The effect of Polimec on the Polkadot ecology is the same as the effect of the ERC20 contract on the Ethereum ecology.
Original Title: “Polimec: The Original Fundraising Mechanism of Polkadot Ecosystem”
Written by: KILT
Translation: Ice Chain Technology
The Polimec blockchain (like Polkadot, Kusama, KILT and many other blockchains) is built with Parity’s Substrate framework; other Substrate-based blockchains can use Polimec to issue tokens before their network goes live, and Provide them to the market. In this way, Polimec has the same effect on the Polkadot ecosystem as the ERC20 contract has on the Ethereum ecosystem. Polimec will become a parallel thread on the Polkadot network owned by the community. KILT recently received a grant from the Web3 Foundation to support the project.
The value of Polkadot comes from the powerful and dynamic blockchain ecosystem surrounding it. Some of these blockchain projects require a lot of funding because it takes a long time for them to become mainstream. Normally, such projects sell their tokens through the ERC20 contract on the Ethereum blockchain even before the launch of their mainnet. This provides instant liquidity because investors can buy and resell tokens immediately. The ERC20 mechanism has been very successful in the past few years, although it has several challenges. Through Polimec, we try to fix its main problems and establish a new and Polkadot compatible mechanism for blockchain projects.
The most pressing issue of ERC20-based tokens is the gas price: any transfer of ERC20 tokens will call a smart contract, resulting in gas fees, which can easily reach more than $20. This makes small currency transactions almost impossible.
Polimec does not use smart contracts. It directly saves the balance of all tokens issued by Polimec on the Polimec blockchain. Gas fee is paid with the token itself being transferred. The maintainers of the network only get gas rewards. Polimec has no native token, which makes gas prices very stable and relatively low. Just like in the main network, gas is paid for in tokens that are actually transmitted.
Another well-known problem with ERC20 tokens is that there are no real promising projects behind most of the issued currencies. Anyone can issue an ERC20 token within a few hours without any review process. Polimec has established a community of token issuers. Since the reward is limited to gas fees, it is necessary to find a new incentive mechanism for maintainers to run the network: only issuers of Polimec tokens can become Polimec maintainers. In this way, they have the strongest motivation to maintain the network: to keep their tokens alive on Polimec.
Gas income is divided equally among the maintainers. A new maintainer who wants to enter the Polimec ecosystem will dilute the income of all other maintainers. Therefore, for new maintainers to enter the Polimec ecosystem, they need to be approved by the votes of existing maintainers. They may only do this if the project is really promising, because they hope to earn tokens for new projects in the form of gas fees by maintaining the network.
Before, another more technically difficult issue was migrating the balance to the main network. This is a complicated and often problematic process. The balance must be withdrawn from the smart contract and then implemented in the genesis block of the new main network. Then, the user must claim their tokens and create a new wallet.
With Polimec, just like any other Polkadot related blockchain built with Substrate, migrating to the mainnet becomes very easy. Polimec uses the same address and encryption technology as the new mainnet. To migrate, the issuer of the new currency simply stops the transfer, migrates all balances to their mainnet, and runs the mainnet. Holders of the new currency do not need to claim their tokens, establish a new wallet or generate a new address or key pair. They only need to connect to the new mainnet.
Polimec also supports the issuers of new currencies to issue coins for the first time through valuable features. By monitoring the Polkadot relay chain, Polimec can link DOT transfers on Polkadot with currency sales on Polimec, thereby automatically assigning new currency to buyers who have spent dots.
We hope that currency issuers on Polimec can verify the KYC/AML of the initial buyer on the KILT blockchain. Polimec can use the KILT blockchain and Polkadot’s communication mechanism-cross-chain messaging (XCMP) to check the validity of these credentials. We will also provide an off-chain application mechanism that allows the issuer to design complex token issuance and distribution plans.
Exchanges can use Polimec’s simple transaction-based API to execute IEOs, or allow their users to access transferable Polimec-issued currencies. These exchanges can provide the necessary liquidity for future projects.
We firmly believe that Polimec will become an important part of the Polkadot ecosystem. Polimec aims to make a valuable contribution to the community, and we hope to see many publishers using it. We look forward to the launch of the project and future success.
Source link: medium.com
