(ERIC) Thanks so much, Jack. One question on differences — there have been other approaches to Web 3.0, can you speak briefly on the differences between, say Polkadot and Cosmos and Ethereum.

The differences between Ethereum 2.0 and Cosmos and Polkadot are related to composability models, scaling, and governance.

(JACK)

Composability Models

Composability of a platform is to what degree existing resources can be used as building blocks and programmed into higher-order applications — increased composability allows more rapid and compounding innovation.

Polkadot is a sharded platform with individual state machines and blockchains. Each shard can dial into what it’s really good at — one can have different shards that are Zcash-like, Filecoin-like or Ethereum-like, and one can compose these features — where applications exist across all these blockchains; plus, you can do this in a trustless way where everyone shares security.

Cosmos does not share security; each zone can’t fully trust the other blockchain and are responsible for their own security. For example, if one blockchain is worth 10 billion and there’s a 10 million blockchain, let’s say a transaction happens on the 10 million blockchain, is registered on both, and the 10 billion one keeps growing. Maybe 2 weeks later, the 10 million blockchain is double spent attacked with the original transaction is reverted. There is no way to know that the 10 million chain is reverted, so what can the 10 billion chain do? It’s going back to invalid data, which could be troublesome. So one may not take as much risk because it’s up to you to determine which chains you trust and the like.

Aside from trust models being different in Cosmos, right now, Cosmos only works with tokens. However, there are other transactions such as smart contract calls, data transfers. Polkadot believes in transaction ability for arbitrary messaging, and all kinds of transfers, of which tokens are only one part.

Scaling

Scaling on Polkadot uses nodes that process transactions on parallel. With Ethereum, there are 1024 shards and 1024 validators per shard. With Cosmos, each blockchain has ~100 validators to be sufficiently decentralized. On the Polkadot model, there is one relay chain where all the validators sit (say 1000 validators) and each relay chain supports 100 parachains, thus a potentially more efficient on number of validators needed per blockchain than other protocols. Furthermore, due to parallel processing, more parachains can be added to allow throughput if needed.

Governance

Polkadot’s governance is based on the belief that economically powerful entities that should governable, autonomous, and upgradeable.

Ethereum governance is off-chain with the rules off-chain. Hudson, the Chief “Cat Herder” calls up exchanges, tells them to upgrade the nodes, and major holders tell them to upgrade, all done in Slack rooms etc. and they decide when to update chain based on core devs in calls, and what people are saying on social media.

Cosmos governance is partly on-chain — one can definitely vote, and with its Proof of Stake, governance becomes different because there are those that are validators. With on-chain governance, people with tokens backing to validate and they vote with tokens to decide on protocol. With Cosmos, you delegate your tokens to someone to validate on your behalf and they get an inflationary reward, you pay them a %, and they automatically get your votes in governance, but you can have an opt-out (I really like “x” for using cosmos tokens for validating and trust them with a secure system, but don’t want them to make governance decision, and opt-out per vote / and choose another spoke.) A recent development is that they are moving towards an on-chain treasury, where a portion of the reward goes to that — and people can vote.

Polkadot believes that blockchains should be governable. Right now, 2 billion USD goes just to securing the BTC blockchain, and that’s powerful. But, what if instead of 100% of these BTC going to miners, what if if a portion went to a treasury where people vote where to goes, and what if people could also vote on how to upgrade the chain or protocol, just like a smart contract autonomously executes, what if the blockchain could autonomously upgrade — this is the approach with Polkadot.

Polkadot is a complex governance system, where 50% doesn’t necessarily do it, there is a technocratic council of proposals (who can veto but not much more power), to put proposals at the front of the queue and people vote. These proposals are autonomously executed if enough people say yes proportionate and altered according to turnout, so there is a turnout bias. Thus, Polkadot is designed for automatic upgrades, at the behest of a distributed group of blockchain owners.

Similarly, Polkadot is interested in cases, such as if there is an on-chain treasury, where a portion of the reward (ex. 50MLN) goes. The blockchain can pay for developers and marketing, and because of interoperability, the chain can also buy ETH or BTC tokens with the ability to custody tokens as well. So Polkadot’s governance is based on economically powerful entities that should governable, autonomous, and upgradeable.

(ERIC) And with Enterprise adoption interest is rising in the blockchain space, what solutions does Polkadot or Web3 provide?

[Parity] Substrate is a customizable framework that allows everyone to set parameters, authorities, and customize it rather quickly with a blockchain.

(JACK) For Enterprise, the most exciting thing is Substrate. Right now, companies might use Hyperledger or are trying to change the parameters of the EVM through the Parity Ethereum settings, hoping it works in an enterprise setting. But it lacks customizability. Substrate is a framework that allows everyone to set parameters, authorities, and customize it rather quickly with a blockchain.

Substrate isn’t part of Polkadot. Polkadot is built with Substrate and projects on it can run natively on Polkadot. If you want, one can use Substrate to build new blockchains right now. It’s a web application framework for building distributed or decentralized systems — there’s no need to create a new blockchain from scratch. Substrate lays the groundwork, so teams can focus on customizability on top. Learn more here

You get the interoperability baked in with Polkadot if you so choose, one can be a parachain and bid on the 100 slots available, but there are also slots reserved for those who share slots (30 slots for 300 blockchains), they pay small fee upfront and then pay as you go for access to relay chain. Substrate is the framework, and Polkadot is a good add-on if you want to talk to public chains (ETH, BTC) on top of private chains.