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Dot Pulse #25 — Parachain Hiccups & The Substrate Infrastructure
Learn about the new XCM update, the Quartz parachain, parachain auctions on Polkadot and Kusama, plus governance watcher! 📣
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With most of the parachains done, it’s about the right time to start talking about something that is just as important: infrastructure!
Yeah we hear you, infrastructure is boring, right? Not on Polkadot! There are a lot of teams building very useful infrastructure for Substrate chains, some of which leverage very unique features that make it far more advanced than anything else on the EVM!
We’ll take a brief tour through some of the most important primitives here. There is a lot of ground to cover so we may not include everything — might pick it up in a Part 2!
Bridges, bridges, bridges
Let’s start with the bread and butter of any cross-chain blockchain: transferring assets to other blockchains.
Polkadot is designed to connect seamlessly within itself, but what about external chains? It’s unlikely that others will implement the native XCM format, so we need to create custom built implementations for each potential chain.
Bridges are such an important aspect of today’s DeFi landscape that it’s quite a shame that most of them are custodial. Recent hacks of a number of bridges showcase that holding a honeypot of hundreds of millions in funds is a very dangerous idea!
Most bridges today rely on a custodial architecture where bridging operations are done through multisig wallets held by validators. The validator set can be variable or fixed, the keys may be held in a secure enclave or not, but the basic architecture remains the same.
Snowfork, the Ethereum trustless bridge
The holy grail of bridges is the light client bridge, where the target blockchain itself verifies that a user committed funds to an address in the origin blockchain. With that information, the destination blockchain can mint or unlock funds for the user without having to trust any third party!
That’s what Snowfork has been building for the past two years. The basic idea is that Snowfork will let you trustlessly transfer ETH and tokens to any Polkadot parachain (likely passing through Snowfork’s hub), or back to Ethereum.
Since it’s all EVM-based, it will likely work on other chains just as well, which is exciting! More advanced versions should allow you to send arbitrary data across chains, including function selectors and calldata. Translation: Polkadot could call Ethereum smart contracts!
But that’s still all work in progress. Snowfork has certainly been delayed on its initial roadmap by quite a bit and it’s not doing much public outreach, although the GitHub is still very much active. There’s also one important drawback of light client bridges — they’re expensive. Since you need to verify proofs on-chain, gas costs become a pretty serious issue!
ChainBridge, Interlay and others
While complex bridges are still being developed, other projects are building their own custodial bridges to ensure something can be used right now.
ChainBridge does this for Ethereum, and it’s been used in production. It’s a kind of “white label” solution built by ChainSafe and used by projects like Centrifuge and Meter to power their Ethereum bridges.
Astar Network is working hard on multiple bridges to make it a parachain bridge hub with other ecosystems. The first implementation will be that with Cosmos, which is useful because with IBC, integrating one chain immediately makes it work with all the others! But Astar aims to connect more and more platforms eventually.
Lastly, we have Interlay which is a bridging project for Bitcoin that launched its own parachain. Like Snowfork, this one is also trustless, but it mostly uses economic incentives for that. Bitcoin doesn’t have smart contracts, so this is about the best you can do! We covered Interlay and Kintsugi in-depth before.
Data and Indexing
As a non-developer it’s often hard to understand exactly why indexing projects like The Graph are necessary! It all stems from the fact that blockchain nodes are really inefficient at retrieving old data directly, and it is a huge waste of time anyway: if it’s immutable, it really should be enough to get it just once and store it in a more accessible format.
That’s what indexing projects do, in a nutshell. It’s very important work for a whole bunch of projects and especially data platforms, such as DeFi Pulse. Instead of trying to query the blockchain and potentially make their own storage systems, data platforms can just run efficient queries through these indexing projects.
SubQuery is one of them, and it works mostly like The Graph: you have a class of indexers elected by stakers of the SQT token, which is also what you use to pay for queries. The indexers extract and organize the blockchain data so that users can query it at a much faster pace than directly from the blockchain. The biggest difference from The Graph is that there are no curators who create feeds, instead it’s done via a system called Purchase Order Contracts
Subsquid is another project developing indexing for Substrate chains. The basic mechanism is the same, but Subsquid introduces some innovations at the data retrieval layer. Instead of having one monolithic indexer class, it instead uses three separate actors called indexers, processors and gateways.
Here, processors execute the data queries, gateways provide endpoints to users, while indexers do the heavy lifting of organizing blockchain data. The key difference is that any small device can be a processor, while indexers need to be large servers.
HydraDX has won the recent slot auction with almost 2.5 million DOT collected. Interlay is now in the pole position, with 2 million DOT raised so far, followed by Equilibrium and Nodle.
Current Polkadot leaderboard by parachains.info.
On Kusama, SORA won the last auction with almost 10,000 KSM raised. KICO and Pichiu are next.
Active Crowdloans (Polkadot)
TL;DR: The platform offers 10% of supply to bring trustless Bitcoin to Polkadot. Plenty of referral bonuses, double dips and early bird encouragement.
TL;DR: This DeFi-focused parachain offers 20% of the supply in a variety of base and early bird and referral bonuses. It seems to be running some promotions with up to 150% bonuses!
TL;DR: This decentralized IoT network offers 23% of its total treasury reserves or 10% of the circulating supply on the Nodle Mainnet. This includes various incentives to early and/or highest contributors!
Karura changed up its farms, removing BNC and KAR/kUSD pools.
Earn KAR by staking on Karura DEX
Yields are around 23% APR for KAR/KSM.
KSM/LKSM farm has 37% APR
KAR/LKSM with 85% APR
kUSD/LKSM with 95% APR
kUSD/RMRK seems to have been removed.
Sushi farms on Moonriver have APRs ranging from 7% to 45% this week, with the exception of MIM / WMOVR pool, offering 91% APR on tiny liquidity.
Solarbeam went lower this week, with up to 120% APR on Pool 2s and Pool 1 APR ranging from 11% to 80%.
RomeDAO is giving a 10% return every 5 days for OHM-style staking. Market cap is stable so far.
Solarflare, the Moonbeam deployment of Solarbeam, is lower this week as well with up to 475% APRs on Pool 2s, Pool1s with up to 87% APR. For stablers, yield is about 20% APR.
StellaSwap, another DEX offering decent yields on Pool2s (600% APR) and a few blue chip Pool 1s with triple digit APR.
Sadly, it’s been a bit of a rough week for the DotSama ecosystem!
Meter Passport, one of the main bridges into the Moonriver ecosystem, got hacked due to an issue with how it handled the Wrapped ETH contract.
It seems that the additional code introduced over ChainBridge’s implementation by Meter introduced a vulnerability that allowed the attacker to mint unlimited BNB and ETH tokens on the Moonriver. These were used to dump on various AMM markets, and they were also added as collateral to Hundred Finance, a lending protocol, and used to borrow way more than should’ve been possible.
A curious case where using external oracles was actually the reason it was vulnerable to this bug!
Unlike last time with the KSM hack on Karura, this is all happening on EVM land, so governance can’t really make the users whole. Meter committed to repaying the LPs who lost their money, though there are no specific plans yet.
There also seem to have been a few hiccups with Moonbeam’s runtime 1200 which introduces EIP-1559 to it! According to some Github issues, it seems that the EVM stopped working well on testnet, but the issue seems to have been fixed quickly.
But technical difficulties happen often, hopefully some great news await us next week!
On February 10, Acala will launch the inaugural liquidity mining program, Acala Kikoff, with 1 million in ACA divided into three rewards pools. The program will be extended over six months to include newer liquidity pairs as they become live on Acala Swap, Acala’s trustless DEX.
Acala has partnered with Capx that will be bringing their products to the Acala EVM+ environment, including Capx Liquid, which will allow projects to issue Wrapped Vesting Tokens (WVTs) to their stakeholders, Capx Exchange and Capx Lend.
Acala has launched a one-directional DOT bridge, a non-custodial solution endorsed by Parity, in order to invite early adopters to bring liquidity to Acala’s DeFi protocols. However, the team warns that users will only be able to exit with their liquidity when the platform is completely enabled and advises caution.
There’s going to be a Curve-like platform on Moonriver/Moonbeam soon. Stable AMM will be launching first to Solarbeam on Moonriver, and then Solarflare on Moonbeam.
Moonriver informs its users that the Meter.io team is working on getting the system running after the February 6 hack.
(Polkadot) Motion 151, to incentivise the community to fight against scams and protect users from falling for them.
(Kusama) Referendum 173, to upgrade Kusama Runtime to v9160.
(Kusama) Motion 435, to upgrade Statemine runtime to v700
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!