Moonbeam is a Polkadot-based smart contract-enabled parachain offering seamless Ethereum compatibility and interoperability. As a decentralized protocol, Moonbeam operates through the native Glimmer token (GLMR). As a multi-utility token, GLMR token holders can secure or contribute to the network. Also, as Moonbeam is yet to launch its mainnet services, developers can use its sister network, Moonriver. Operating live on Kusama, developers can experience the services through Moonriver, soon to be available on the Moonbeam mainnet. Moonriver smart contracts and the native Moonriver token (MOVR) tokenomic structure operate very similarly to Moonbeam. But, what is Moonbeam doing to offer such competitive Ethereum interoperability services?
In this article, we are going to dive deep into the Moonbeam ecosystem, discovering the fundamentals and use cases for the project. Also, we will discuss the various roles for the Glimmer token (GLMR) and the tokenomic make-up. Moreover, we will look at Moonbeam’s sister network, Moonriver, and its native MOVR token.
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What is Moonbeam?
Moonbeam is a parachain on Polkadot offering Ethereum-compatible smart contract capabilities. Moreover, Moonbeam is host to ChainBridge by ChainSafe, offering bi-directional bridge services between the Ethereum blockchain and the Polkadot ecosystem. Furthermore, as a fully decentralized smart contract-enabled platform, Moonbeam uses its native Glimmer token (GLMR) to operate the network.
As Moonbeam is still in the testnet phase, developers can use Moonbeam’s sister network, Moonriver, which we will discuss further in the article. Both Moonbeam and Moonriver receive operational, development, and marketing support and funding from the Moonbeam Foundation. There is little else published about the background of the Moonbeam Foundation or its members.
As a developer-oriented blockchain, Moonbeam offers a Web3-compatible application programming interface (API) and full Ethereum Virtual Machine (EVM) implementation. Further, Moonbeam provides bridges to connect with existing Ethereum applications. This means Ethereum developers can gain access to the Polkadot ecosystem with minimal code configurations. Moreover, Moonbeam offers developers a seamless experience with minimal cost.
Moonbeam plans to partner with other parachain-based bridges once this functionality launches on Polkadot. This will allow Moonbeam to offer developers multiple choices for integrating decentralized applications (dApps) and users to transfer assets to and from the Ethereum mainnet.
One of the leading blockchain infrastructures in terms of market capitalization size is the Polkadot ecosystem. Rather than operating a single blockchain, Polkadot is often known as “the blockchain of blockchains”. The Polkadot ecosystem comprises several aspects, including the Relay Chain, parachains, parathreads, and bridges.
The Relay Chain is the heart of Polkadot, facilitating cross-chain interoperability for communication and transfer of assets. Parachains are sovereign blockchains operating with their own tokenomic and governance structure, secured by the Relay Chain. Parathreads are smaller size parachains that don’t require 24/7 access to the Relay Chain. Bridges are the protocols that connect different parachains to external blockchains, such as Bitcoin or Ethereum.
As Moonbeam is operating as an individual parachain, the project uses its own consensus mechanism. Moreover, this also means that Moonbeam receives shared security from the Polkadot Relay Chain and benefits from interoperability with other parachains in the network. Moonbeam network participants known as “collator nodes” will produce blocks. Validators on the Polkadot Relay Chain are then responsible for verifying and finalizing transactions on the network. Moonbeam’s consensus is entirely separate from Ethereum’s Proof-of-Work (PoW) and Proof-of-Stake (PoS) consensus models. Moonbeam bridges create the connection between Moonbeam and Ethereum, with each end of the bridge connecting to the different consensus models.
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The Glimmer token (GLMR) underpins the entire Moonbeam ecosystem as a highly functional multi-utility token. Shouldering the main responsibilities for the up-keep and smooth-running of the Moonbeam network, the GLMR token holds many use cases. Some of these include incentives for honest participation and decentralization of the platform. Also, the GLMR token supports gas metering with smart contract executions. This is in addition to being the unit of exchange when paying for gas fees on the network. Furthermore, holding the GLMR token entitles holders with governance rights and access to on-chain voting mechanisms.
Operating on the Polkadot network, the Glimmer token (GLMR) aims for an annual inflation rate of 5% with an uncapped maximum token supply. The 5% inflation rate pays for a parachain slot on Polkadot on an ongoing basis and rewards network participants. Of the 5% inflation rate, 1.5% goes towards funding the parachain bond reserve. Additionally, 1% is to incentivize collator nodes, while the remaining 2.5% goes back to GLMR token stakers who help power the block production process.
On the other hand, Moonbean also incorporates deflationary aspects of the Glimmer token (GLMR). When users or developers execute smart contracts to fulfill a transaction, they must pay a fee to cover the computational gas the nodes need to complete the request, alongside a small platform fee. This fee is then split between two protocols. Firstly, 80% of the GLMR tokens received as fees are burned. This acts as a deflationary force, increasing scarcity as the GLMR token has no capped supply. If the number of GLMR tokens burned from transactions and fees on Moonbeam exceed the 5% annual inflation rate, GLMR will become a deflationary asset.
The remaining 20% of GLMR tokens go to the on-chain Treasury. On-chain governance proposals will confirm how these funds are spent. This includes covering the costs of initiatives and projects bringing adoption and boosting engagement with the Moonbeam network.
Moonriver Smart Contracts
Live since June 2021, Moonriver is the sister network to Moonbeam, offering a smart contract-enabled parachain on Kusama. Moonriver smart contracts offer speedy deployment for new or existing decentralized applications (dApps) looking to connect and access the Kusama network. Offering a super-easy on-ramp, there are little-to-no modifications needed to the existing code.
The Moonriver smart contracts platform provides developers an incentivized canary network. Moonriver offers an environment for testing and developing new smart contracts under real-life economic conditions. Then, once the code is proven to be valid, the same code can be transitioned across to Moonbeam on Polkadot.
As a community-led sister parachain, Moonriver allows developers to create, experiment, and launch smart contract-based decentralized applications. Moreover, Moonriver smart contracts allow others to access and interact with dApps and assets on-chain during the development phases.
The experimental sister network Moonriver is to Moonbeam what Kusama is to Polkadot. Offering a “canary in the coalmine” for developers, Kusama is of the same blockchain infrastructure make-up as Polkadot. Kusama allows developers to deploy custom blockchains and applications with advanced technologies, low economic barriers, and fast iterations. Also, Kusama operates much faster than Polkadot, allowing developers to launch their applications to market far quicker than its sister network. Both Polkadot and Kusama were created using Substrate, designed by Dr. Gavin Woods, former chief technology officer (CTO) and co-founder of Ethereum.
As Kusama is live, operational, and offering developers such a seamless service, some projects choose to stay exclusively on Kusama. On the other hand, some projects use Kusama for temporary deployment prior to deploying on the Polkadot network. Moonriver will remain exclusively on Kusama in preparation for the Moonbeam network going live on Polkadot later in 2021.
Similar to Polkadot, Kusama offers the same blockchain infrastructure components comprising the Relay Chain with “slots” for parachains and parathreads. As only a limited number of parachain slots are available, projects have to bid to receive a space. Moonriver generated a crowd loan initiative for Moonbeam and Moonriver enthusiasts to lock up their Kusama tokens (KSM) in order to bid for Moonriver to receive a slot. Token holders receive their funds back after the end of the auction. Following the success of the crowd loan, Moonriver received a slot in the Kusama parachain auction, going live in June 2021.
Similar to Moonbeam’s GLMR token, the MOVR token is a highly functional multi-utility token. Facilitating nearly the exact same roles and responsibilities as its sister token, Moonriver’s MOVR token is crucial to the operations of its native platform. The MOVR token also supports gas metering for Moonriver smart contracts. This is alongside being the token used to pay for network fees, facilitate on-chain governance rights, and incentivize participants in the network for honest behavior.
The MOVR token operates with the same tokenomic structure and inflation rate as Moonbeam’s GLMR token. Moonriver aims for a 5% annual inflation rate with no maximum supply. The distribution of tokens is virtually the same too. Of the 5% inflation, 1.5% is for the parachain bond reserve, accumulating funds to pay for the parachain slot in perpetuity. Another 1% is towards rewarding collator nodes to incentivize honest participation, and 2.5% is for rewarding MOVR token stakers. The MOVR token also operates with the same deflationary measures by burning 80% of transaction fees to counter the inflation rate. The remaining 20% of transaction fees go towards project initiatives to grow and expand the network and engagement. This is through an on-chain Treasury with fund allocations chosen via on-chain governance voting mechanisms.
As part of the Moonriver crowd loan initiative, the Moonbeam Foundation reserved 3 million MOVR tokens (30% of genesis tokens created) to reward crowd loan contributors. Upon the Moonriver parachain launching, 30% of the reserved MOVR tokens were distributed to contributors, proportional to their contribution amount. The payouts of rewards then follow a linear vesting schedule for 48 weeks for the remaining 70% of tokens (2.1 million MOVR).
Moonbeam offers competitive development services for blockchain developers looking to build with both the Ethereum and Polkadot ecosystems. In turn, Moonbeam boasts its abilities as a Polkadot-based protocol while both compatible and interoperable with Ethereum. Moonbeam prides itself on its “unmatched Ethereum compatibility”.
Moonbeam offers pre-built integrations with industry-leading infrastructure services, including The Graph and the number one oracle, Chainlink. Furthermore, developers can take advantage of built-in integrations for ERC-20-based assets, support for Ethereum H160 account structures, and publish-subscribe capabilities. Also, Moonbeam supports Ethereum ECDSA (Elliptic Curve Digital Signature Algorithm) signatures. Moreover, developers can interact with Moonbeam using their existing Ethereum keys and accounts.
Moonbeam gives developers’ Ethereum-based decentralized applications (dApps) instant access to Polkadot-based assets, including Polkadot (DOT), Kusama (KSM), Glimmer (GLMR), and Moonriver (MOVR). Also, bridged assets such as ERC-20 tokens and Bitcoin are available, plus support for a bridge back to Ethereum for wrapped ERC-20 tokens.
Over 50 projects have already or are in the process of deploying their decentralized applications (dApps) on Moonbeam. As a rapidly growing ecosystem, Moonbeam is offering developers the “first-mover advantage” of being able to deploy dApps early to Polkadot’s parachain ecosystem. Moreover, operating on Moonbeam addresses a user demographic that potentially may have been excluded previously due to higher gas fees on Ethereum.
Exploring Moonbeam & the GLMR Token Summary
Moonbeam allows developers to operate with familiar tools and connect decentralized application (dApp) front-ends as simply as the process is for Ethereum. Fundamentally a Polkadot parachain, Moonbeam facilitates the ability to “extend the Ethereum feature set with Polkadot-specific benefits”. This includes cross-chain compatibility and on-chain governance. Moonbeam operates and is governed by its native Glimmer (GLMR) token.
Moreover, Moonbeam hosts a bi-directional modular blockchain bridge, ChainBridge, enabling interactions with multiple Substrate-based chains and Ethereum. The ChainBridge integration between Moonbeam and ChainSafe (the team behind ChainBridge and a global leader in Web3 development) allows developers to freely move ERC-20 and ERC-721 assets between Ethereum and Moonbeam and vice versa.
While Moonbeam is still in the testnet phase, developers can get a taste of the experience by interacting with its sister network. Live on Kusama, Polkadot’s ‘canary network’, Moonriver, and the native Moonriver token (MOVR) use the same application parameters and tokenomic structure as Moonbeam. With many applications choosing to deploy on Moonbeam, and a core ethos of community and interoperability, the project appears set to do well upon launch.
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