting. He rates Sia’s user experience as phenomenal and is excited about many upcoming cloud computing projects on the Cosmos hub due to their interoperability. Greg also uses DVPN, the decentralized VPN project on Cosmos.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=486" target="_blank" rel="noreferrer noopener"><strong>Staying up to date on Crypto markets?</strong></a></h3>



<p>Twitter.</p>



<h2>Let’s dive deep into the Akash network.</h2>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=873" target="_blank" rel="noreferrer noopener"><strong>Motivation to start Akash and what problem does it solve?</strong></a></h3>



<p>Greg has been working in the cloud industry since 2008 and designed Kaiser Permanente’s first cloud infrastructure. When AWS first launched, Greg was optimistic about its developer-first ethos, but soon noticed that it lost touch with developers; pricing became opaque and created a closed competitive moat with web 2.0 cloud services companies. </p>



<p>Most shockingly, Greg talks about Amazon&#8217;s practice of repurposing open-source software as part of their paid suite of add-ons, a morally questionable step in expanding their empire. Seeing this shift in the paradigm of cloud computing, Greg set out on his quest to develop an easy-to-use and easy-to-scale system.</p>



<p>This quest culminated in his idea of Edge computing, where users can use any data centre as a cloud provider. This reduced the latency between data centres and users as they were able to use centres closer to the user, a non-negotiable for high-speed applications. </p>



<p>Greg still faced the challenge of keeping the data in sync, which is where the distributed ledger technology of blockchains came in. Thus, a complete solution was found and Greg, along with the other members of his team, built Akash in 2017 &nbsp;— an open-source cloud computing marketplace, with a vision of utilizing 85% of the unused computing power in data centres all over the world.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=1571" target="_blank" rel="noreferrer noopener"><strong>Complexity and reliability of building on Akash?</strong></a></h3>



<p>In Greg’s own experience, Akash is very reliable, and it has inbuilt fault tolerance. Whenever he sees some website crashing due to extra loads, it instantly comes back up. This is because the data is synced between multiple data centers, which forms the basis of Akash’s reliable decentralized network. Backing this up is that since the March 2021 launch, Akash has never gone down once, while AWS has gone down 50 times during the same time period.</p>



<p>Akash is optimized for composability on top of which usability can be built. So, Greg believes that the complexity of building on Akash will reduce with time as usability and integrations with other decentralized cloud projects increase.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=1866" target="_blank" rel="noreferrer noopener"><strong>How does Akash plan to win market share from AWS and GCloud?</strong></a></h3>



<p>Greg mentioned that providing managed services in a decentralized manner is a challenge. Akash’s intent is to provide 300+ managed services in the smooth and seamless way that AWS and GCloud provide today. Greg desires to build Akash with a mindset of developer first, open marketplace, and focusing on the user. </p>



<p>When all of these things will be achieved, then Akash will start to challenge and win market share from its Web 2 counterparts. He stated that Akash has a distinct advantage against AWS and GCloud in Akash’s permissionless nature, empowering any developer to innovate with zero restriction and without Akash’s permission.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=2192" target="_blank" rel="noreferrer noopener"><strong>Why move to Akash when AWS and GCloud offer reliable professional managed services?</strong></a></h3>



<p>Greg aims at facilitating the open-source software creators(on top of which AWS runs its cloud), who logically are better equipped to provide these managed services than AWS. He and his team are working on designing a system that will incentivize these creators to participate in providing these services openly. Greg wants to see this kind of system running at the end of 2022 and thinks that it will be a game-changer. </p>



<p>Greg and his team are currently focused on perfecting the solo container run time service on Akash, which is the foundation of any successful cloud system.&nbsp; (In layman’s terms, container runtimes are responsible for loading container images from a repository, monitoring local system resources, and managing container lifecycle)&nbsp;</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=2463" target="_blank" rel="noreferrer noopener"><strong>What are the differences between decentralized cloud computing and cloud storage?</strong></a></h3>



<p>Greg informed that Akash’s model doesn’t have permanent cloud storage in its design, it stores very small amounts of data only during the lease period. He plans to work through this problem by partnering with decentralized cloud providers such as Sia, Filecoin, and Arweave for cloud storage. Greg aspires to build a system in the future, where users can pay using any one of the tokens of integrated projects, thus reducing the complexity of payment.</p>



<p><a href="https://youtu.be/tOnFXB7L0DY?t=2658" target="_blank" rel="noreferrer noopener"><strong>What will a world where Akash will be extremely successful look like?</strong></a></p>



<p>At the full success state of Akash, users of Akash won’t know that they are using Akash. Greg inspires to reduce the cost of computing by using computing power in house devices, cars, and gaming consoles. By providing computing power with the use of GPUs in these devices, a person can potentially repay the cost of that device. The end state is when Tesla has Akash installed in it. </p>



<p>Akash is also coming up with a new feature with which you will be able to provide computing power from your phone and earn crypto while doing so.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=3057" target="_blank" rel="noreferrer noopener"><strong>Will Ethereum GPU miners run Akash as providers when the merge happens?</strong></a></h3>



<p>Akash is betting on this heavily, and with GPUs support coming out, Ethereum miners can repurpose their hardware to run Akash as providers.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=3083" target="_blank" rel="noreferrer noopener"><strong>What are the differences between running validator and cloud provider nodes on Akash?</strong></a></h3>



<p>On Akash,100+ validators secure the blockchain and earn around 40–45% APR.</p>



<p>Running a Cloud provider is more complex than a validator because they have to increase their capabilities as Akash increases its services like storage and GPUs. They earn $AKT on the basis of the amount and type of cloud services they provide. </p>



<p>Akash is working on an incentivized model where a lack of demand for cloud services can be compensated by staking rewards to the cloud provider. Akash has 79 professional cloud providers such as Equinix, Orion, etc.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=3399" target="_blank" rel="noreferrer noopener"><strong>Why did Akash choose to build using the Cosmos-SDK?</strong></a></h3>



<p>Akash’s first prototype was built on Ethereum, but due to scalability issues on Ethereum, they had to build their own blockchain. Then the team read the paper on Cosmos-SDK, on top of which blockchains can be easily built from scratch using Tendermint technology. </p>



<p>The idea of composability and the sovereign system as a scaling solution in Cosmos-SDK resonated with them, and Akash decided cosmos-SDK as an ecosystem.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=3853" target="_blank" rel="noreferrer noopener"><strong>What was the objective to establish this high APR of staking $AKT?</strong></a></h3>



<p>Greg<strong> </strong>read a paper in 2019 talking about bootstrapping free markets by borrowing from the future and adopted a model in which 389 million $AKT are distributed over 80 years in a decaying fashion with rewards reduced each year. The idea behind that from the team was to incentivize stakers to secure the network. </p>



<p>Greg firmly believes that stakers are a powerful pillar of the whole system, and this tokenomics design will filter out short-term holders from long-term holders. Akash’s team is formulating an incentive model where the volatility of $AKT is mitigated with some stable exchange of value, making $AKT deflationary.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=4232" target="_blank" rel="noreferrer noopener"><strong>What will be the future role of staking in the Akash network?</strong></a></h3>



<p>Although not much revenue is generated today, the team wants to incentivize staking in the future with some percentage of hosting fees. They are working through a lot of considerations to capture the value indirectly vs directly because of regulatory implications. For example, a stablecoin that uses $AKT as collateral or a burn/mint mechanism like $LUNA, to make $AKT a store of value.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=4485" target="_blank" rel="noreferrer noopener"><strong>What happens when Cloud provider nodes manipulate computing?</strong></a></h3>



<p>Akash relies on redundancy rather than trying to prevent faults. It needs a decentralized identity establishment mechanism; that is where auditing attributes will come from. In other words, there is really no way to filter out bad unknown actors, but there is a way to filter out bad known actors.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=4695" target="_blank" rel="noreferrer noopener"><strong>What is the Roadmap for Akash in the coming months?</strong></a></h3>



<p>Greg recommends checking <a href="https://akash.network/roadmap" target="_blank" rel="noreferrer noopener">https://akash.network/roadmap</a> for roadmap details. He shared that the big thing that is coming in Feb 2022 is persistence storage, to enable data-heavy applications for running nodes as validators on any layer-1 blockchains. Also, in another 3 to 5 months, GPUs and the IP address marketplace will be ready. The big thing leading up to the end of the year is going to be the decentralized service marketplace.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=4870" target="_blank" rel="noreferrer noopener"><strong>How can the community support Akash and get involved?</strong></a></h3>



<p>Akash is hiring at <a href="https://akash.network/careers" target="_blank" rel="noreferrer noopener">https://akash.network/careers</a>. In Greg’s opinion, the most important thing in the crypto world right now is end-to-end decentralization. He iterated that Akash is great for DAOs. So, if you have a DAO or you are a part of a DAO, he highly encourages you to put a proposal to bring a website or any data services that DAO uses on Akash. </p>



<p>The second thing Akash is very good at is proof of work mining. You can go to <a href="https://www.akashlytics.com/price-compare" target="_blank" rel="noreferrer noopener">https://www.akashlytics.com/price-compare</a> and see that Akash is 80–90% cheaper than AWS and GCloud in pure computing costs. Akash’s goal is to onboard DeFi applications, miners, and DAOs.</p>



<h2>A round of community questions from the chat.</h2>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=5167" target="_blank" rel="noreferrer noopener"><strong>How Akash is attracting new devs to build on Akash?</strong></a></h3>



<p>According to Greg, Akash needs awareness, simplicity, and easy access in order to attract more DApps and developers.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=5354" target="_blank" rel="noreferrer noopener"><strong>Does the reliance on centralized data centers compromise decentralization?</strong></a></h3>



<p>Greg finds the sample of 8.2 million data centres in the world big enough that it doesn’t compromise the decentralized nature of Akash. Conversely, according to him, it bootstraps network effects, so that eventually an Akash supermini, a phone, a car, or refrigerator can be used for computing.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=5498" target="_blank" rel="noreferrer noopener"><strong>How does Akash team think about Future partnerships?</strong></a></h3>



<p>The Akash team wants to partner with vibrant ecosystem projects. They want to focus on leveraging the relationships with current partners like Polygon, Solana, Helium, etc. Because of the current hurdles to support DApps fully, they don’t want to push new partnerships for the sake of it.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=5748" target="_blank" rel="noreferrer noopener"><strong>Any advice for freshly graduated software engineers?</strong></a></h3>



<p>Greg advises learning things the hard way and working in challenging startup-like companies, where there are high chances of failure. The high failure rate will consequently result in a high success rate in the long term.</p>



<h3><a href="https://youtu.be/tOnFXB7L0DY?t=5937" target="_blank" rel="noreferrer noopener"><strong>How does Akash remain cheaper in the long run?</strong></a></h3>



<p>Greg believes the right price is more important than the lowest price. He paints a future where, for example, if all the servers run on Akash, it will always provide the best price because of its internal competition. Consequently, making all the other cloud providers, in the long run, adjust to the right price.</p>



<p>Refer to <a href="https://www.stakingrewards.com/earn/akash/" target="_blank" rel="noreferrer noopener">https://www.stakingrewards.com/earn/akash/</a> to know how to stake Akash, the staking APR, and how you can participate in general.</p>


How the Akash Network is Challenging the Billion-Dollar Cloud Computing Market by AWS


<h3><strong>Our research team has screened and vetted over 260 assets on Staking Rewards’ website. The result: 108 assets have been delisted in the last 6 months as they fail to meet predefined standards, outlined below.</strong></h3>



<p>Staking Rewards has a team of researchers and code developers who review every asset integration request. We strive to find the best applications of blockchain technologies that enhance community participation and build on ecosystem utility.&nbsp;</p>



<p>With a host of new features coming soon (we don’t want to spoil any surprises), we have set out to only integrate assets which we deem to be of high quality.&nbsp;</p>



<h2><strong><strong>How&nbsp;Do&nbsp;We&nbsp;Define&nbsp;a&nbsp;High&nbsp;Quality&nbsp;Asset?</strong></strong></h2>



<p>We look at an asset’s probability to succeed and their long-term benefit to the crypto market. We consider whether the asset is likely to gain significant traction, appreciate in value, increase in daily trading volume, and whether they’re backed and supported by reputable providers and VCs.&nbsp;</p>



<p>Any current and new integrations will be backed by our research panel and our users can be assured that we have done proper due diligence on them.</p>



<h2>Asset and Provider Integrations: <strong>Quality Over Quantity</strong></h2>



<p>How are we expected to provide our users with the best quality and real alpha if we don’t truly believe in some of these projects ourselves? Our research team paneled this question at our recent company retreat in Algarve, Portugal. After a long week of planning, setting objectives and working from sunrise till sunset; a rigid, fair and transparent process has been outlined to vet all current and future assets against rigorous quality checks.</p>



<p>Thus, we have reduced the number of integrations by 108 assets in the last 6 months.&nbsp;Some of you might wonder where your favorite assets have gone, and we are here to explain our criteria so that it’s clear for everyone going forward.</p>



<h2><strong>Integration Criteria</strong></h2>



<p>Any stakeable asset with a market cap greater than $100 million will remain integrated on our site if it was not vetoed by our research team, and these assets have been split into 3 tiers: namely Tier 1, 2 and 3. These tiers are currently purely for internal use, but we have some exciting new features related to this which we will be able to share with you in the future.</p>



<p>Any stakeable asset with a market cap below $100 million, or assets that do not have any native staking, have been reviewed by our team of experts. </p>



<h2><strong>Delisting Factors</strong></h2>



<p>Our decision to delist certain assets was based on a number of factors. </p>



<ul><li>Recent user engagement on our website</li><li>Quality and potential impact of the project to sustainably solve new problems (instead of just copying what others have already done)</li><li>Whether the project is relevant or outdated</li><li>Whether the project is backed and supported by reputable providers and VCs&nbsp;</li></ul>



<p>For any assets not yet integrated on <a href="https://www.stakingrewards.com/" target="_blank" rel="noreferrer noopener">stakingrewards</a><a href="https://www.stakingrewards.com/">.com</a>, the same criteria will be used to decide whether they are eligible for integration or not.</p>



<h2><strong>The Axe Has Fallen</strong></h2>



<p>Therefore, it is our (dis)pleasure to announce that we have delisted 108 assets. </p>



<p>We can focus on integrating only those assets that we believe have greater potential for success; and therefore make our integrations far more valuable for all of you.</p>


The Axe Has Fallen: Staking Rewards’ Journey to Providing Quality Over Quantity


<h2>What are your options for staking $PORT?</h2>



<p>You have two staking options; PackagePortal&#8217;s buoy contract and/or dock contract. These are smart contracts that allow you to stake your $PORT in a non-custodial manner straight from your ZilPay web wallet. </p>



<p>Let&#8217;s deep dive into the workings of these smart contracts and what you need to know to get started. </p>



<h2>The Buoy Contract</h2>



<figure class="wp-block-image size-full"><img loading="lazy" width="818" height="348" src="https://cms.stakingrewards.com/wp-content/uploads/2022/04/image.jpg" alt="Package Portal Buoy Contract" class="wp-image-7586" srcset="https://cms.stakingrewards.com/wp-content/uploads/2022/04/image.jpg 818w, https://cms.stakingrewards.com/wp-content/uploads/2022/04/image-360x153.jpg 360w, https://cms.stakingrewards.com/wp-content/uploads/2022/04/image-80x34.jpg 80w, https://cms.stakingrewards.com/wp-content/uploads/2022/04/image-768x327.jpg 768w" sizes="(max-width: 818px) 100vw, 818px" /><figcaption>See latest annualised APR on <a href="https://www.stakingrewards.com/earn/package-portal/" target="_blank" rel="noreferrer noopener">Staking Rewards</a></figcaption></figure>



<p>The most important distinctions between the two contracts are the APR and unbending periods. The Buoy contract pays out a 7% APR (see latest annualised APR on <a href="https://www.stakingrewards.com/earn/package-portal/" target="_blank" rel="noreferrer noopener">Staking Rewards</a>), offers a 7-day unbonding period, and follows a reward cycle of roughly 1 day. </p>



<p>The 7-day unbonding period means that you have to stake for at least 7 days to avoid the 10% unstaking fee and that you will see rewards accruing daily. <em>Total Rewards</em> indicates how much $PORT is left to be distributed to stakers. By extension, <em>Total Stakers</em> and <em>Total Staked</em> indicates how much users have deposited into the contract. This contract can be found on the Zilliqa Block Explorer <a href="https://viewblock.io/zilliqa/address/zil1lkhea3egremrwtn4lfhsa4psk978k2sat3cs3u" target="_blank" rel="noreferrer noopener">here</a>. When you unstake, you will still earn rewards over the 7 day period but at a reduced APR. If you withdraw immediately, there will be a 10% unstaking fee.</p>



<h2>The Dock Contract</h2>



<figure class="wp-block-image size-full"><img loading="lazy" width="820" height="350" src="https://cms.stakingrewards.com/wp-content/uploads/2022/04/image-1.jpg" alt="Package Portal Dock Contract" class="wp-image-7588" srcset="https://cms.stakingrewards.com/wp-content/uploads/2022/04/image-1.jpg 820w, https://cms.stakingrewards.com/wp-content/uploads/2022/04/image-1-360x154.jpg 360w, https://cms.stakingrewards.com/wp-content/uploads/2022/04/image-1-80x34.jpg 80w, https://cms.stakingrewards.com/wp-content/uploads/2022/04/image-1-768x328.jpg 768w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption>See latest annualised APR on <a href="https://www.stakingrewards.com/earn/package-portal/" target="_blank" rel="noreferrer noopener">Staking Rewards</a></figcaption></figure>



<p>The Dock contract follows the exact same structure but features a 90-day unbonding period and offers a 19% APR (see latest annualised APR on <a href="https://www.stakingrewards.com/earn/package-portal/" target="_blank" rel="noreferrer noopener">Staking Rewards</a>). Thus, it is identified as a long-term contract with a higher APR than the Buoy contract, which has a lower lockup but also a lower reward incentive. </p>



<p>PackagePortal emphasizes the long term nature of this contract by introducing a 25% fee for those who stake for less than 90 days. Before you stake into this contract, make sure you understand the risks. Unlike the Buoy contract, you get the full 19% reward over the unstaking period; only paying the 25% unstaking fee if you withdraw instantly. </p>



<h2>What you need to stake PackagePortal </h2>



<ul><li>A ZilPay web wallet</li><li>20 Zilliqa for fees</li><li>At least 1 $PORT to stake</li></ul>



<h2>Step-by-step guide to staking PackagePortal </h2>



<h3>Step 1 &#8211; Connect your ZilPay wallet to PackagePortal </h3>



<figure class="wp-block-image size-full"><img loading="lazy" width="780" height="438" src="https://cms.stakingrewards.com/wp-content/uploads/2022/04/Package-Portal-Staking-Tutorial-.gif" alt="" class="wp-image-7589"/></figure>



<ol><li>Head to <a href="https://www.packageportal.com/" target="_blank" rel="noreferrer noopener">https://www.packageportal.com/</a></li><li>Click Launch App in the top right hand corner</li><li>Connect your respective wallet</li></ol>



<h3>Step 2 &#8211; Staking through the Buoy contract</h3>



<figure class="wp-block-image size-full"><img loading="lazy" width="780" height="438" src="https://cms.stakingrewards.com/wp-content/uploads/2022/04/Package-Portal-Staking-Tutorial-1.gif" alt="" class="wp-image-7590"/></figure>



<p>Staking through the Buoy contract is a simple process that involves inputting the amount of $PORT you want to stake and then confirming the transaction. Reminder! This staking method has a 7-day lockup period with a 10% instant withdrawal fee.</p>



<h3>Step 3 &#8211; Staking through the Dock contract</h3>



<figure class="wp-block-image size-full"><img loading="lazy" width="780" height="438" src="https://cms.stakingrewards.com/wp-content/uploads/2022/04/Package-Portal-Staking-Tutorial-2.gif" alt="" class="wp-image-7591"/></figure>



<p>Staking through the Dock contract follows the exact same process as the Buoy contract and just requires you to input the amount of $PORT that you want to stake. Reminder! This staking method has a 90-day lockup period with a 25% instant withdrawal fee.</p>



<h2>Conclusion</h2>



<p>You are done! </p>



<p>Your PackagePortal is staked. As you can see from the steps above, it is quite a simple process. Happy staking! </p>


How To Stake Your PackagePortal ($PORT)!


<p>Often termed the Google of blockchains, The Graph is a decentralized protocol for indexing and querying data from blockchains. Sounds complicated? Think of it in the way Google indexes the Internet. In indexing, the Googlebot analyses a web page for content and meaning, stores it in the Google index, which then shows up in Google Search results. Quite similar to a books library. </p>



<p>Books are organised as per a code, labelled by category, and so on, thus making retrieval easy. The Graph, on its part indexes blockchain data, grouping it into open application programming interfaces (API) called subgraphs, accessible for use by anyone. The utilisation of the platform has grown rapidly, as indicated by usage among projects including Uniswap, Synthetix, Gnosis, AAVE, Decentraland. If, for example, you&#8217;ve used Uniswap, or delved deeper into it, chances are you&#8217;ve come across Uniswap Analytics. Much of that is powered by The Graph.&nbsp;</p>



<h2>Understanding The Graph</h2>



<p>Before delving further into this project, a quick understanding of how The Graph works may be helpful. Here&#8217;s a look at the protocol roles within this ecosystem:</p>



<figure class="wp-block-image"><img src="https://lh6.googleusercontent.com/OrCVdfo6bKKbpi681A7yuBXwqYaNuyKUvKypDNP9GTWt_8RzT6XamIWpQj_nwONo7mNn3DKrlrGioBc53Si_CEFaryG9eGhQeZOi3s70_BUvRcqAPCMxGG02o5cvj6EuQA" alt=""/></figure>



<p>The Graph makes difficult-to-query information, accessible in an easily queried way, for individuals or organizations (Consumer). How a typical transaction occurs is spelt out below:</p>



<ul><li>The consumer asks/queries The Graph which Indexers have the data they are seeking</li><li>A list of Indexers is provided</li><li>The consumer selects an Indexer based on which they deem most likely to provide the highest quality service at the best price&nbsp;</li><li>Pricing is set between an Indexer and a Consumer, rather than at the network level</li><li>If the Indexer accepts the price offered by the consumer, then they process the query and respond with the resulting data</li></ul>



<p><br>Thus, The Graph functions as a marketplace for specific data on a blockchain like Ethereum. Each data set on this marketplace is called a Subgraph and can be accessed through <a href="https://thegraph.com/explorer" target="_blank" rel="noreferrer noopener">the Graph Explorer</a>. Each Subgraph carries a description of specific smart contracts within those dApps. This includes details like the subgraph description, developers, project links, query fee data and charts, deployment ID, API endpoint and other metadata. Below, is an example of the Subgraph for Curve (Source: Graph Explorer).</p>



<figure class="wp-block-image"><img src="https://lh5.googleusercontent.com/g88h3tvgvfapnZDS7Y-vxQF9v_MAMglSW0-FwD4RlKXQXzR2eeGSROAf4PnV-mCW9ZGWHMdSsnThiwwWv3EVSSgG7_AeeAk1dUCVV5_AvMCUkg1I8OprJV5skd-jrVqfiw" alt=""/></figure>



<p>Using the Graph Explorer, an app developer, for example, can query the data needed for their dApp. They do so using The Graph’s querying language called GraphQL. Once a data request is received, the Indexer searches through relevant subgraphs to find the information. Indexers decide on the subgraphs based on what&#8217;s referred to as a Curations Signal. This has been put in place by Curators who develop subgraphs and evaluate them for quality.&nbsp;</p>



<h2>The journey so far</h2>



<p>The Graph was founded in 2018 by <a href="https://www.linkedin.com/in/yanivtal9/" target="_blank" rel="noreferrer noopener">Yaniv Tal</a> (Project Lead), <a href="https://www.linkedin.com/in/jannispohlmann/?originalSubdomain=de" target="_blank" rel="noreferrer noopener">Jannis Pohlmann</a> and <a href="https://www.linkedin.com/in/1stramirez/" target="_blank" rel="noreferrer noopener">Brandon Ramirez</a>. The trio has previously worked together on several startups. Having begun diving into Ethereum in early 2017, they realised soon after that the tooling and lack of mature protocols made it difficult to build dApps on Ethereum. This inspired the want to make open data more accessible, leading to the incorporation of The Graph.</p>



<p>The first prototype was built soon after, in late 2017. The mainnet launched in 2020. Over 200 Indexers deployed their nodes in the testnet. The Graph has, since, grown to support indexing data from Ethereum, IPFS (InterPlanetary File System), and PoA. The current total number of subgraphs is more than 22,000 and the network has over 8091 delegators; 157 indexers and 2322 Curators&nbsp; (Source: <a href="https://thegraph.com/explorer/participants/indexers" target="_blank" rel="noreferrer noopener">Graph Explorer</a>). Over 23,000 developers have built subgraphs for applications, such as Uniswap, Synthetix, Foundation, Zora, KnownOrigin, Gnosis, Balancer, Livepeer, DAOstack, Audius, Decentraland, and many others.</p>



<h2>Growth</h2>



<p>As per company reports (dated May 2021), from an approximate 30 million daily queries in June 2020, daily query volume in 2021 has grown to over 675 million queries per day. Between May 2020 to April 2021, over 110 billion queries were processed. Query volume has also increased month-over-month (MoM) with 11.7B in January, 14.5B in February, 19B in March, and 20.3B in April.</p>



<figure class="wp-block-image"><img src="https://lh4.googleusercontent.com/OWIfcvca5fblQlqYrOL6Vb6LLt7GIklTtD5EJMzmDDjOjx3ZmwiluOWtnNzPIIUZsiZyYcxMSdNy_6Dkw7c9LZ8Q-58uI-bxZ6XgC4uqkjPawBI44AEhO5m1KARQfVeJrQ" alt=""/><figcaption>Source: The Graph</figcaption></figure>



<p>As of Q1 2021, DeFi makes up 57% of queried subgraphs. 11% of subgraphs serve NFT marketplaces, arts, and gaming. 7% of subgraphs are related to cross-chain use cases like synthetic bitcoin and protocol bridges, signifying an increase in interoperability between dapps.</p>



<figure class="wp-block-image"><img src="https://lh5.googleusercontent.com/Mo1BSbUc7Hi1rKfnIs1BPhHC-1o77ypgPFnRCKqNHqqO6mwAxDEJbW-wx8amIecf9h1iWxh3umAhOCOqoTmQPrjlf7GUQZXxCdEKHA2cuqyNxb_D4K3OfMAF0J32aCzu8g" alt=""/><figcaption> Source: The Graph </figcaption></figure>



<p>DeFi has also dominated dApp adoption, making up 90% of the hosted service query volume. Network-data focused subgraphs make up 4% of query volume. Query volume for NFT use cases like art profiles, NFT minting, and marketplaces have risen in the last few months with increasing mainstream traction. NFTs make up 2.5% of the current query volume.&nbsp;</p>



<h2>The GRT token</h2>



<p>The Graph’s native cryptocurrency, GRT, is used to ensure the integrity of the data queried on the network. All users on the platform, Indexers, Curators or Delegators, are required to stake GRT tokens to perform their roles, in return, earning fees from the network.</p>



<p>Two crucial functions of the GRT token within the protocol include:</p>



<ul><li>Indexer Staking: Indexers deposit GRT to be discoverable in the query market and to provide economic security for the work they are performing</li><li>Curator Signaling: Curators deposit GRT in a curation market, where they are rewarded for correctly predicting which subgraphs will be valuable to the network</li></ul>



<p></p>



<p>GRT is an ERC20 token with an initial supply of 10 billion. It has an inflation rate of 3% per year, used to pay indexing rewards to Indexers. 1% of all query fees go towards burning GRT. The withdrawal tax charge to Curators is also burned and the same goes for any unclaimed rewards from the rebate pool distributed to network participants. The initial token sale was at $0.03. The sale saw a very encouraging response, and the token registered a high of $2.84 (February 2021) soon after listing. At the time of writing (2 December), it trades at $0.90 with a market capitalization of $4.49 billion and a circulating supply of 4.95 billion.</p>



<p>Here&#8217;s a look at the tokenomics:</p>



<figure class="wp-block-image"><img src="https://lh5.googleusercontent.com/Yv5xFVjyqRN11XHxn3Fp0lwIN94ciUnWe9u4b4uBQ0B21Z0AqZXZRwVoKx_qvBTpBnD-BklsfUflMsP5djgfQCQcIzfMuwHQxSFfdLy5hcIrSYn0-UCycxS-qWOL4ZC6_A" alt=""/></figure>



<p>Given that there&#8217;s a sizable proportion of the tokens allocated to parties beyond the general public, the continuous inflow of tokens upon completion of the respective vesting schedule can threaten to keep sell pressures high. The GRT vesting and distribution schedules range between 6 months to 10 years. Here&#8217;s a visual look at the vesting schedule,&nbsp;</p>



<figure class="wp-block-image"><img src="https://lh3.googleusercontent.com/aEFTUm1lg8ibjAGzZdLMcDsJgJKVQGrlod-gG0ujBjNPKIFZ2qN-Hm_lgCuz49FuMg4dEFyn3Lde65m2L-G1bv8GPpgMLYnb0eIsIZLlA9k92kr5iGH2b-xzzSaqZMxXng" alt=""/></figure>



<h2>Staking GRT</h2>



<p>Token holders can stake GRT tokens by delegating them to Indexers. In return, they receive a portion of the reward. Tokens can be staked through <a href="https://thegraph.com/explorer/participants/indexers" target="_blank" rel="noreferrer noopener">The Graph staking UI</a>. A word of advice here, the process is not stated upfront and may require some degree of manoeuvring. There&#8217;s a detailed guide available on the <a href="https://thegraph.academy/delegators/how-to-delegate-grt-tokens/" target="_blank" rel="noreferrer noopener">The Graph Academy</a>. Here&#8217;s a quick look at what to expect:</p>



<figure class="wp-block-image"><img src="https://lh5.googleusercontent.com/gwLSY23OTXcBHQ7QuAdsyyRhiweUQZ0MRLcZZigREr5sPshspLTzKx9bYA623etsmX_VBxE8pbhoEiHE1cViWaGUmmdY-l84vItlz0IucbYXzUNnAhT1pwBrTVKWB8mt-g" alt=""/></figure>



<h3>The page lists details of Indexers, highlighting:</h3>



<ul><li><strong>Subgraphs</strong>: Showcasing which subgraphs are indexed by the indexer</li><li><strong>Query Fee Cut</strong>: Query fees are earned every time an indexer serves data. This shows how much of the total query fees goes to the indexer. The rest is shared among the delegators, proportional to their share of delegated tokens. For example, the first indexer in the screenshot above has a 50% Query Fee Cut. Thus, they would keep 50% of the query fees for themselves. The delegators get to share the remaining 50%. A lower Query Fee Cut is generally better for the delegators.</li><li><strong>Effective Reward Cut: </strong>Indexers earn indexing rewards for their own stake as well as delegated tokens. The Effective Reward Cut describes the commission paid out to the indexer for providing their services.</li><li><strong>Stake Owned</strong>: This is the amount of GRT the indexer is “staking” on The Graph Network. If the indexer indulges in some kind of malpractice, these tokens can be slashed by the protocol.</li><li><strong>Delegated</strong>: This is the number of tokens currently delegated to the indexer. A lower amount of delegated tokens translates to a higher share of the fees and rewards to the delegator.</li><li><strong>Query Fees</strong>: While not visible in the screenshot above, the table also shows the total amount of query fees an indexer has earned. Ideally, a high amount of Query Fees, combined with a low Query Fee Cut and a small delegation pool would be ideal (Source: <a href="https://thegraph.academy/delegators/choosing-indexers/" target="_blank" rel="noreferrer noopener">The Graph Portal</a>).</li><li><strong>Indexer Rewards</strong>: This is the total amount of indexing rewards the indexer has accrued. Again, a high amount of indexing rewards earned, combined with a low Effective Reward Cut and a small delegation pool would be ideal.</li></ul>



<p></p>



<h3>Staking Alternatives</h3>



<p>Thus, based on the metrics above, staking GRT can necessitate some degree of research work. There are, however, secondary alternatives to staking GRT. Binance, for one, offers a Locked Staking option of GRT, with an estimated APY of 13.56% and locked in periods of 30, 60, and 90 days.&nbsp;</p>



<h3>Curators</h3>



<p>Now that the role of an indexer is clear, let&#8217;s take a quick look at the role of a Curator and see if it&#8217;s a profitable one. As mentioned earlier, Curators analyze subgraphs and curate high-quality subgraphs. Thus, for example, once a Curator has found a potentially attractive subgraph, they curate it by signalling on it. In doing so, Curators highlight to Indexers, which subgraphs are valuable and should be indexed accordingly. </p>



<p>As per the team at The Graph, delegation is a safe and stable way of generating interest while not exposing oneself to the high risks Curators are confronted with. So while Curation offers large potential gains, it is significantly riskier as Curators may be confronted with the loss of capital. Currently, a minimum of 100 GRT (˜$89) is needed to curate a subgraph with no signal. Curators also have to pay gas costs and a curation fee. For this reason, it may not be profitable to signal small amounts of GRT.</p>



<p>Here&#8217;s a quick look on how curation actually works:</p>



<figure class="wp-block-image"><img src="https://lh4.googleusercontent.com/y756txPI2DsKxPnisLDvkycnJjrdkAuLJ7JYdLyRa5sjKy36qX0Zzib04L6BijrDKuX3OowzIzcC_GGsuq2sVF5h_ER4YCBi_ahwi-xuSWq3ul-dzzSVYr5GhmP9PYsVfw" alt=""/></figure>



<p>When Curators signal on a subgraph, they actually deposit GRT into a bonding curve. Doing so mints curation shares. Now, 10% of all the query fees generated on the subgraph are deposited into the bonding curve. Thus, the value of each share increases if a subgraph receives queries. To get rewarded eventually, Curators need to burn their curation shares. (To know more about this, <a href="https://thegraph.academy/curators/curation-faq/" target="_blank" rel="noreferrer noopener">click here</a>). Again, it is important to note that as a Curator, one is confronted with the risk of withdrawing less GRT from the bonding curve than they started with. In the worst-case scenario, the curation shares decrease substantially in value so that one receives only a tiny fraction of the GRT back that was initially deposited.</p>



<h2>Community</h2>



<p>The Graph has a sizable online social presence, as reflected by the following on its channels. Twitter clearly is the mainstay channel with 168K followers. Updates are regular and include informational, educational content. There are even regular community talks. Other prominent social channels include Telegram (26K), Discord (28K) and Reddit (20K).</p>



<h2>Competition</h2>



<p>While some have linked The Graph as a competitor to Chainlink, there remains a fundamental difference in what the two are doing. While Chainlink acts as an oracle, bridging the gap between real-world data and the blockchain world, The Graph makes blockchain data available off-chain.</p>



<h2>Roadmap and future</h2>



<p>The Graph doesn’t currently have a clear roadmap. During the current year, the project has increased focus on moving away from having a highly centralized development side. Edge &amp; Node, a software development company launched earlier this year, led by the core protocol team behind The Graph, has a 2-year service agreement with The Graph Foundation to help maintain the core protocol and build new trust-minimized tools and applications alongside The Graph community. More recently, with a focus to ​​decentralize core protocol development, two new development teams have joined the network. They include StreamingFast and Figment.</p>



<h2>Developments over the year have included:</h2>



<p><strong><em>Launch of the Subgraph Studio</em>:</strong> Enabling developers to deploy and curate on subgraphs, and earn query fees. The two months post-launch in July saw more than 180 subgraphs having migrated from the hosted service to the permissionless Subgraph Studio, a 2150% growth in just two months.</p>



<p><strong><em>Graph Improvement Proposal (GIP) Process</em>:</strong> GIPs are proposed and discussed in The Graph Forum to receive feedback from subgraph developers, Indexers, Curators and Delegators. GIPs are then put up for a Snapshot vote to unofficially gauge community sentiment, followed by a vote by The Graph Council before the upgrades are implemented.&nbsp;</p>



<p><strong><em>Improvements in costs and performance</em>:</strong> StreamingFast, in September, <a href="https://twitter.com/streamingfastio/status/1433067360836063232" target="_blank" rel="noreferrer noopener">shared their enhancements</a> that could increase indexing speed by 300x. Over the past months, the network has seen query fees range between 0.00002 GRT and 0.0002 GRT per query. The cost per query is expected to change with the shift in network dynamics, such as increased migration, greater query volume and Indexers becoming more efficient in managing their operations.&nbsp;</p>



<h2>In conclusion</h2>



<p>The Graph has successfully put together an indexing protocol offering developers easy access to on-chain data in a decentralized manner. As an open data marketplace where queries are individually priced and optimized for access not only making the Web3 stack possible, The Graph also simplifies developer work and creates better performance for dapps at scale.</p>



<p>One of the biggest opportunities for The Graph going ahead includes expanding to other blockchains. As stated earlier, between May 2020 to April 2021, over 110 billion queries were processed on The Graph’s hosted service. April this year saw over 20 billion queries registered. And this largely comes from just one blockchain &#8211; Ethereum. Over the last year, successfully integrated chains have included EVM-based L1s, Fuse, Celo, Avalanche, Clover, Binance Smart Chain, and Fantom and L2s such as Polygon. Most recently, The Graph announced the indexing of NEAR, a Layer 1 blockchain, and the first non-EVM (Ethereum Virtual Machine) compatible blockchain supported by Graph Node. The team has indicated a focus on multi-blockchain expansion, with a focus on Solana and Polkadot.</p>



<p>Will it emerge as the Google of Blockchains? It&#8217;s certainly on the right path. However, what remains to be seen, as stated above, is how successful The Graph is in integrating other blockchains and maintaining its first-mover advantage. The blockchain space is evolving every single day, and competitors threaten to spring out of nowhere. Striving to reach Google&#8217;s stature is great. Yet the path is bound to be a long and challenging one.</p>


The Graph: Is this the &#8216;Google of Blockchains&#8217;?

Liquid vs. Illiquid Staking – What is better?


<p>In the <a href="https://www.stakingrewards.com/journal/ethereum-and-the-7-challengers-part-1/" target="_blank" rel="noreferrer noopener">previous post</a>, we looked into seven projects which are attempting to dethrone Ethereum. We introduced each of the seven and briefly discussed their tech and how they aim to steal the crown from Ethereum. Clearly, some projects have made major inroads when it comes to factors like transaction speed, costs. We now take this analysis a step further.</p>



<p>Here, we will delve deeper into these seven projects, evaluating factors including ease of usability and developer interest, level of decentralization, governance framework, security setup, features and more. Which of these projects has it in them to dethrone Ethereum the Goliath, and emerge as the David in this story?</p>



<h2>Level of decentralization</h2>



<p>One measure of estimating the level of decentralization on a blockchain is the number of validators. The chart below puts into perspective the number of validators across each of the seven challengers outlined.</p>



<figure class="wp-block-image"><img src="https://lh5.googleusercontent.com/di6sCXF_wIn0jm8fduzDTJREklFd_MjQUEP0Hd3Mbocz4WkpWx_8zfBeA1LOxSO7dbiZofUP---W8wOAnBr2cuEnDyuXDtKdCAWuLFDjVgV6JasnbfdRzfxkrh9tbxt_-A" alt="Validators"/></figure>



<p>Among the projects selected, Cardano with 2076 validators, Solana with 1065 and Avalanche with 1057 validators clearly lead the rest in terms of number of validators. The higher the number of validators, the greater the level of decentralization on a network.&nbsp;</p>



<p>Taking this a step further, it helps to look at what is known as the Nakamoto coefficient. <a href="https://news.earn.com/quantifying-decentralization-e39db233c28e" target="_blank" rel="noreferrer noopener">First proposed by Balaji Srinivasan</a>, the Nakamoto coefficient is a quantitative measure of a system’s decentralization. It helps determine how many entities one would need to be compromised to control a system. The higher the value of this minimum Nakamoto coefficient, the more decentralized the system is. Among the three listed above, Cardano has a Nakamoto coefficient of 24 (Source: <a href="https://www.adapools.org/groups" target="_blank" rel="noreferrer noopener">ADApools.org</a>), Solana has a Nakamoto coefficient of 19 (Source: <a href="https://solanabeach.io/validators" target="_blank" rel="noreferrer noopener">Solana Beach</a>), while Avalanche has a Nakamoto coefficient of 26 (Source: <a href="https://thecurrencyanalytics.com/altcoins/why-avalanche-avax-is-the-most-decentralized-pos-blockchain-31778.php" target="_blank" rel="noreferrer noopener">Industry Reports</a>).</p>



<p>Another measure of decentralization is the level of staked tokens. This is basically the percentage of eligible tokens that are being staked. As seen below, Solana (77.93%), Binance (76.54%), Tezos (75.53%), and Cardano (70.86%) have over 70% of eligible tokens staked.</p>



<figure class="wp-block-image"><img src="https://lh3.googleusercontent.com/mpSkIsIeuxNwDWj0cOqCXmZBUjERDZvExVvmuWfMcL0E6UOVdDv19wn6F-F8cXJhr73LxpQyKaNwnaHOngDJsEb2Y1FxHEE7qm_JAr4XXt7-SVttQrcJlz71TEsfRuta_A" alt="Ethereum Competitors Staking"/></figure>



<h2>Developer interest</h2>



<p>A recent report by <a href="https://outlierventures.io/wp-content/uploads/2021/09/Blockchain-Trend-Report-Q2-20-21.pdf" target="_blank" rel="noreferrer noopener">Outlier Ventures</a> brought out some interesting statistics (period under consideration: July 20 &#8211; June 21) on developer interest in some of these blockchains. Here are some highlights,</p>



<ul><li>Cardano ranks the highest in terms of average GitHub commits per month (CPM). It registered an average of 701 CPM. Ethereum ranks second highest, with an average of 447 CPM. Solana, Avalanche and Polkadot registered CPM&#8217;s of 247, 237 and 221 respectively.</li><li>Avalanche is a clear winner when it comes to an overall increase in the commits on its blockchain. AVAX recorded a growth of 709.7% of total commits in the recent 12-month period compared to the last one, going from 1,553 commits per year (CPY) to 12,575 CPY.</li><li>Ethereum demonstrated a high number of monthly active developers averaging 168 per month. Cardano had 165 active developers per month. Polkadot averaged 68 active developers per month.</li></ul>



<p>Extending this, which of these platforms is stealing the show when it comes to the trendy sectors within blockchain? Think, <strong><em>DeFi, NFT, Gaming.</em></strong></p>



<h3>DeFi</h3>



<p>According to data aggregator <a href="https://defillama.com/home" target="_blank" rel="noreferrer noopener">DeFi Llama</a>, over $256 billion has been locked into <strong>DeFi</strong> protocols. Of this, nearly 67.5% involves DeFi projects built on Ethereum. However, what&#8217;s interesting to note is that Ethereum&#8217;s dominance has decreased from 97.6% at the beginning of the year. From the projects included in this comparison, networks including Binance, Solana and Avalanche have been eating into Ethereum&#8217;s market share. For a perspective, Solana&#8217;s popularity has grown tremendously over the past few months among DeFi projects. The total value locked (TVL) of all DeFi projects built on Solana is currently at <a href="https://defillama.com/chain/Solana" target="_blank" rel="noreferrer noopener">$14.9</a> billion (5.8% of the overall share), as against 592 million (0.50%) as of 30th June 2021. Avalanche, on its part too, has been making inroads in Ethereum&#8217;s and Binance&#8217;s dominance, with a near 47X growth in TVL since the mid of the year.</p>



<figure class="wp-block-image"><img src="https://lh3.googleusercontent.com/_yu1x67UFPSNbsVYklRkGONAfW55cpTfYzedXg8XeCATQxbP6bJ7p3Qkinq07EuqCzGRjTNGTaw_Vf9g_acYAoAaIsQyC4MJlpu3FzuX2m1qWdYjvYnmhRSssCMEjt0GpQ" alt="Ethereum Competitors TVL"/></figure>



<h3>NFTs</h3>



<p>When it comes to NFTs, Ethereum dominates the space with most collections, marketplaces, and dApps (Source: <a href="https://dappradar.com/nft/marketplaces/protocol/ethereum" target="_blank" rel="noreferrer noopener">DappRadar</a>). However, with well-known downsides in terms of limited scalability (we touched upon TPS in the previous part of this article) and exorbitant transaction fees, other blockchains have been making their mark in this space. Binance Smart Chain, for one, offers significantly lower fees and faster transactions. However, BSC has found limited appeal within the NFT space. Solana, though, has been making rapid inroads in this space. Its <a href="https://solana.com/ecosystem?categories=nft" target="_blank" rel="noreferrer noopener">ecosystem</a> boasts 193 NFT projects.</p>



<h3>Gaming</h3>



<p>On Gaming, Ethereum-based Axie Infinity dominates the space (30 days trading volume is $2.3 billion with over 661K users). However, <a href="https://twitter.com/cz_binance/status/1421327274738028546?s=20" target="_blank" rel="noreferrer noopener">BSC&#8217;s focus on gaming</a> has been evident. As per DappRadar, 15 of the top 20 blockchain games by volume are BSC based.</p>



<h2>Programming languages supported</h2>



<p>Solidity is the programming language popular amongst Ethereum developers. It is designed for developing smart contracts that run on the Ethereum Virtual Machine (EVM). Here&#8217;s a look at the programming languages supported across each of the blockchain outlined:</p>



<figure class="wp-block-image"><img src="https://lh5.googleusercontent.com/t2mS0sbq8Q4FgaGknI9KYS726JApkcxzgv4Wqa5CCWUDU9msqy2FyQ8wQQAhLGwnQZdaHj_goS1oaNmLC86iHu0IlW15zAmmYPO1Lxpij_apKL05BBacJihayTMyofUDfA" alt="Ethereum Competitors Programming Language"/></figure>



<h2>Governance framework</h2>



<p>As against off-chain governance methods (both Bitcoin and Ethereum utilize off-chain governance processes), on-chain governance widens the participants in a blockchain governance process. This aids in limiting the threat of chain splits and forks. Of course, both mechanisms have their pros and cons, and are expected to continue evolving over time. Here&#8217;s a quick take on the governance framework of the blockchains discussed,</p>



<h3>Cardano</h3>



<ul><li>Operates an off-chain governance model</li><li>Input Output Hong Kong (IOHK) and the Cardano Foundation develop and implement protocol updates</li><li>The off-chain governance model will continue until the network reaches the <a href="https://roadmap.cardano.org/en/voltaire/" target="_blank" rel="noreferrer noopener">Voltaire era</a></li><li>Participants, then, will be able to use their stake and voting rights to influence the future development of the network</li></ul>



<h3>Binance Smart Chain</h3>



<ul><li>Binance provides on-chain governance through the Proof of Staked Authority (PoSA) consensus</li><li>BSC has system parameters to dictate network behavior, including slashing amounts, cross‐chain transfer fees, etc. These parameters are defined by the BSC validator set using a proposal‐vote process on Binance Chain</li><li>Anyone can submit a proposal on Binance Chain to update BSC parameters&nbsp;</li></ul>



<h3>Solana</h3>



<ul><li>The Solana Foundation, a non-profit organization, owns Solana’s IP, and alongside Solana Labs, aids in establishing the development direction&nbsp;</li><li>Solana Labs will remain a core contributor to the protocol</li><li>There have been no plans indicated for on-chain governance. It has a delegated proof-of-stake (DPoS) system that allows token holders to select the validator set. However, there is no roadmap for a token-weighted voting system</li></ul>



<h3>Polkadot</h3>



<ul><li>Parity Technologies built the Polkadot protocol and Substrate framework, controlling much of the process initially</li><li>In July 2020, control over the protocol was transferred to the network&#8217;s proposed on-chain governance system</li><li>Network participants are now the primary source of upgrade submissions and approvals</li></ul>



<h3>Avalanche</h3>



<ul><li>Avalanche provides on-chain governance for critical parameters of the network, letting participants vote on changes to the network and network upgrades&nbsp;</li><li>However, Avalanche does not allow unlimited changes to arbitrary aspects of the system. Instead, only a pre-determined number of parameters can be modified via governance</li></ul>



<h3>Tezos</h3>



<ul><li>Tezos employs an <a href="https://messari.io/resource/on-chain-governance" target="_blank" rel="noreferrer noopener">on-chain governance</a> system&nbsp;</li><li>The governance mechanism enables bakers (validators) to vote on upgrade proposals</li><li>A proposal can only be accepted if it has a super-majority (over 80%))</li><li>The Tezos Foundation runs eight bakers capable of casting nearly 30% of the voting power (Source: Messari)</li></ul>



<h3>Near Protocol</h3>



<ul><li>Open to contributions from the community, anyone can submit or comment on a NEAR improvement proposal.&nbsp;</li><li>Governance discussions take place within the <a href="https://gov.near.org/" target="_blank" rel="noreferrer noopener">NEAR forum</a>&nbsp;</li><li>The timing of the proposal&#8217;s implementation will depend on the change&#8217;s urgency</li></ul>



<h2>Security setup</h2>



<p>The switch to ETH 2.0 has raised concerns in areas including a network split, a security breach due to a possible vulnerability in the code. On its part, ETH 2.0 has been devised with a focus on security, making potential attacks extremely costly. ETH 2.0 requires a minimum of 16,384 validators. Security audits of ETH 2.0 code are being carried out by organizations including Least Authority and Quantstamp. The Ethereum Foundation is also setting up a security team to research possible cybersecurity problems.&nbsp;</p>



<p>While most of the blockchains listed here are less susceptible to breaches such as a 51% Attack, given the wider adoption of the Proof of Stake model as against Proof of Work, there remains a focus on improving safety and security across all networks. Here&#8217;s a look at some of the unique security measures implemented within a few of the blockchains considered here,</p>



<p><em>Polkadot</em>: Polkadot, by way of the Relay Chain, has built a system where different blockchains are incentivized to pool their resources and secure the system as a whole. This makes it more difficult for an attacker to gain control over the consensus process.</p>



<p><em>Binance Smart Chain</em>: A number of “rug pulls” and exploits on BSC has often raised questions around the chain&#8217;s security. BSC&#8217;s security algorithm, known as Proof-Of-Staked-Authority (PoSA), is controlled by 21 node operators. The BSC Security Alliance recently released a <a href="https://www.binance.org/en/blog/beyond-the-big-bang-security-report/" target="_blank" rel="noreferrer noopener">whitepaper around security</a> highlighting concerns around potential vulnerabilities and outlining measures to go beyond security audits, bounty programs, and dApps monitoring.</p>



<h2>Community</h2>



<p>Here&#8217;s a quick look at the communities across two popular crypto social media channels, Twitter and Telegram, across each of these projects,</p>



<figure class="wp-block-image"><img src="https://lh4.googleusercontent.com/j8acxtcFFACgSLV2cM1h-FV-25zctimj2W7rd__-AdBgcWobHJuXjXBdFMy7YKJvnEy7KqpmIJMAb9gnHdPGjmQpW0ZHmtBhGAdefvip-8rD9cTt3HLIrFP-gZ_xnAK4XA" alt="Ethereum Competitors Community"/></figure>



<h2>In conclusion</h2>



<p>Ethereum’s network effects as a technology remain unmatched. Besides, it enjoys a far superior degree of trust, security, and dependability given its lineage. Ethereum’s success going forward is heavily dependent on Layer 2 solutions. With the potential to move the majority of transactions off the chain, these Layer 2 solutions could hold the key to some of the Ethereum network&#8217;s current woes, transaction processing speeds and gas fees. While some of these Layer 2 solutions, example Matic (Polygon), have successfully proven their effectiveness, a large number of the Layer 2 solutions are in development or testing stages. Here&#8217;s where the rest of the blockchains stand an opportunity.&nbsp;</p>



<p>Clearly, the dominance of Ethereum has begun to shrink, as reflects in the TVL. From a dominance of over 97% in TVL (31st Dec 2020), Ethereum today holds roughly 67% of the TVL.&nbsp;</p>



<p>As seen in the previous part of this series, blockchains including Solana and Binance Smart Chain have gone way past Ethereum when it comes to TPS and cost per transaction.&nbsp;</p>



<p>Cardano, with an average of 702 commits per month (12-month period till June 2021) surged past Ethereum with an average of 447 CPM. The segment of DeFi which has been in focus through the year has seen projects including Solana and Avalanche make inroads over the past few months into Ethereum&#8217;s and Binance&#8217;s dominance.</p>



<p>Over the last year, Layer 1 platforms have emerged threatening to dethrone Ethereum. It&#8217;s clear though that competition is cut-throat and newer Layer 1 platforms have to focus on retaining users. The lure of return on capital is extremely strong in the crypto market and blockchains will have to present niche use cases, nimble-footedness to keep up with the emerging trends in the space.</p>


Ethereum and the 7 Challengers – Part 2: Does ETH 2.0 ward them off?


<p>A centralized finance (CeFi) platform, <a href="https://www.stakingrewards.com/savings/nexo/" target="_blank" rel="noreferrer noopener">Nexo</a>, lets users earn interest and avail of loans on their cryptocurrencies. Operating since 2018, Nexo is among the largest lending institutions in the digital finance industry. <a href="https://nexo.io/ref/stakingrewards" target="_blank" rel="noreferrer noopener">Nexo</a> claims to manage assets for over 2 million users across 200 jurisdictions. Total assets under management (AUM) stands at <a href="https://real-time-attest.trustexplorer.io/nexo" target="_blank" rel="noreferrer noopener">over $12.5 billion</a>, an over 200% jump from a year ago. As of Q3 2020, the total AUM for Nexo stood at $4 billion. The platform also has a native token, NEXO, which aims to nurture a loyalty program, bringing with it higher earning rates and low borrowing rates. </p>



<p><em>Read on to know more about Nexo, and see if it fits your criteria of an ideal staking service provider. I tried out the service. So I&#8217;ll share my experience within this post.</em></p>



<figure class="wp-block-image"><img src="https://lh5.googleusercontent.com/Yw7SjxV6EbCwNRsyCZINhxkmjSpYe3ZUMgmkpeCyiBPRnrTz_Sq1iumYIUhqE2WBCw5pJPKS6YSxbdLA658hrjCzuEbpTmnC0D5EYNgY7TRmoavsLmLZSPg_Y3ak84MPIQ" alt=""/><figcaption>Source: Nexo</figcaption></figure>



<p>Firstly, creating an account was fairly straightforward and the advanced verification, which included scanning an official ID and a face scan, went off really smoothly and was completed in a matter of minutes.&nbsp;</p>



<p>Purchasing crypto, let&#8217;s say, Bitcoin for example, with a card, came at a cost of 1.49%. For non-EU countries, the charge for card purchases is 3.49%. To get an idea of the amount of crypto received against FIAT purchases, check out their <a href="https://nexo.io/buy-crypto" target="_blank" rel="noreferrer noopener">calculator here</a>. If you are new to cryptocurrencies and looking to buy crypto for the first time, the cost of purchasing crypto with FIAT, in my own personal experience, would not be too different from the rates here. However, please do your own research here. Also, Nexo supports transferring cryptocurrencies from any other exchanges or wallets you may be holding them on. As always, please ensure taking proper note of the address and chain. The platform supports Visa and MasterCard purchases, and the interface was fairly intuitive.&nbsp;</p>



<h2>Delving into the product offerings at Nexo</h2>



<p>Before delving into the products at Nexo, it helps to understand their business model. Quite like a traditional bank, Nexo offers interest on depositing assets and charges interest on giving out loans. The difference between the interest earned and the interest paid out translates into their profit margin. Obviously, given the nature of assets involved here i.e. cryptocurrencies, which may be considered a highly volatile asset class, there are certain adaptions to the business model. This typically involves the adoption of various risk management strategies, including higher collateral and the use of under-leveraging. Let&#8217;s take an example to delve further. A $100 loan on Nexo, for example, would require collateral equivalent to 0.00323453 Bitcoin i.e. $200, at the time of writing, translating into a 50% loan-to-value (LTV). </p>



<p>The same loan using Polkadot (DOT) as collateral has a 30% LTV. A lower LTV protects clients from the daily fluctuations of crypto prices, thus making it less likely that a client will end up losing their crypto. At the same time, it also ensures Nexo is protected, should a user default on a loan. Beyond this, the platform implements the Nexo Oracle which tracks cryptocurrencies’ prices in real-time, thus managing risks. If, for example, the price of the assets deposited as collateral drops, the Nexo Oracle mitigates the risk of potentially having to sell off a portion of a client’s assets by sending notifications to the borrower. This could either include the borrower topping up the collateral or making a partial repayment.</p>



<h2>Nexo Products and Services</h2>



<p>Nexo&#8217;s products and services can also be availed of in a desktop and app version. The app is available on Google Play and AppStore. It&#8217;s easy to use, mimicking functionalities of the desktop platform and comes with a focus on necessary security measures. This includes 2FA authentication and biometric identification, withdrawal confirmations &amp; log-in Alerts. A quick mention here, the app enjoys a rating of 4.5 on Play Store (15,202 ratings) and 3.6 on App Store (578 ratings). Here&#8217;s a quick look at Nexo&#8217;s products:</p>



<h3><strong>Earn Crypto Interest</strong></h3>



<p>One of the mainstay products of Nexo, <em>Earn Crypto Interest</em> advertises an APR of up to 12% APR, paid out daily. Currently, this is offered on over 20 assets. Bitcoin and Ethereum and most major cryptocurrencies invite an annual interest of up to 5%. This, though, depends on the user&#8217;s progress within the NEXO loyalty program. The chart below spells this out, detailing how moving up loyalty tiers depends on the percentage of NEXO tokens held in your portfolio. There&#8217;s more on the loyalty program later in the post.</p>



<figure class="wp-block-image"><img src="https://lh4.googleusercontent.com/QFwDebXVfiMVi9GfE0DtjNIkLe-Zeptp5LPwVdxBrlcmuhzTaw5gfYMp9hbpn3nLaCkGGuHTN1UGQ0nbQPU_MYtE8is3xvtjnUT3vrM6C1up9gDvg-iam1G4l9CTXg5PTw" alt=""/><figcaption>Source: Nexo</figcaption></figure>



<p>A Base account with, let&#8217;s say, no NEXO tokens within one&#8217;s portfolio maintained on the platform, will earn you an interest of 4%* on most major cryptocurrencies supported. Opting to have your interest credited in NEXO tokens can attract an additional 2% rate. The interest rate on Stablecoins goes up to 8% per annum.</p>



<p><br>* FLEX Interest Rate is the current interest rate compounding daily on the balance. It consists of the Savings Interest Rate of one&#8217;s Loyalty Level and the 2% bonus rate when one opts-in to receive the interest in NEXO Tokens.</p>



<figure class="wp-block-image"><img src="https://lh3.googleusercontent.com/sLk4T46Dt51Xw0Lu7e3Pw8d8CwDSkbxjK5YzWX3xnnMUH1XXezEZHi3zg255Ls0thbFPgaNOar7-mOPkQbTNpQcWqWGyxrzOST_sH1zzSA7mKkemoPnpR-CcOzD1_mqkRw" alt=""/><figcaption>Source: NEXO press kit</figcaption></figure>



<h3><strong>Instant Crypto Credit Lines™</strong></h3>



<p>Nexo offers over 20 collateral options and in excess of 40 fiat currencies and stablecoins to borrow in. The process of borrowing is fairly straightforward with instant approval. It typically involves, topping up your collateral, which makes your available credit immediately known, giving you the option to borrow. </p>



<p>Let&#8217;s take a look at this product with an example. To borrow an amount of $1000, you need to provide collateral equivalent to 0.03 BTC ($2010 as of 20 October 2021). You will pay an interest of 13.9% a year at the Base Loyalty Level (refer to the chart above). Depending on the percentage of NEXO tokens staked can lower the interest rate to 6.9% per year.&nbsp;</p>



<h3><strong>Nexo Card</strong></h3>



<p>Finally, completing the NEXO ecosystem is the NEXO Card. Offering 2% cashback on every purchase, the card lets you choose to receive rewards in NEXO Tokens or BTC.</p>



<h2>The team at the helm</h2>



<p>The team is led by <a href="https://www.linkedin.com/in/antoni-trenchev" target="_blank" rel="noreferrer noopener">Antoni Trenchev</a>, co-Founder &amp; Managing Partner. Prior to NEXO, Antoni managed his own hedge fund and was also the Chief Innovation Officer (CIO) of the largest fashion retailer in Bulgaria, MDL Ltd. Interestingly enough, earlier he served as a Member of Parliament in Bulgaria, campaigning for legislation to enable blockchain solutions for government services, including e-voting. Another co-founder of NEXO is <a href="https://www.linkedin.com/in/kalinmetodiev" target="_blank" rel="noreferrer noopener">Kalin Metodiev, CFA</a>. Kalin has served as the Chairman of the Managing Board of the CFA Society Bulgaria since 2005. He carries extensive experience in the field of Corporate Finance and Investment Banking.</p>



<h3>Security and Insurance</h3>



<p>Obviously, as a user, security takes precedence in selecting a provider when it comes to crypto lending and borrowing. Nexo&#8217;s taken some major steps in building trust within this area. By partnering BitGo and Ledger Vault, Nexo has availed of coverage of $375M in insurance protections for digital assets held on the platform, protecting it against security breaches. So far, in its operating history, Nexo has never faced a security breach.</p>



<h3>Compliance &amp; Risks</h3>



<p>Besides this, Nexo has initiated a number of partnerships focused on compliance with regional regulations and global KYC and AML standards. Recently, Nexo engaged Armanino LLP, an accounting firm in the US, to provide attestations over assets and liabilities. A real-time Proof of Reserves assessment is available <a href="https://real-time-attest.trustexplorer.io/nexo" target="_blank" rel="noreferrer noopener">here</a>. This is indeed a major step towards transparency, especially given a platform like Nexo involves a high degree of centralization.</p>



<p><a href="https://nexo.io/licenses-and-registrations" target="_blank" rel="noreferrer noopener">Here&#8217;s a full list</a> of licenses and registrations Nexo has across jurisdictions worldwide. In fact, just recently, Nexo was in the news after being named by New York Attorney General James among two crypto lending companies to cease operations, citing failure to register the business in New York. On its part, <a href="https://cointelegraph.com/news/crypto-lender-nexo-confirms-nyag-order-calls-it-a-mix-up" target="_blank" rel="noreferrer noopener">Nexo said it is not offering its Earn Product and Exchange in New York</a>. The matter is ongoing.</p>



<h3>Community &amp; Support</h3>



<p>Clearly, Nexo has developed a strong community, which reflects across its social channels. Regular updates, as is the case with any project, always helps, and the team seems to be on top of this. A look at the <a href="https://twitter.com/NexoFinance" target="_blank" rel="noreferrer noopener">Twitter account</a> reflects this. Here&#8217;s a look at the followers across its social channels, compared to some other prominent providers:</p>



<figure class="wp-block-image"><img src="https://lh6.googleusercontent.com/nELIp7dhO_48nNi7OiJ6dQjmohO_X5REaNZwgW8ZXLAKNh5VOXyUxHlZqqnyxdCvMvfphn7l8UuE-a9iOGxsIBPzzGcO3Mx8Hvs-94sIyHVVMzOR_SKs1ipxvSMUJspQOA" alt=""/></figure>



<p>The community seems engaged and all of the social channels seem updated and well covered. There&#8217;s also an effort in terms of educating the community with the regular AMA&#8217;s and knowledge-based Brainer sessions on YouTube.<br><br>One thing that stands out for Nexo is that it enjoys a rating of 4.6 on Trustpilot with nearly 6500 reviews. That is significantly higher than BlockFi and Celsius Network.</p>



<h2>Competition &amp; Comparison</h2>



<p>As outlined earlier, Nexo&#8217;s total AUM stands at over $12.5 billion, making it among the top players within this space. To put this in perspective, <a href="https://www.stakingrewards.com/journal/blockfi-the-better-savings-account/" target="_blank" rel="noreferrer noopener">BlockFi</a> has over $15 billion AUM, while <a href="https://www.stakingrewards.com/journal/lending-and-borrowing-with-celsius-network/" target="_blank" rel="noreferrer noopener">Celsius Network</a> has over $26 billion in AUM. </p>



<p>How does Nexo compare with Celsius Network or BlockFi on rates offered? Let&#8217;s assume $1000 worth of Bitcoin. Taking a base case scenario, Nexo offers a 4% interest rate on BTC deposits. BlockFi has a tiered structure, offering 4.5% on Bitcoin deposits of similar value. Celsius Network, at the time of writing, is offering 6.20% on Bitcoin deposits. Benefits vary depending on the loyalty program tier, among other criteria.&nbsp;</p>



<p>Nexo does have a strong loyalty program which comes with a number of benefits depending on the loyalty tier, which encourages trade in the native token NEXO. The chart below provides an overview of the loyalty program:</p>



<figure class="wp-block-image"><img src="https://lh4.googleusercontent.com/Y8SWA1b1ZRe8in8BuiV6PaX3FO3y3ZKI7yRkgE7KEdOP7NhHoYirLI4we49lF0qHbGklIdnQcPsV5ZrYjaCnoLCvchnUvLqN4crcVqUxheF3_1mFe67LAAK_URuITKGpJw" alt=""/><figcaption>Source: Nexo</figcaption></figure>



<p>On the fees, once the free withdrawal limit is reached, users are automatically charged a fee incurred by the network. The fee is not fixed and depends on the current condition of the respective blockchain.&nbsp;</p>



<h2>The NEXO token</h2>



<p>Launched in 2018, the <a href="https://www.stakingrewards.com/earn/nexo/" target="_blank" rel="noreferrer noopener">NEXO token</a> is the basis of the platform&#8217;s loyalty program. Depending on the amount of NEXO tokens held as a percentage of one&#8217;s portfolio, it can invite higher yields, better rates on borrowing, a greater number of free withdrawals and so on. Currently, there are 560 million tokens in circulation from a maximum supply of 1 billion. At the time of writing, the token is valued at $2.69, with a market capitalization of $1.52 billion.&nbsp;</p>



<h2>Summary</h2>



<p>As highlighted in one of our <a href="https://www.stakingrewards.com/journal/staking-how-to-earn-yield-safely-with-crypto/" target="_blank" rel="noreferrer noopener">recent posts</a>, centralized finance apps, like NEXO, have been seeing growing popularity, as reflected in their AUM growth. Ease of use, limited tech knowledge to get going, are some reasons these platforms find favour when it comes to earning a yield on crypto assets.&nbsp;</p>



<p>Here, I&#8217;ve summarised a few pros and cons of the platform as I see them,</p>



<figure class="wp-block-image"><img src="https://lh3.googleusercontent.com/ERCalPymQGrPVDK-PeB5GHzdZxfrXENZ_DDkQ3-2u9ff1_s9F6KzQBjrqJVa0MU9xyZJatICEH4zkPyosYNx_-U9i-HhYi6mhh2mbiU7pCnjfIDk9VKv5s2QQ5wuzm-Yhg" alt=""/></figure>



<p>On NEXO specifically, it is among the frontrunners in its area of operations. With a lineage of over 3 years, backed by an experienced and well-respected team, a focus on safety and security, NEXO seems to tick most of the crucial checkboxes a crypto lending and borrowing service provider must have in place. What particularly stood out was a seamless and intuitive platform, which makes the usage very easy. The platform seems to enjoy a strong level of stickiness with the community which reflects in the ratings it enjoys. This is reciprocated by the team with regular updates and interactions, keeping the community informed.&nbsp;</p>



<p>However, as is the case with other providers, there is a high degree of centralisation at <a href="https://nexo.io/ref/stakingrewards" target="_blank" rel="noreferrer noopener">Nexo</a> too with the involvement of the company. Accordingly, risks persist. So it is essential you are aware of that. </p>


Nexo: Is this the one to &#8216;Unlock the Power of Your Crypto&#8217;?


<h2>A deep dive into what makes Polkadot unique – TL;DR</h2>



<p><a href="https://www.stakingrewards.com/earn/polkadot/" target="_blank" rel="noreferrer noopener">Polkadot</a> is a network of blockchains that can seamlessly interact with one another, process data in parallel, and is secured under the umbrella of Polkadot’s Relay Chain. The Relay Chain is a blockchain singularly focused on providing security to the network. The blockchains making up this network are called parachains and can be built by anyone for any purpose. To become a part of the Polkadot ecosystem, these parachains must bid and win auctions for the ability to rent space on the network and run their services.</p>



<h2>Introduction</h2>



<p>If the crypto world becomes multi-chain, there’s a good chance it will be built on <a href="https://www.stakingrewards.com/earn/polkadot/" target="_blank" rel="noreferrer noopener">Polkadot</a>. Gavin Wood, a co-founder of <a href="https://ethereum.org/en/" target="_blank" rel="noreferrer noopener">Ethereum</a> and <a href="https://www.parity.io/" target="_blank" rel="noreferrer noopener">Parity Technologies</a> (responsible for launching Polkadot), understood the limits of Ethereum and the blockchain data structure’s abilities to safely and efficiently run the world’s data at scale.</p>



<p>To pursue such a global undertaking, Wood proposed Polkadot as a “scalable, heterogeneous multi-chain” solution in the protocol’s <a href="https://github.com/polkadot-io/polkadot-white-paper/blob/master/PolkaDotPaper.pdf" target="_blank" rel="noreferrer noopener">first whitepaper</a>. Keyword: “multi-chain.” Admittedly, from the whitepaper, “Polkadot itself is designed to provide no inherent application functionality at all.” (<a href="https://github.com/polkadot-io/polkadot-white-paper/blob/master/PolkaDotPaper.pdf" target="_blank" rel="noreferrer noopener">Polkadot Whitepaper</a>, pg. 3) Rather, the bedrock <em>Relay Chain</em> is responsible for securing the network of blockchains within its ecosystem. These blockchains are referred to as <em>parachains</em>.</p>



<p>The beauty of parachains on Polkadot is their pooled security from being hosted on the network and their inter-chain interactability, known as interoperability, that allows them to seamlessly transfer data among each other. Instead of one blockchain supporting every type of smart contract — like how Solana and Ethereum operate — Parity has made it easier for teams to focus on creating domain-specific blockchains that handle their own throughput and can function with other chains on Polkadot without friction.</p>



<figure class="wp-block-image"><img src="https://lh4.googleusercontent.com/lXBWCv0kl-lrPdJTGK00rR7DfsvmBPoWxbixtwaDh6Zvd3_VcttSEjeZA6IcDmUm3KrBeeT4izEHHPiEw6Qzq8T7sZMrh3sf6f0Rydp7FfIMFV5x9FlmPErun8_uMt7R9IohV-72pCY" alt=""/><figcaption>Polkadot parachain architecture. Credit: Polkadot <a href="https://polkadot.network/technology/" target="_blank" rel="noreferrer noopener">website</a>.</figcaption></figure>



<h2>Parachain Architecture</h2>



<h3>Relay Chain</h3>



<p>The Relay Chain is the umbrella of security that guarantees safe operations for parachains. Adhering to the lack of application functionality described in the whitepaper, the Relay Chain cannot even support smart contracts. It simply exists to manage the ecosystem as a whole and can only support transactions relating to Polkadot governance, parachain slot auctions, and nominated Proof-of-Stake (NPoS) participation.&nbsp;</p>



<p>The validators that help secure the network validate for the Relay Chain and stake the native DOT token on the Relay Chain. Pooling parachain security keeps the history/state of the Polkadot ledger shared among all connected parachains. So if the Relay Chain reverts (changes its state), all of the parachains would revert as well. This mechanism takes away the incentive to try to corrupt an individual parachain’s state and puts trust on only the Polkadot Relay Chain validator set.</p>



<h3>Parachain slots</h3>



<p>For a parachain to operate under the security umbrella of Polkadot’s Relay Chain, it must rent out space in the network. This “rented space” is most commonly referred to as a parachain slot, and Polkadot only <a href="https://polkadot.network/launch-parachains/" target="_blank" rel="noreferrer noopener">plans</a> to have 100 of them due to theoretical computing constraints. The parachain slot is a subscription model for individual chains that want constant and long-standing connectivity to the network. This subscription model requires the specific parachain to reserve DOT for the duration of its slot lease, <a href="https://wiki.polkadot.network/docs/learn-auction#polkadot-implementation" target="_blank" rel="noreferrer noopener">capped</a> at two years and divided into three-month periods.</p>



<h3>Parathread slots</h3>



<p>Parathreads are a part of a group of chains that share slots. The subscription model for parathread slots is often used by early-stage chains or ones that do not need a constant connection to Polkadot. This model allows early-stage chains to focus on their product instead of hustling to win an auction. With a pay-as-you-go model in place for parathreads, payments are made on a per-block basis with an auction for each block. Parathreads can become parachains, and vice-versa.</p>



<h3>Bridges and the XCM format</h3>



<p>Bridges connect parachains and parathreads to external networks. Data on other networks is recorded in various formats and is processed differently than how Polkadot processes data moving through its network. These incongruences lead to a lack of compatibility. A couple of <a href="https://wiki.polkadot.network/docs/learn-bridges#examples" target="_blank" rel="noreferrer noopener">examples</a> exist of bridges being built between Polkadot &amp; Ethereum and Polkadot &amp; Bitcoin; however, use is not widespread and bridges have a degree of clunkiness to their structures.</p>



<p>Bridges between parachains are much smoother than between independent networks. Polkadot parachains support a <a href="https://wiki.polkadot.network/docs/learn-crosschain#xcmp-cross-chain-message-passing" target="_blank" rel="noreferrer noopener">cross-consensus messaging format</a> (XCM), which allows them to transfer any type of data between one another. The XCM format complements the Relay Chain’s validation logic that facilitates the trustless and interoperable interactions between parachains.</p>



<figure class="wp-block-image"><img src="https://lh6.googleusercontent.com/-nWLn4YcWavMu4pH-qNK71gTHktnVFDzqKqpj0zCznIxDf8tYorLO4OPAIigIJMnUFjNu-jqyM3hobtbCrTSfHIByNNUGsLWWOcvQlwi9yIvw0AbH9WkiWMockY48lmt-eN04XuqOOw" alt=""/></figure>



<h2>Parachain Types</h2>



<h3>Common good parachains</h3>



<p>Parachains that function to benefit the entire ecosystem are referred to as common good parachains. Through on-chain <a href="https://polkadot.network/blog/common-good-parachains-an-introduction-to-governance-allocated-parachain-slots/" target="_blank" rel="noreferrer noopener">governance</a>, a certain subset of slots is reserved for common good parachains — that would otherwise be underfunded due to the free-rider problem — to benefit the entire network. These chains often get categorized as system-level chains or public utility chains.</p>



<p>A <a href="https://wiki.polkadot.network/docs/learn-common-goods#system-level-chains" target="_blank" rel="noreferrer noopener">system-level</a> parachain moves functionality from the Relay Chain to a parachain. An example of a system-level responsibility is governance. By moving the governance process off of the Relay Chain and onto a parachain, this could free up traffic to allow the Relay Chain to more efficiently process parachain activity.</p>



<p><a href="https://wiki.polkadot.network/docs/learn-common-goods#public-utility-chains" target="_blank" rel="noreferrer noopener">Public utility</a> parachains attempt to implement new functionality that would benefit the network. As a common good chain that adds functionality beyond the Relay Chain, it is subject to using only the native Relay Chain currency DOT. Examples of public utility chains could include bridges or smart contract platforms. Common good parachain leases do not expire and are only removable via governance voting.</p>



<h3>Slot-auctioned parachains</h3>



<p>Parachains that are not deemed as “common good” chains participate in a ​​permissionless <a href="https://wiki.polkadot.network/docs/learn-auction#mechanics-of-a-candle-auction" target="_blank" rel="noreferrer noopener">auction</a> to win an execution slot. Project teams for these parachains can bid with their own DOT tokens or hold decentralized crowdloan campaigns to solicit DOT from their communities. The <a href="https://parachains.info/auctions/polkadot" target="_blank" rel="noreferrer noopener">winners</a> of the first three parachain auctions were Acala, Moonbeam, and Astar, raising $574 million, $631 million, and $182 million, respectively. Only holders with at least five DOT can <a href="https://wiki.polkadot.network/docs/getting-started#what-can-i-do-with-my-dot" target="_blank" rel="noreferrer noopener">participate</a> in crowdloan campaigns. If you’re interested in learning more about parachain slot auctions, read this comprehensive overview <a href="https://www.stakingrewards.com/journal/a-deep-dive-into-polkadot-kusama-parachain-slot-auctions/" target="_blank" rel="noreferrer noopener">here</a>.</p>



<figure class="wp-block-image"><img src="https://lh3.googleusercontent.com/5QYC-8sxu_XW7QG0GvpZrHLvDLP9iTELnhn4REPxd0FpTgjaK7Xw6e6jyD8QHbhquGFwa1a8XdShV1RNWfVHOpqvGT2lTUz0JhDqtSnCFCYeXo3y9JJZ7rmIJ9IcrL_sXW9DWUWvpL8" alt=""/><figcaption>Graphic of Polkadot network architecture. Credit: Polkadot <a href="https://polkadot.network/technology/">website</a>.</figcaption></figure>



<h2>Parachain and Network Security</h2>



<p>A few roles were developed and incentivized in certain ways to ensure the security of the Polkadot network. These roles include <em>Collators</em>, <em>Validators</em>, <em>Nominators</em>, and <em>Fishermen</em>. And the key mechanism ensuring good behavior for consensus on the Polkadot network is <a href="https://www.stakingrewards.com/earn/polkadot/" target="_blank" rel="noreferrer noopener">staking</a>, like most platforms.</p>



<h3>Collators</h3>



<p><a href="https://wiki.polkadot.network/docs/learn-collator" target="_blank" rel="noreferrer noopener">Collators</a> are like miners for the individual parachains. They maintain the history of their parachain by assisting in creating new blocks for their parachain. Technically, they take block headers (hash output) and new transactions and generate a state transition proof that cryptographically describes the history in that particular block. Each block also contains a hash output describing the history in the previous block, which is how collators maintain the history of their specific parachain.</p>



<h3>Validators</h3>



<p>Validators, nominators, and fishermen all secure the Relay Chain and must <a href="https://wiki.polkadot.network/docs/learn-staking" target="_blank" rel="noreferrer noopener">stake</a> DOT tokens to perform their respective roles for the network. After putting their tokens at stake, their next actions determine whether they receive a reward or get their stake slashed by the protocol. If they do their job correctly and behave well, they will be rewarded with more DOT. If they behave badly and do not do their job, the amount of DOT they staked gets slashed, causing them to lose the staked DOT.</p>



<figure class="wp-block-image"><img src="https://lh6.googleusercontent.com/MzJ_pFXC-ro6Q_CDEK-QXIUc5MlIUBR1bRMaqQdIOWT-vmImmF8SYoN8aSnrjUsaszauXg58M0E-2klfgc26-HwjUW-kb6CDDVwh4EuX7zx8c4lHyzD4dVHEbL6STiiQ9DFHNaAp6N4" alt=""/><figcaption>Consensus roles on the Polkadot network. Credit: Polkadot <a href="https://polkadot.network/technology/" target="_blank" rel="noreferrer noopener">website</a>.</figcaption></figure>



<p><a href="https://wiki.polkadot.network/docs/learn-validator" target="_blank" rel="noreferrer noopener">Validators</a> represent the first layer of security for consensus on Polkadot. They are tasked with validating the proofs that collators send to them. These collator proofs are the hash output that collators produce, containing chain history. Validators do not know who other validators are, so they cannot collude to misrepresent a parachain’s history. Because they put DOT at stake, if they are found out to be acting in bad faith, that DOT will be slashed, creating a loss for the validator.</p>



<h3>Nominators</h3>



<p><a href="https://wiki.polkadot.network/docs/learn-nominator" target="_blank" rel="noreferrer noopener">Nominators</a> are the second security layer on Polkadot. They essentially have the same structure as validators, validating the validators’ proofs of the collators’ proofs. Hence, nominators validate validated proofs. A bit redundant, but it ensures safety as they determine the trustworthiness of validators. This determining of trustworthiness is how nominators choose the validators they believe should be securing the network. Because nominators also don’t know who other nominators are and stake an amount of DOT to ensure good behavior, they are incentivized to perform their job honestly or else be at risk of getting their DOT slashed.</p>



<h3>Fishermen</h3>



<p>The last role, the <a href="https://wiki.polkadot.network/docs/learn-availability#fishermen-deprecated" target="_blank" rel="noreferrer noopener">fisherman</a>, is that of a bounty hunter. A fisherman observes the validators to try to find and report bad behavior. Fishermen put a smaller amount of DOT at stake, which gets slashed when they report bad behavior incorrectly. This small amount of staked DOT subject to slashing prevents fishermen from spamming the network of reports. When they find bad behavior, however, they are rewarded with a big, one-time payout. The roles of fishermen, nominators, validators, and collators harmonize to form the backbone of parachain and network security.</p>



<figure class="wp-block-image"><img src="https://lh4.googleusercontent.com/v3euiYRxTo1J0GnHRxBm1rDM7HuV-mnq3mvFXR7F2zX8-c2uQxgeYCOgxjl065nlAjN5JoK_hlZfjk5y7V78MLTUnKE7RGTGGvdGrt3n47z0z2IObFaufgklX6e_Sigh6djoZAhdgAw" alt=""/><figcaption>Features of building with Substrate. Credit: Substrate <a href="https://substrate.io/">website</a>.</figcaption></figure>



<h2>Technical Aspects</h2>



<h3>Substrate</h3>



<p>The <a href="https://gavwood.com/" target="_blank" rel="noreferrer noopener">inventor</a> of the Solidity programming language (used to build smart contracts on Ethereum) and founder of Polkadot, Gavin Wood, spearheaded the development of Substrate, a software development kit (SDK) for building blockchains. </p>



<p>Developing the Polkadot Relay Chain, the Parity team <a href="https://substrate.io/vision/substrate-and-polkadot/#the-road-to-substrate" target="_blank" rel="noreferrer noopener">realized</a> that many of the components they were building would be useful for building Polkadot parachains. This realization led to the team collecting these components and forming a blockchain framework that would become Substrate.</p>



<p>The Substrate framework alleviates the <a href="https://substrate.io/vision/substrate-and-polkadot/#greater-possibilities" target="_blank" rel="noreferrer noopener">pains</a> of developing on Ethereum like building a project on top of a smart-contract blockchain with inapplicable design decisions, being restricted to Ethereum’s transaction pool, being subject to clunky network upgrades, and building logic tuned for the EVM.</p>



<p>With Substrate, developers have the <a href="https://substrate.io/technology/interoperable/" target="_blank" rel="noreferrer noopener">freedom</a> to build their own independent chains that connect to Polkadot via bridges or can create a parachain that seamlessly transfers data between other parachains. Building with Substrate allows developers to build their own forkless, purpose-built blockchains with less technical experience than if they started from scratch. The flexibility of using components gives development teams the option to deploy quickly or to custom-build components that others may use in the future.</p>



<h3>WebAssembly (Wasm) &amp; forkless upgrades</h3>



<p>WebAssembly (<a href="https://hackernoon.com/webassembly-the-journey-what-is-wasm-caf9871108aa" target="_blank" rel="noreferrer noopener">Wasm</a>) is a compiler target (code generated by compilers) with a platform-agnostic binary format. For the layman, Wasm allows for the execution of  C, C++, and Rust at very high speeds and will run the same instructions across whatever machine it is operating on. </p>



<p>Wasm helps all nodes in a peer-to-peer network run state transition updates without forcing every peer to utilize the same exact hardware. By using Wasm in Substrate, chains built with the Substrate framework can implement forkless upgrades. With Wasm deployed on-chain, updates are small, isolated, and easy to manage.</p>



<figure class="wp-block-image"><img src="https://lh4.googleusercontent.com/wup5sBkSlMLmlOVem6D8lRUrv1QdKFR4mtGswq2G8yhg6rm_EwsnBXRzdS4sk50bTitGfTwWrOOvkn1QENqj1GPd5YnQcSwibMA7J-0hq94yYBo8gbGEwxdhiT5_rxfvHJEQcUj-W8M" alt=""/></figure>



<h2>Summary</h2>



<p>The point of Polkadot is to reduce the limitations of blockchains by increasing throughput and providing a toolset for reducing the workload needed to launch blockchain projects. The Substrate SDK is a great tool for saving time, technical know-how, and costs. By giving development teams a modular framework to build blockchains that can be secured under one network’s security umbrella, Polkadot conceives of a world where blockchain throughput scales in parallel, while parallel blockchains (parachains) built to serve specific domains can interoperate seamlessly among each other.&nbsp;</p>



<p>Parachains are a beautiful idea implemented well at the technical level. Polkadot has many incentives in place, like slot auctions and slot leases, that ensure parachains on its network are invested in the greater ecosystem and provide value to users. With the Substrate attracting <a href="https://medium.com/electric-capital/electric-capital-developer-report-2021-f37874efea6d" target="_blank" rel="noreferrer noopener">developer</a> talent to Polkadot, it will be interesting to see the utility that future parachains offer while auctioning for slots.</p>



<p>Polkadot’s biggest challenge is simplifying the interaction with its ecosystem through the Polka.JS wallet. It’s nowhere near as simple as any Algorand wallet, Solana’s Phantom wallet, or Cosmos’ Keplr wallet. For a project as big as Polkadot, how mainstream users interact with the ecosystem and parachains on it should be much simpler. From crypto-novice friends, Polkadot’s wallet, compared to the aforementioned ones, is full of complexity. Parachains as a means of parallel processing and serving specific domains will be even more successful if Polkadot builds a simpler interface for the ecosystem’s primary wallet.</p>


Polkadot Parachain Breakdown


<p>Staking Rewards and <a href="https://www.stakingrewards.com/savings/stakin/" target="_blank" rel="noreferrer noopener">Stakin</a> have decided to collaborate to bring Stakin merch to the Staking Rewards&#8217; HEARTS community!</p>



<p>You can now <a href="https://www.stakingrewards.com/account/redeem/" target="_blank" rel="noreferrer noopener">claim your Stakin merch packs</a> in exchange for HEARTS. To ensure accessibility for all, we’re making the following packs available: </p>



<ul><li>The Stakin T-Shirt Pack (available in sizes S to XL) includes a branded t-shirt, stickers, and pens. Price: 350 HEARTS. </li></ul>



<ul><li>The Stakin Summer Pack, includes a summer cap and water bottle to make sure you are ready for summer! Price: 450 HEARTS. </li></ul>



<p>The Stakin T-Shirt Packs have a total quantity of 20 per size available and the Summer Pack is limited to 10! So, don’t miss this opportunity and get your hands on them before anyone can beat you to it. </p>



<p>For more info, check out when we had Stakin Founder Edouard Lavidalle on Staking Mondays here:</p>



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Staking Mondays with Edouard Lavidalle from Stakin" width="500" height="281" src="https://www.youtube.com/embed/24H9aPEr-Sw?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
</div></figure>



<p>Also when our CEO was interviewed by Gisele Schout on their Stakin(g) podcast here:</p>



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="The Stakin(g) Podcast Sits Down With Staking Rewards" width="500" height="281" src="https://www.youtube.com/embed/l2dZVRJwtYg?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
</div></figure>



<h2>About Stakin&nbsp;</h2>



<p><a href="http://www.stakin.com">Stakin</a> is an infrastructure operator for Proof-of-Stake (PoS) public blockchains, offering non-custodial delegation services.</p>


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The Axe Has Fallen: Staking Rewards’ Journey to Providing Quality Over Quantity

How To Stake Your PackagePortal ($PORT)!

The Newsletter

Reviews

The Graph: Is this the ‘Google of Blockchains’?

Liquid vs. Illiquid Staking – What is better?

Ethereum and the 7 Challengers – Part 2: Does ETH 2.0 ward them off?

Nexo: Is this the one to ‘Unlock the Power of Your Crypto’?

Research

The Axe Has Fallen: Staking Rewards’ Journey to Providing Quality Over Quantity

Polkadot Parachain Breakdown

Claim Stakin-branded merch for HEARTS

The NEAR Protocol – A fourth alternative Layer 1 “Ethereum Killer” alongside Solana, Luna and Avalanche?