Polymath, a digital asset issuance platform, “optimised for (hosting) compliant assets operating in regulated markets,” has announced it will be building its Polymesh blockchain on Parity Substrate rather than Ethereum.
Ethereum is the world’s second-largest “public” blockchain (self-settling ledger-like database).
Ethereum was inspired by Bitcoin, but Bitcoin only hosts one kind of token, Bitcoins themselves.
Ethereum, on the other hand, has been used by thousands of discreet projects across the globe to issue thousands of cryptographic tokens (or securities) and circulate them to speculators.
Ethereum has also been designed to host potentially elaborate “smart contracts” that can automatically regulate the flow of tokens.
Since Ethereum’s inception in 2014, however, critics have claimed that the system is badly designed and unlikely to scale to accommodate its creators’ ambitions. Due to high volumes of trading traffic, Ethereum has been clogged, slow and very expensive to use at times.
Polymath spends the majority of its announcement touting the technical virtues of Substrate.
Little is said about what informed the decision to leave Ethereum other than, “Polymesh…is highly optimised for compliant assets operating in regulated markets. As such there were some core requirements for the network driven by our experience in building on Ethereum and hundreds of discussions with stakeholders such as banks, trading houses, broker-dealers, exchanges, KYC service providers, custodians and many more.”
One particularly advantageous technical feature of Substrate, says Polymath, is that it, “ships with a finality gadget called GRANDPA which provides deterministic guarantees around finality, rather than a probabilistic finality common to proof of work networks like Ethereum and Bitcoin. For capital markets, this is absolutely critical with T+0 settlement being one key advantage of using public blockchains, and a necessity to avoid block re-organisations which we’ve seen extend over a day in some major proof of work networks.”
“Another great feature of Substrate is their so-called Forkless Upgrades. Governance and forks in public blockchains is an area of concern to many institutions looking to engage with this type of technology, presenting severe risk in the event of a contentious fork and requiring institutions to build risk teams and associated competencies to deal with this eventuality. Substrate takes a different approach with the key innovation that the state transition function itself (i.e. the blockchain logic) is held under consensus on the network. This means that upgrades can be triggered directly through clear on-chain governance and simplifies the operational process of rolling out upgraded runtime software. Shawn Tabrizi from the Parity team gives a great explanation in more detail here.”
The process of implementing the still “early stage” Substrate system, says Polymath, has been attractively collaborative:
“Whilst this brings in some challenges from an integration and coordination perspective, the silver lining is that we have been able to collaboratively and constructively engage directly with the Parity team and Substrate community to help inform the functionality being delivered through Substrate.”
Polymath promises to report regular updates regarding the implementing of Substrate for, “building a regulated securities purposed, modular and extendable blockchain.”