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Polkadot has announced that Statemint will become the first common-good parachain to join its Relay Chain and Kusama. Statemint is a generic asset bridge developed by Parity Technologies, the lead developer of the Polkadot infrastructure, that will allow anyone within the Polkadot ecosystem to deploy any type of digital asset. This will range from pieces of art, Central Bank Digital Currencies (CBDCs), tokenized and fractionalized assets and commodities, governance voting rights over dApps, and more, depending on what the owner would like to create.
Parachains for the People
There are two ways for new projects to secure access to a Polkadot parachain, allowing access to the main Relay Chain and all the Polkadot ecosystem has to offer. The first is through a Parachain auction mechanism, an event that will take place in the near future, and the second is through the granting of a parachain by public vote.
This latter case is only reserved for protocols that will provide core functionality to the Polkadot ecosystem and its users, with Statemint fulfilling this parameter.
The development and production of digital tokenized assets is already possible on other blockchains like Ethereum, but Polkadot will provide an overall better experience for issuers and future token holders alike. Using Ethereum, issuers have to create digital assets through the deployment of a smart contract, leading to a costly experience for users, as the network must meter each part of the executed transaction. As more users flock to Ethereum and its blocks continue to fill up, the execution of smart contracts will become even more expensive, sometimes costing users upwards of $100 to complete a single transaction. This is unsustainable for regular users.
Statemint Brings Tokenization to Polkadot
Using Polkadot, the issues with Ethereum token issuance can be mitigated, as Statemint will issue all tokenized assets directly on-chain. It will provide the functionality necessary to create and issue these types of assets, where the original issuer would define the asset’s authenticity and future obligations. Statemint would only provide the tools necessary to create assets, not the verification methods necessary to prove the backing or authenticity of each digital asset.
When taking this into consideration, all users should make sure the asset they are getting involved in is provably authenticated by the issuer. For example, the issuer of a US dollar-backed currency could provide verified audits of the bank account hosting the one-to-one US dollar token peg.
To deploy an asset, the owner would need to make a deposit in DOT (or in KSM if they are minting on the Kusama blockchain) into the generic asset chain. There is also the possibility of getting the asset approved via the Relay Chain’s governance, which would then bypass the need to make a deposit before deployment. Regardless of how the asset is minted, the asset account needs to maintain a minimum balance. Otherwise, the governance mechanism may delete the account in order to clear out useless ‘dust accounts’ from the network.
Taking Care of the Entire Tokenized Asset Lifecycle
Following the tokenized asset’s deployment, the original issuer can deploy a maintenance team that is charged with managing the future development of the asset. This includes the ability to mint new tokens, freeze or burn specific tokens on any account, or freeze all tokens of the asset. These teams can consist of promoted individuals, or through a group of accounts using a multisig wallet (such as a Board of Directors or community managers). In the name of decentralization, creators can also opt to grant these privileges to a provably inaccessible account, meaning no entity will have the ability to change the rules surrounding the asset.
By the People, for the People
Since Statemint will be a common-good parachain, the platform’s future will be fully dictated by the Relay Chain’s utility token holders. Statemint will leave governance and control of the network to the stakeholders, giving them full discretion on the direction of the chain. This includes responsibilities like registering a new digital asset without requiring a deposit, changing specific parameters within the chain such as deposit amounts or royalty fees, and upgrading the platform’s functionality through the distributed consensus of the community.
This democratic method will allow for the creation of a wide range of diverse tokenized assets, all usable within the Polkadot and Kusama networks. As a common-good parachain fully governed by the community, Statemint will demonstrate the true power of a distributed community and provide a wide range of utility to platforms and applications built within the network.
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