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Dot Pulse #21 — Moonbeam Launch & Kintsugi Dive
Learn about the Kintsugi and Interlay parachain, Moonbeam launch, parachain auctions and governance watcher! 📣
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And so we’re rounding out the first two batches of Kusama parachains with Kintsugi, the canary deployment of Interlay. Feels like we started it out just yesterday! For variety’s sake we may start to do deep dives on other topics from now on, although we’re nowhere close to tapping all the 20+ parachains that are live on Kusama!
Kintsugi: The Trustless Bitcoin Parachain
So while we’re here talking about parachains, smart contracts, privacy and whatnot, it’s time to take a nod to the roots of this movement and the grandfather of all cryptocurrencies. If it wasn’t for the rise of Bitcoin, we all wouldn’t be here!
Bitcoin is reliable and sturdy. Some may call it obsolete, but that is really by design. For its aspirations of being global storage of value, Bitcoin must be impervious to attacks, hacks and bugs, hence it takes a very long time to upgrade.
We have Polkadot and Bitcoin, two worlds separated by time and innovation, but with mostly the same spirit. Marrying them together is what Kintsugi is trying to do! Well, technically, they’re doing it with Kusama.
A note on Interlay
It makes more sense to explain Interlay, the Polkadot deployment, as it’s the same fundamental design as Kintsugi. We’ll talk more about their differences later.
Interlay and Kintsugi are decentralized networks, built as parachains on DotSama, which focus on connecting Bitcoin to other ecosystems like Ethereum, Cosmos, and of course Polkadot itself!
Interlay uses the flexibility of the parachains to create the perfect environment for bridging Bitcoin to the smart contract world. The system is fully trustless and community-based, using over-collateralized vaults to back the peg of InterBTC, the name of Interlay’s pegged BTC.
This is a major difference from assets like Wrapped BTC, which are fully custodial and not too different from USDT or USDC but for Bitcoin. WBTC works as a stop-gap solution, but we really need a decentralized alternative for long-term resilience. That’s where InterBTC comes in!
Cracking the pegged Bitcoin nut is tough! Fully trustless bridges without intermediaries are essentially impossible to create, as Bitcoin’s lack of smart contracts means it can’t verify other blockchains. Interlay uses economic incentives to make sure nobody really wants to run away with the Bitcoin instead.
InterBTC works through a system of Vaults on the Bitcoin blockchain. In order to create a vault, users need to deposit and lock some collateral assets on Interlay/Kintsugi (DOT/KSM and others) and activate the interBTC bridge. At this point the user or liquidity provider can lock their Bitcoin and mint interBTC.
Having a collateral that ensures the value of interBTC is critical to guarantee that InterBTC maintains value, even if the original BTC was lost! The collateral would just be liquidated to pay for the withdrawal.
To ensure maximum peg stability the collateral is always significantly more than the value of the BTC, and you can use multiple forms of it. It’s almost like a Maker for BTC, but with the added stability of having actual BTC secured!
An additional and interesting feature is that Vaults can even leverage their positions by borrowing collateral from users, who are going to benefit by earning rewards. This aims to improve capital efficiency, which is probably the only weak point of this type of solution.
But the benefits are obvious. InterBTC can be used for lending, yield farming, for collateral and more, just like any other token. InterBTC is flexible and unlocks Bitcoin liquidity for DeFi in Polkadot and Ethereum, Cosmos and beyond. We’re talking hundreds of billions of dollars of potential DeFi TVL here!
Kintsugi vs. Interlay
So Interlay is cool, but what about Kintsugi? How is it different? There aren’t that many differences, like in most parachains. Besides being called kBTC instead of InterBTC, Kintsugi is designed to be more experimental and wilder in terms of its parameters. You can of course expect most major updates to make their way to Kintsugi first.
Still, they are two different communities with two different governance tokens. Speaking of the token, it is an important part of the Interlay system and KINT or INTR token holders are responsible for making sure the system works!
Its governance is quite similar in principle to MakerDAO’s governance, where the community tunes the parameters to ensure the system is safe and effective for users. Borrowing a few concepts from Polkadot governance, Interlay community members elect a dedicated council for these decisions.
Kintsugi won Kusama’s 11th slot auction by raising 200,000 KSM from over 8,000 contributors, who were rewarded with a distribution of 1 million KINT (10% of KINT total supply).
Despite being one of the later parachains, Kintsugi actually launched its network and KINT is already tradable. At a price of $26, crowdloan contributors made approximately a 50% return so far!
As expected from the past few weeks Composable locked the 2nd slot of the new batch, opening up competition further down the standings!
The biggest change since last week is definitely the rise of HydraDX which is now solidly in the top-6 of parachains that might make it.
On Kusama, auctions have restarted with Integritee currently leading the way.
Active Crowdloans (Polkadot)
TL;DR: Offering 15% of supply to connect Centrifuge Chain to Polkadot. Offers a whole bunch of early bird, referral, and double dip bonuses!
TL;DR: The platform offers 10% of supply to bring trustless Bitcoin to Polkadot. Plenty of referral bonuses, double dips and early bird bonuses too!
TL;DR: The DeFi protocol offers 10% of its supply in the crowdloan, but it works on a first-come first-serve basis! The team doesn’t want to pay too much for the slot, stopping rewards once squarely in the lead.
TL;DR: This DeFi-focused parachain offers 20% of the supply in a variety of base and early bird and referral bonuses. Plus, it gives you an xDOT derivative to make use of your assets!
Earn KAR by staking on Karura DEX
Yields are around 16% APR (or 23% with loyalty bonus) for KAR/KSM.
KSM/LKSM farm has 10% APR (40% with loyalty)
KAR/kUSD offers an APR of 51%, 57% with loyalty.
A couple of new farms popped up:
KAR/LKSM with 30%/160% APR
kUSD/LKSM with 30%/150% APR
Earn KAR + BNC (Bifrost tokens) when staking kUSD/BNC
APR is 120% with loyalty, 35% without.
Sushi farms on Moonriver continue with decent strength, especially for blue chips.
Solarbeam farms remain strong, especially in the Pool2s.
RomeDAO is giving a 10% return every 5 days for OHM-style staking.
As we anticipated last week, Moonbeam has launched!
And in doing so it became the first fully functional parachain on Polkadot. So after almost a week, where are we standing? Well the GLMR token is pretty widely available on centralized exchanges, and prices Moonbeam at over $13 billion FDV already!
And in the short time it’s been live it has already generated 60,000 wallets and 300,000 transactions!
But of course we’re mostly interested in DeFi here! And for DeFi we need bridges and protocols. On the former we’re already covered: Meter Passport rolled out support for Moonbeam, allowing you to transfer ETH, USDT and WBTC back and forth across the two networks. Anyswap also added Moonbeam but only on minor coins so far.
In terms of projects we can get a good idea on them by checking out the tokens that have been launched on Moonbeam so far. Among Moonriver projects we’re seeing Solarbeam deployed as Solarflare, making it the first DEX of the ecosystem.
So the gist is that we’re definitely moving! There are a number of DEXs launching, though other projects still need to come. In terms of integrations we definitely still need a few important pieces, such as more bridges and more explorers, apps and much more. One thing definitely worth noting is that Moonbeam launched waaay faster than Moonriver, owing to all that canary network experience!
We’ll continue monitoring the new networks as they launch. For now, stay tuned and start bridging!
The founders of the Web3 privacy projects, such as Manta, Obscuro, Railgun and Secret Foundation, discuss topics that should be addressed to push privacy on Web 3.0.
HydraDX’s team posted an update about retargeting their crowdloan for the parachain slot #9, where they are at the leading position, and providing information about rewards.
Composable Finance announces the upcoming integration with Moonbeam, which will allow $GLMR users to easily transfer tokens between Moonbeam and Ethereum, Moonriver, Fantom, Avalanche, Polygon, and more.
New integration will allow users to transfer assets to/from Moonbeam directly from other L2s and sidechain systems.
(Polkadot) Motion 139 a proposal for a recurring payment (quarterly) to cover maintenance, operations and human resource costs for Polkassembly.
(Kusama) Referendum 165, to approve Bifrost's HRMP channel request with Statemine.
(Kusama) Referendum 164, to open a HRMP channel between Statemine & Moonriver.
All info in this newsletter is purely educational and should only be used to inform your own research. We're not offering investment advice, endorsement of any project or approach, or promise of any outcome. This is prepared using public information and couldn't possibly account for anyone's specific goals or financial situation. Be careful and keep up the honest work!