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Moonbeam: Polkadot’s Smart Contract Hub


Moonbeam

With the successful launch of the first batch of Polkadot Parachains, the first rewards are now claimable. We have taken the time to analyse the launch of one of our top projects, and this will be the first full journal outlining all the details surrounding this launch.


Included in this journal is how to claim rewards, how to stake the tokens, a basic staking strategy, and our thoughts on where this project could be headed over the next 2 years.

Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

Fundamentals

Moonbeam is a Layer 1 blockchain built on Polkadot that provides an Ethereum Virtual Machine compatible development environment for the entire Polkdot ecosystem. There are a few options for implementing smart contracts within the Moonbeam dev environment. Any language that is capable of compiling contract code into EVM compatible bytecode can be used, which drastically increases the developer talent that Moonbeam and the wider Polkadot ecosystem can draw from.

The goal of Moonbeam is to emulate Ethereum Layer 1 as closely as possible, and as such can be considered an instance of Ethereum running directly on Polkadot. Due to this close compatibility with Ethereum, Moonbeam can integrate existing Ethereum applications (DApps) with very few changes. We have already seen this in action with the integration of SushiSwap with Moonriver within a few weeks of them securing their slot on Kusama.


Nodes on the Moonbeam network can directly call functions from existing Ethereum DApps and execute them on the Moonbeam’s EVM instance. Additionally, since Moonbeam is also compatible with Substrate tools, other Parachains and their ecosystems can use Moonbeam to connect with and execute Ethereum based transactions and processes.



Moonbeam Cross-Consensus Messaging (XCM)

In line with the goal of replicating Ethereum within the Polkadot ecosystem, Moonbeam has its own token standard – XC-20. XC-20 tokens are essentially ERC-20 tokens (the Ethereum standard) generated by the Moonbeam EVM upon the external transfer of tokens from the Polkadot ecosystem.

Through the Substrate API and the bi-directional nature of the Relay Chain, XC-20 tokens are also cross-compatible with the wider Polkdot ecosystem. The XCM process essentially acts as an internal Polkdot bridge. For example, if we were to port DOT from Polkadot to Moonbeam, the DOT would be locked in a contract and XC-20 standard DOT (xcDOT) would be minted for use within the Moonbeam platform.


ChainBridge

ChainBridge is an external bridge built by ChainSafe utilised by Moonbeam to create a bridge between Moonbeam and Ethereum. This solution, although not perfect, allows the two chains to communicate with each other and provides the means to transfer assets back and forth. ChainBridge allows the bridging of both ERC-20 assets (tokens) and ERC-721 assets (NFTs).


Ultimately this links the Polkadot ecosystem with that of Ethereum, since the entire Polkdot ecosystem can utilise this connection and tap into the liquidity available on Ethereum (and vice versa).


Tokenomics

GLMR is the utility and governance tokens for the Moonbeam network, with the following use cases:

  • Gas metering for smart contract execution.

  • Staking incentive for securing the network and collating transactions.

  • On-chain governance – e.g. voting, elections, referendum proposals.

  • Paying for transactions. 80% of fees are burned, and 20% go to the Moonbeam treasury.

At the time of launch, there was a 1 billion GLMR total supply, with an uncapped max supply and a fixed inflation rate of 5% per year. The distribution is as follows:


To summarise, the distribution can be condensed to:

  • 51% for Strategic/Seed investors, Founders & Early Developers.

  • 15% for Protocol and Ecosystem development.

  • 10% for “Take Flight” community event – a token sale that took place at the start of September 2021 for community members.

  • 8% for Liquidity Programs/Incentives.

  • 5% for Parachain bonding – a fund used to pay for Parachain auctions and bonding etc.

  • 5% for the Moonbeam Treasury (20% of network fees are sent here).

Moonbeam currently has a market cap of just over $1 billion. Moonbeam is comparable to Ethereum in terms of scope and functionality, with improved transaction speeds and significantly cheaper gas fees. The main question is how quickly Moonbeam can attract protocols willing to port over to Polkadot, liquidity from Ethereum, and what state the rest of the Polkadot Ecosystem will be in.


We set a target of $100 for DOT and so it seems reasonable to use this target as a base for setting price targets for GLMR. At $100 DOT the Polkadot market cap will be between $110-120 billion. Considering the proven potential of smart contract capable Layer 1 blockchains and the relatively heavy GLMR allocation towards ecosystem development, coupled with the success of Moonriver on Kusama, it is not unreasonable to suggest that Moonbeam is capable of achieving a market cap 20-25% of Polkadot’s.


Under the assumption that the $100 target for DOT will be met between now and 2023, that would suggest the market cap of GLMR at $30 billion. This is comparable to other L1s currently with similar capabilities. Honestly, however, this feels like a lowball. Often it’s better to be conservative with targets though. Additionally, the DOT contributed to the Crowdloan will be returned and so this is essentially an airdrop allocation.


Price target for GLMR for 2023 – $250 minimum (taking into account inflation).


Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.


Claiming

There were a few options for participation in the Moonbeam auction:

Centralised Exchanges (CEXs)

  • For those who used a CEX (e.g. Binance, Kraken) the tokens should automatically be claimed within the exchange account.

Moonbeam Website

  • For those who used the Moonbeam portal directly, an Ethereum address (e.g. a Metamask account) should have been given.

  • Go to this link and connect your wallet.

  • It should ask to switch to the Moonbeam network.

  • From there, any GLMR tokens should be visible on the Moonbeam interface. (See example below)


Parallel Finance

  • For those who used Parallel Finance, if a wallet has already been given the GLMR tokens should automatically be airdropped to Metamask. Go to this link and connect your wallet to check.

  • If the GLMR tokens are not there, go to Parallel Finance and check the rewards page.

  • Ensure that the Terms and Conditions (blue button) have been signed using the Polkadot.js extension, and then add a Metamask address using the button shown on the right.

  • If an address has been added recently (within the last day) please allow between 24-48 hours for Parallel Finance to process the information.

  • GLMR tokens should automatically airdrop to the given address.


Transferring

  • GLMR tokens can be transferred to any Moonbeam address, using GLMR to pay gas fees.

  • To transfer from Metamask to an exchange, simply switch network to Moonbeam and click “Send” from the GLMR wallet.

  • Go to the relevant exchange and find the GLMR address.

  • Ensure that the address on the receiving end is correct and leave a small amount of GLMR in the wallet to pay the transaction fee.


Staking

Holders of GLMR are able to delegate their tokens to a Moonbeam collator in order to earn rewards on their assets. To recap, a collator is like a validator for a Polkadot Parachain – collators process Parachain transactions which are then grouped and periodically validated by Polkadot validators on the Relay Chain.

Here’s how it works:

  • GLMR can be delegated to active collators from this portal on Moonbeam.

  • The idea is to select a collator with both a relatively low amount of GLMR delegated to them, and a higher number of blocks produced last round.

  • The lower the amount of GLMR delegated, the larger each individual’s share of the rewards will be.

  • Equally, the more blocks produced by the collator means more rewards allocated to that collator and subsequently more rewards for delegators involved with that collator.

  • More blocks produced = better performance = consistent rewards.

Moonbeam should be one of the top-performing Polkadot Parachains going forward. Combining the utility and reach of Ethereum with the interoperability, speed, and cost of the Polkadot Relay Chain is huge and we expect GLMR to outperform most of the other Polkadot ecosystem tokens. It is still very early days for Polkadot and we are excited to see what Ethereum projects use the Moonbeam infrastructure to expand their reach!



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