Article by Florian Strauf

ParaState is an on-chain runtime for developer tools that lets developers ‘drag and drop’ their Ethereum Solidity code to the Polkadot ecosystem and run Ethereum dApps within the Polkadot ecosystem with little to no change. Additionally it provides a future proof runtime (WebAssembly or Wasm) in which developers can use other programming languages like RUST to develop smart contracts. Simply put, ParaState provides bi-directional compatibility between Ethereum and non-Ethereum based smart contracts.

Polkadot is just the start and ParaState plans to expand its service to other ecosystems. With Wasm becoming the standard for web applications, supported by most browsers and backed by W3C, Mozilla, Google, Microsoft, RedHat and Apple it is likely that Ethereum 2.0 will move into the direction as well. EWasm was introduced as an Ethereum specific subset of Wasm and ParaState supports it already.

Any development project that starts right now will have to evaluate whether to build on Ethereum — the largest ecosystem. ParaState allows projects to build on a different ecosystem with currently greater performance, but stay compatible with Ethereum. Once Ethereum 2.0 increases performance, moving to Ethereum will be easy.

BanklessDAO talked to Marco Chen, co-founder of ParaState about the project, its token and future plans of ParaState.

The intent is to fully decentralise this project i.e., let it be governed by a DAO. All token holders can participate in governance and this will include the development roadmap and usage of the treasury. ParaState so far has been developed by our foundation and it will continue to be the team to build out features. Funding and prioritization of these features will come from the DAO.

The main idea is compatibility to Ethereum. Ethereum is the largest ecosystem and attracts a large number of smart contract experts. Building a new application that could at any point be deployed to Ethereum gives any protocol that is developing a wider reach (the reach of the largest ecosystem = Ethereum).

Ethereum in the ecosystem comparison

The other important thing is building apps with more popular languages like Rust. Solidity is fairly niche and has its issues (this article goes into some details) so enabling Rust and developers of other languages to build Blockchain applications, while staying compatible with Ethereum is really what should attract developers to ParaState.

In computer science, runtime is the final phase of a computer program’s life cycle, in which the code is being executed on the computer’s central processing unit (CPU) as machine code. In other words, “runtime” is the running phase of a program. An on-chain runtime is the environment of the smart contracts/codes being executed in all decentralized network nodes.

You can think of an on-chain runtime being the operating system for a blockchain. We believe this runtime will be WebAssembly (Wasm) and we have thus focused on building out this Wasm runtime with Ethereum compatibility.

WasmEdge is our backend infrastructure where the EWasm runtime is built on. It is a lightweight, high-performance, and extensible WebAssembly runtime for cloud native, edge, and decentralized applications. It powers serverless apps, embedded functions, microservices, smart contracts, and IoT devices. It’s the first Wasm runtime infrastructure hosted by the Cloud Native Computing Foundation (CNCF).

You can think of it as a specialised version of Wasm. Specialised for Ethereum and specialised for cloud native, decentralized blockchain applications.

The $STATE token is an important piece on our pathway to decentralisation as its utility is embedded into the functionality of the ParaState runtime. When the ParaState runtime is used to run smart contracts, a small percentage, as license fee, is paid to the ParaState DAO treasury. 10% of this license fee goes to a long-term development reserve and 90% is paid to the DAO treasury.

Distribution of ParaState license fees

This will be the main revenue stream for us and will help us fund future developments of ParaState. The license fees will be paid in the token of the blockchain using ParaState, so the $STATE token is then backed by all these different currencies in our treasury.

Additionally, token holders can participate in DAO governance via snapshot votes. We plan to encourage participation to kickstart engagement around the DAO.

We will launch the $STATE token with a total supply of 1 billion as ERC-20 tokens. The tokens will be distributed as follows:

STATE token distribution

Tokens will be released over the course of 5+ years with various linear vesting schedules:

Details of this can be found on our website.

Our licensing model will be hard coded into the L1 blockchain, parachain or L2 where the ParaState infrastructure is deployed. For the project using ParaState it will then just be a small additional fee on top of what they would charge for their service. The main argument for why a protocol uses it is future proofing their application. Wasm is already supported by many organisations and we believe it will emerge as a standard in the blockchain space as well. Using our ParaState runtime will set them up to flexibly move to other ecosystems supporting Wasm.

All kinds of developers, but especially cloud native developers who want to build decentralised applications. It could be Solidity developers, who want to build a more scalable application on the Polkadot Ecosystem. Rust developers who are interested in deploying to Ethereum 2.0 once EWasm is released in the future.

There are two main parts of tooling we currently offer.

SewUp, the Rust SDK for EWasm; this gives Rust developers access to web3 and blockchains. The SDK provides easy access to a set of APIs accessing EWasm to then run functionalities like ERC-20 tokens on a blockchain. This will be a big step to unify developer communities and give web3 access to more developers.

Sew Up Rust SDK

BUIDL, the EVM IDE; Solidity developers can use this development environment to build smart contracts in Solidity on a Parachain in the Polkadot ecosystem. This provides backward compatibility for all existing EVM applications.

With the EVM or EWasm, developers can simply develop their smart contracts as if they were doing so on Ethereum, making use of token standards ERC-20 and ERC-721 (NFT).

We are actually implementing a lot of this to showcase the art of the possible. The Plato testnet is the 1st Substrate blockchain that both features EVM & EWasm runtime. And we are currently testing Uniswap on top of this infrastructure. We want to use this to really show how easy it is to move smart contracts between different blockchains with the ParaState runtime.

ParaState has a gateway bridge to bridge assets between Ethereum and ParaState supported networks. Gateway bridge means that we run smart contracts on both chains and thus control the exchange of tokens between chains. We are working on integrating more decentralized bridges to ensure diversity.

We believe that it will take some time for Ethereum to really bring forward the EWasm standard so this is an important gap to fix at the moment. We want to allow protocols to future proof themselves and already run the standard that is going to be implemented.

There are currently about 200 substrate protocols under development and all of these could benefit from becoming EWasm ready

Positioning as an L1 or parachain, by encouraging the token holder to vote whether to start a permanent L1 or a Polkadot parachain based on ParaState’s technical infrastructure in Q1, 2022 after TGE.

We are also planning to launch a ParaState runtime on Ethereum after the ETH2.0 code merge and once ZkRollups have matured. Our rough timeline for this is Q4 2022 or Q2, 2023.

Ultimately our goal is really to deploy our ParaState runtime, or the OS for blockchains on all kinds of networks. This would give developers a familiar environment regardless of where they are developing. Similar to Windows, which runs on many different hardware environments but the Windows user doesn’t really have to care about that.

The operating system for blockchains is a great way to describe a runtime like Parastate and it shows the ambition projects like it have. It also shows that even though NFTs and the metaverse are fancy, hype topics, in the end it all relies on some sort of infrastructure and I think what the team from Parastate is building is a quite important piece of infrastructure.

It is not only infrastructure though, it is also an attempt to future proof inter-chain development and bringing different developer communities together, giving each the choice of development language and the flexibility to migrate between environments.

With Ethereum 2.0 on the horizon and with a potential implementation of EWasm directly on Ethereum, one might ask why we need this additional piece of infrastructure. For the same reason there are plenty of layer 2 scaling solutions on top of Ethereum even though Ethereum 2.0 is planning to be a lot more scalable. There will be room for both. Any protocol that is currently developing should think about what language it should be built on and that could lead them to a runtime like WasmEdge from Parastate.

Florian Strauf is a technical writer exploring and visualising the tokenomics of various web3 projects.

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