Magnet: A New Smart Contract Hub to Spur Web3 Mass Adoption
Background
As one of the top 15 public chains by market capitalization, Polkadot has been leading the crypto industry in technology and governance innovations. Polkadot’s relay chain effectively provides high-quality block space services and shared security, guaranteeing the smooth operation of more than 80 parachains in the ecosystem. OpenGov, a disruptive innovation in on-chain governance, ensures that every DOT holder can fairly participate in Polkadot’s governance. XCM V3 (to be upgraded to V4 in the future) provides better asset security, enabling communication and true interoperability between different chains.
Even though the Polkadot ecosystem now covers various areas of infrastructure and applications, from DeFi to DID, NFT, DAO, etc., and developer activities are relatively active, there are still many bottlenecks. For example, long-tailed parachains and Dapps lack user activity, DOT values cannot be captured, and users continue to lose. These problems are common in mainstream public chains, and only one public chain, Ethereum, performs better. L2s on Ethereum have already satisfied a large portion of these long-tail needs, and TVL continues to grow, currently reaching $10.55 billion, with a large number of projects and users flocking to these L2 networks, expanding the scope of Ethereum’s use cases. Arbitrum, for example, has a current TVL of $5.71 billion and a total address count of over 10 million. Ethereum’s L2 network does, to some extent, provide a solid foundation for its long-term stability.
The root of the problem for Polkadot is that the DOT itself, as the core asset within the ecosystem, has relatively limited application scenarios. For DOT holders, it is mainly used to participate in staking and governance, which cannot create network value sustainably and effectively. Parachains and application developers need to choose the corresponding smart contract parachain for deployment and purchase parachain tokens to participate in the corresponding project ecosystem instead of directly using DOT as gas. This is also a kind of value dilution for the Polkadot network itself, so there is an urgent need for a new technology paradigm to emerge in the Polkadot ecosystem.
Magnet — a more resilient, economical, and customizable blockchain architecture
Polkadot founder Gavin Wood announced at the June 2023 Polkadot Decoded conference that Polkadot 2.0 will use a new system for allocating block space. The system will be more flexible than the current leasing model, allowing developers to purchase block space in bulk or on demand as needed. The core concepts driving the evolution of Polkadot 2.0 are centered on the introduction of a resilient core to meet the need for adaptive computing power and expand the scenarios in which Polkadot can be used.
Currently, Polkadot Parachain Auction offers a relatively static parachain design that provides up to two years of stable block space service, ensuring the long-term security of the parachain. However, for lightweight applications, an on-demand usage model better meets their needs. Therefore, Parity has designed an on-demand parachain mechanism for the Polkadot network. In this model, parathreads can subscribe to core services from the relay chain based on actual usage, allowing them to access high-quality block space on demand. This design not only saves resource consumption but also reduces the operating costs of parathreads and accelerates their deployment cycle.
Magnet will be the first project to implement elasticized Coretime on-demand deployment on the Polkadot network, utilizing DOT rather than parachain tokens as gas fee revenue to submit block space demand orders to the relay chain and providing smart contract platform services to DOT holders in a more flexible way. Magnet not only realizes a more reasonable and economical allocation of resources in the Polkadot network and facilitates the deployment of existing smart contract applications within the Polkadot ecosystem, but also meets the smart contract platform needs of specific long-tail users (e.g., blockchain enthusiasts, community developers, students, researchers).
Innovation Advantages of Magnet
Magnet extends DOT usage scenarios by creating a scalable smart contract dock (parathread) in which DOT acts as gas, thus covering the long-tail users of the smart contract market and increasing the use cases of DOT. Magnet’s main innovations are as follows:
● DOT as a Native Token
Unlike other parachains or parathreads, Magnet will use DOT as a native token, allowing developers to quickly and flexibly subscribe to block space or Coretime and access the Polkadot network using the PAYG (Pay As You Go) model. Users do not need to convert DOT into parachain tokens to utilize the various Dapps, lowering the barrier to adoption.
● Sustainable Operation Model
Magnet can be viewed as a similar business model to ETH L2. It collects platform transactions and bundles them together, anchoring the overall state to the relay chain for state confirmation. Magnet generates profit through the difference between the total gas cost of these transactions and the cost of anchoring to the relay chain, which is used for network maintenance, development incentives, system reserves, etc. By being deeply tied to DOT tokens, it is equivalent to Magnet being incorporated into the DOT’s economic value system, gaining growth in tandem with the Polkadot network, and achieving long-term sustainable operations.
● High Compatibility and Development Friendliness
Magnet combines the PAYG model with highly trustworthy rollups, which allow multiple blocks to be pre-generated through the container chain and then ordered at once, enabling fast transaction execution and improving the efficiency of block space utilization. Synchronization will also develop XCM auxiliary tools to achieve cross-chain smart contract invocation. Magnet supports EVM in the initial stage to quickly acquire and accumulate Ethereum ecosystem users. In the future, it will also support WASM to prepare for the future high-performance smart contract market and ensure its long-term stability.
● Excellent User Experience
In terms of asset transfer, Magnet can realize real-time XCM asset transfer without a waiting or challenge period and even realize contract cross-chain between multiple docking stations, which saves cross-chain cost and time for users and reduces transaction risk.
Technical realization of Magnet
Magnet will use Tanssi’s ContainerChain architecture, which is based on Polkadot’s Substrate framework, known for its adaptability and modular design that supports advanced customization. While Substrate is powerful, it can still be relatively complex for the uninitiated. Tanssi’s ContainerChains, on the other hand, has pre-built templates that contain the necessary compatibility components to simplify application chain customization and ensure a fast and efficient deployment process that helps application chains integrate smoothly into the Substrate and Polkadot ecosystems. Whether using the templates directly or customizing them, developers, especially those familiar with the Ethereum Virtual Machine (EVM), can find EVM-compatible options.
Working with the Tanssi team, Magnet uses a simplified Substrate development framework focused on building Coretime interfaces and unique business logic, while Polkadot provides high-quality block space and shared security for Magnet and the Dapps deployed on it. With the dual support of Tanssi and Polkadot, Magnet will be able to achieve stable and secure operations, provide superior blockchain services, and enable Dapps deployed on Magnet to seamlessly access the Polkadot and Tanssi ecosystems.
It is worth mentioning that Magnet’s core team members have been involved in various crypto projects since as early as 2017, including participating in the XMC project (a fork of Monero) of the well-known mining company Bitmain, optimizing Filecoin mining algorithms, developing the NFT platform on Tezos, and so on, and have accumulated a wealth of experience in crypto project development and operation. The members’ rich resumes and resources, as well as their deep understanding of the crypto industry, will provide strong support for Magnet’s official delivery and launch.
High recognition of Magnet’s value
For developers and users, dApps in the Magnet ecosystem can directly use DOT to pay for gas without token conversion, which enables them to participate in on-chain activities more conveniently. For the Polkadot ecosystem, the current smart contract parachain development model is similar; there is a bottleneck in the development of on-chain DAPPs, and at the same time, facing the competition from Ethereum, Polygon, and the emerging public chain, Magnet will quickly realize the technical conception of Coretime in Polkadot 2.0 and effectively expand the use of DOT scenarios. In the future, DOT will meet different needs, from large enterprise users to small teams, smart contract users, and individual users. The emergence of new DOT usage scenarios, coupled with Polkadot’s industry recognition, will attract the attention of new users, help Polkadot expand its user base, and expand DOT beyond the Polkadot ecosystem, giving Polkadot a headstart in the competition of public chains in the future. Because the Polkadot community highly recognizes the value and potential of the Magnet project, the project’s development proposal in Polkadot OpenGov has been approved and passed by the majority of DOT holders.
Outlook
Since the start of the current crypto bear market, most projects have stalled out. In contrast, Polkadot, a representative of mainstream public chains, has continuously experimented with and improved its technology, and it just unveiled its brand-new 2.0 coretime architecture this June. Magnet is one of the projects in Polkadot’s ecosystem that are being actively developed and innovated by the projects and developers, who are still eager and active as always. By constructing a fast-start smart contract platform using DOT as the gas fee and basing it on the PAYG fee model, Magnet brings the flexible coretime architecture of Polkadot into reality. This allows DOT to meet the needs of all different types of Web3 users, enriching DOT usage scenarios and ultimately realizing the value of DOT for further empowerment.
Being a latecomer to the ecosystem, Magnet positions itself as a paradigm shifter, presenting a blockchain innovation paradigm based on the current mature technology architecture rather than as an EVM-compatible chain imitator. We think that application chain-based high-performance dApps will provide users with previously unheard-of Web3 experiences, and Magnet is one of the key infrastructures for achieving high-performance dApps and Web3 mass adoption. As a project backer, DFG is steadfastly committed to collaborating closely with Magnet’s outstanding staff and following the project as it develops.
About DFG
Digital Finance Group (DFG) is a global blockchain and cryptocurrency investment firm founded in 2015 with assets under management of over $1 billion. Through a wide range of sectors within the blockchain ecosystem such as Web3.0, CeFi, DeFi, NFTs, the Polkadot ecosystem.
Investments include Circle, Ledger, Coinlist, FV Bank, Astar, ChainSafe and over 100 more. DFG intends to create value, through analytical research, based on the most impactful and promising global blockchain and Web3.0 projects that will bring a paradigm shift to the world.
DFG Website: https://dfg.group
DFG Twitter: @DFG__Official
DFG LinkedIn: DFG
