During the Polkadot Decoded 2022 conference in New York, Derek Yoo, CEO of Moonbeam, introduced connected contracts to the world. He discussed how developers can achieve interoperability on the platform. Then, he provided a look ahead at what Moonbeam has in store in its pipeline.
Before we delve into the speech, let us recap about Moonbeam.
What is Moonbeam?
Moonbeam is a smart contracts platform with interoperability in mind. Built on Polkadot’s relay chain, Moonbeam is also the first Parachain. It aims to onboard Ethereum’s Solidity developers to their blockchain.
But, how do they plan to do this?
Firstly, Moonbeam is compatible with the standard tools used by Solidity developers, such as Metamask and Remix. With this, developers can build new projects easily on Moonbeam. They can also move their Solidity-based projects over without much effort. Moonbeam is EVM compatible.
Secondly, the initial design of Moonbeam focuses on interoperability. With that, developers building projects interoperate with other Polkadot Parachains. There are plans to bridge to Layer 1 chains outside of Polkadot! In other words, Moonbeam empowers developers to reach a larger number of networks. And that is without developers deploying on separate chains. This is possible with “connected contracts”, which we will discuss in the next section.
For an in-depth look into Moonbeam and its token ($GLMR), you can refer to our previous research.
In simple terms, connected contracts are unique cross-chain smart contracts. This is a key feature of Moonbeam’s ecosystem. During his presentation, Derek explained how his project supports connected contracts with 3 features:
- They can access multiple chains through cross-chain messaging (XCM).
- They are built and deployed within an ideal developer-friendly environment.
- They have advanced Substrate functionality. This allows scaling of Parachains through Parathreads.
Yet, what problem do connected contracts hope to solve?
Problems – Centralized and Multi-Instance Deployment
Today, we live in a multi-chain world. Despite that, Derek says developers have trouble reaching a large user base. This is because said users reside within many smart contract platforms. To overcome this, they had to use 1 of 2 solutions:
- Centralized deployment – Developers first deploy on the main blockchain, before using bridges to reach out. This is not favorable for the user experience. Besides, bridges pose a security risk as they’re an easy target for hackers.
- Multi-instance deployment – Developers deploy on multiple blockchains progressively. The downside is that dApps on each chain do not interoperate. Also, they may have different features. This is also not good for the user experience.
Solutions and Use Cases for Connected Contracts
In view of these problems, connected contracts are a novel solution. With XCM, connected contracts can be deployed across chains in one go. Derek provides some examples below of existing projects built on Moonbeam:
- Lido Finance – Lido is a liquid staking protocol built on Moonbeam. It allows for $DOT staking and in return, users will get $stDOT. To accomplish this, connected contracts were deployed on Moonbeam. When users stake their $DOT on Moonbeam, these contracts interact in the backend with Polkadot’s main relay chain. This completes the staking operation without users interacting with the relay chain. Note: To stake your $DOT on Lido, check out our guide here.
- Prime Protocol – Prime is a lending protocol. It uses connected contracts for cross-chain lending. For instance, a user can collateralize their assets on Ethereum to borrow on Avalanche. This is enabled by XCM as the Avalanche address recognizes the collateral on Ethereum.
Projects in the Pipeline
Derek also provided information on upcoming projects building on Moonbeam, and how they’re leveraging connected contracts:
- Osmosis – Connected contracts are in development to achieve 1-click $DOT deposits. With the help of Axelar network, users only need to click once on Osmosis to deposit $DOT. At the back-end, a myriad of transactions will occur across Osmosis, Axelar, Polkadot and Moonbeam. Usually, this requires users to execute 7 to 9 transactions. With XCM and connected contracts, the user only executes 1 transaction.
- Uniswap DAO – XCM will enable governance action outside of Ethereum. Simply put, governance proposals from $UNI voters are first defined on Ethereum. Thereafter, resulting governance action will use XCM for implementation across multiple chains.
Moving on, Derek re-states the key benefits of connected contracts. These are:
- Improving deployments to reach a larger user base.
- Reducing inefficiencies for cross-chain transactions.
- Improving user experience.
He believes that the above would allow Moonbeam to gain user adoption.
He then concludes his speech by sharing his long-term vision:
“To create a decentralized Amazon Web Services (AWS), powered by many blockchains.”
Indeed, Moonbeam has been making the right strides in the interoperability space. We are excited to see what this project has in store in the future. Who knows, Derek might just achieve his vision.