Scaling Astar Network’s Foothold in Japan

DFG Official
9 min readApr 13, 2024

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Astar Network’s Continuous Development

Astar was one of the pioneer Polkadot parachains that went live with a mission to onboard users and enterprises into Web 3 by the masses. It serves as a multi-chain hub that supports both EVM and WASM smart contracts while driving interoperability between these environments with its Cross Virtual Machine (XVM).

To further strengthen its position in the multichain world, it aims to be the gateway that connects Ethereum and Polkadot ecosystems together with the launch of its own Layer 2 network, Astar zkEVM. By providing greater scalability and security options through its Layer 2, Astar enables enterprises to bring their services onto the blockchain better to build impactful dApps.

Leveraging on Polygon’s zero-knowledge technology expertise, Astar zkEVM was built with Polygon CDK and is the first chain that is connected to Polygon’s Aggregation Layer (AggLayer). Plugging into Polygon’s AggLayer makes complex cross chain transactions possible at fast speeds and combines the benefits of both monolithic and modular blockchains while solving the issues they face in today’s existing solutions in the market.

The First Network Integrated into Polygon AggLayer

Monolithic blockchains face tradeoffs from scalability, security, and decentralization as what is known as the blockchain trilemma. This gave rise to modular blockchains which provided customizability, but led to fragmentation of liquidity. To incorporate the benefits of both solutions, Polygon developed the AggLayer which allows connected chains to maintain sovereignty but unite all liquidity connected to it through one single layer.

The AggLayer is a decentralized aggregation protocol that seeks to provide a unified layer for connected chains. Imagine wanting to swap ETH for MATIC to purchase an NFT on a Polygon CDK chain — users would have to bridge, make a swap and then make a buy transaction on the CDK chain. With AggLayer, users will only have to make a single transaction for this cross-chain interaction which simplifies the process tremendously.

Compared to optimistic layer 2 bridges which will take up to 7 days for bridging back to Ethereum, bridging will reach sub 1 second in AggLayer’s final form. Even for third party bridges which may take shorter periods of time compared to official optimistic bridges, users are still subject to security risks of these solutions.

Generating Zero-Knowledge (zk) proofs from connected chains reduces the trust assumptions users have to make from existing cross-chain solutions, making atomic cross-chain transactions possible.

How the AggLayer Works

When a user initiates a transfer on a source chain A, chain A submits these transactions into a transaction pending pool which is batched by its sequencer. Chain A commits to the state of other chains’ blocks before it can mine a new block, and a light client proof is generated for chain A’s proof of commitment in a pre-confirmed state.

When a full node has generated a zk (validity) proof on chain A, it is sent to the AggLayer which considers chain A to reach a confirmation state. The AggLayer collects proofs from all connected chains to produce an aggregated proof that ensures all connected chain proofs are valid and is sent on Ethereum in a finalized state.

To enable cross-chain transactions, the AggLayer does this through the asynchronous and atomic methods. The asynchronous method allows other chains (e.g. Chain B) to commit to a source chain A’s pre-confirmed state to create a dependency on chain A for the production of its next block.

During the confirmation process of chain A, AggLayer checks for consistency of transaction requests and builds a dependency graph. This allows chains that depend on chain A to roll back on the transaction and not produce the next block if the proof from chain A is inconsistent or does not submit a proof.

Illustration of Asynchronous Method

In the atomic method, a bundle of transactions is submitted to a node in AggLayer which forwards them to the respective supported chains. Each chain includes its new chain state from the change caused by the transaction request and is sent back to the node which checks and bundles the resulting chain states, ensuring they are consistent across all chains. This confirmation bundle is then included in AggLayer and each chain can execute the transactions after submission of validity proofs containing the bundle of intent.

Illustration of Atomic Method

Advantages of Astar Network

As the AggLayer serves as a unified aggregated layer for chains connected to it, it simplifies the process of bridging assets and making cross chain transactions. Astar users can easily tap into liquidity from connected chains in the AggLayer (currently Polygon PoS and Polygon zkEVM) in a consolidated liquidity layer connected to Ethereum.

The usage of zk-proofs not just enhances Astar’s scalability, but derives higher security from ensuring transactions are valid and included in a validity proof compared to optimistic chains. As these transactions are eventually finalized on Ethereum itself, this further ensures Astar’s robust chain security.

Although Astar’s zkEVM is currently a type 3 zkEVM, which is compatible with most Ethereum apps, it aims to transition into a type 2 equivalent zkEVM which will be fully EVM equivalent, making it seamless for apps built on Ethereum to easily move onto Astar with minimal changes. This will make it more enticing for developers to build on Astar, since this reduces vulnerabilities from code changes and easier developer transition.

Other than benefiting from the effects of liquidity, scalability, and security by connecting to Polygon’s AggLayer, this partnership also stands to create more value for ASTR tokens as the sequencer fees from Astar zkEVM collected in ETH will be used to buyback and burn ASTR tokens. ASTR paid to the network aggregator are also burned, which translates to a higher value of ASTR tokens when the usage of Astar zkEVM increases.

Revamped Tokenomics 2.0

As part of Astar’s continuous improvement to create a holistic ecosystem that aims to promote growth while ensuring each participant is sufficiently incentivized, it revamped its tokenomics to enable this vision. Their key changes are:

  1. Reduced inflation rate by changing a fixed inflation into a dynamic inflation rate
  2. Stakers receive higher base rewards but reduced adjustable block reward
  3. Increased dApp rewards
  4. Treasury base rewards are reduced and no longer receive adjustable block rewards
  5. More fee burning mechanisms
Astar Network’s Revised Tokenomics

The previous inflation rate was a fixed rate of 253 ASTR per block, roughly 9.5% per year. This was reduced to a dynamic rate of 124–215 ASTR per block, depending on how much TVL Astar has relative to the ideal TVL of 50%.

Instead of rewarding ASTR tokens to dApps that scaled linearly to their TVL, rewards are separated into 4 tiers with limited slots and varying rewards that only included dApps if they met TVL requirements. Should there be empty slots, the ASTR allocated to these slots will be burnt. When the ideal TVL of 50% is not hit, adjustable block reward rewards are also burnt.

These changes were made to correctly incentivize all participants within the ecosystem sufficiently according to market conditions. For ASTR holders, this also means that value is not unnecessarily lost from the inflation of tokens through underutilized resources. Having a dynamic token inflation model can more likely translate efforts for network growth by the Astar team to token value accrual in the long term. For full details about all tokenomics changes, please visit this link.

AggLayer’s Potential

Despite the AggLayer being still in its infancy, more developments are expected which will achieve sub 1 second cross chain atomic transactions in its end state. Recently, Polygon developed its Type 1 prover which can generate zk proofs for EVM chains, allowing them to migrate over to become a zk Layer 2 chain while being connected to AggLayer without having to reprove the entire chain since its genesis block.

This allows EVM chains to continue using EVM clients, improving scalability while maintaining low costs and preserving full EVM equivalency. With the Plonky3 expected to launch later this year, it aims to improve performance by over 10 times.

With so many developments, it is expected that more Layer 1s will be more willing to migrate over while allowing new zkEVMs to build with the different provers available, reusing existing infrastructure that has perfect compatibility with Ethereum. Canto, a Layer 1 Cosmos blockchain, recently also announced that they will remain a Layer 1 that utilises Polygon’s type 1 prover and plug into the AggLayer.

As more networks connect to the AggLayer, Astar is already stationed in an area that will benefit from the increased connectivity to other chains. Over time, more chains plugged into AggLayer will also mean enhanced reach of liquidity for users on Astar with easier access cross chain.

Astar’s Extensive Partnerships

As the leading Layer 1 in Japan, Astar has formed many partnerships with not just Web3 companies but also many existing large corporations from Web2. This includes firms such as Toyota, Sony, UOB Venture Management, and even Shibuya, one of Japan’s cities.

Sota Watanabe, the founder of Astar, has also worked closely with the Japanese government to work towards the future of Japan’s national strategy in the adoption of Web3. As one of the directors of Japan Blockchain Association that focuses on adoption of blockchain technology for businesses and society, Sota can further grow Astar through capturing network growth from partnerships with continuous technological advancements.

Multiple companies are already building on Astar to reach extensive reach within the Japanese community. Kokyo is a Japanese RWA NFT platform that allows users to participate in exclusive experiences and was launched in collaboration with Japan Airlines and Hakuhodo. Japan’s idol producer Yasushi Akimoto who brought popular idol groups like AKB48, Nogizaka46, and SKE48 to fame, is set to launch a token-based idol economy named YAOKE Entertainment that will be launched in Astar zkEVM as well.

Conclusion

By continuously innovating and adopting new technologies within the blockchain industry, Astar provides its users with added cost benefits and utility, while positioning themselves with more growth opportunities. Zero-knowledge technology is one of the trending topics in the blockchain space because it is believed to be the future of scalability for not just rollups but also for Ethereum, as mentioned by Vitalik himself.

Astar showcases its readiness to be at the forefront of innovation by building Astar zkEVM, accepting new use cases for scalability while tapping into wider growth opportunities through attracting both developers and liquidity into its ecosystem by plugging into Polygon’s AggLayer.

Having already established itself as the leading Japanese blockchain together with both the Japanese government and traditional Japanese corporations’ embrace of Web3, Astar looks poised to reach closer to their vision of bringing Web3 to billions of users.

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 Web 3.0, CeFi, DeFi, NFTs, and the Polkadot ecosystem.

Investments include Circle, Ledger, Coinlist, FV Bank, Astar, ChainSafe, and over 150 more. DFG intends to create value, through analytical research, based on the most impactful and promising global blockchain and Web 3.0 projects that will bring a paradigm shift to the world.

DFG Website: https://dfg.group
DFG Twitter: @DFG__Official
DFG LinkedIn: DFG

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