Introductory Questions
- Name and affiliation of applicant and association with collateral
- Name: Composable
- Affiliation: Polkadot/Kusama Parachain
- Association with collateral: DOT is the base asset for the Polkadot network, of which our project, Composable, is currently centered around via our Kusama parachain, Picasso, and our future Polkadot deployment, Composable.
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High level overview of the project with a focus on the proposed collateral
Polkadot is a layer-1 network focused on interoperability of application specific chains named parachains. Parachains are interlinked with one another via the Polkadot relay chain, which provides security and finality for these chains. Much like the Cosmos ecosystem, parachains are able to interact with one another through asset transfers and messaging using Polkadot’s native Cross-Consensus Message (XCM).
The team at Composable has done work to extended interoperability of the Polkadot network, and its native token DOT by implementing an IBC connection between the DotSama ecosystem and Cosmos. Centauri is the first trustless connection between DotSama and the first implementation of IBC outside of its native ecosystem. This is facilitated by both Composable’s Kusama parachain, Picasso, and the Inter-Blockchain Communication (IBC) Protocol. Resultantly, all 46+ IBC-enabled chains can interoperate with ~80 DotSama parachains, with each ecosystem’s native assets now being able to flow to the other. -
How old is the project and when was the genesis block or token generation event?
- Project age: Polkadot - 6 years, beginning development in 2017
- Genesis block or token generation event: TGE/Network Launch May 2020
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Provide a brief history of the project
Polkadot is a proof-of-stake network that was designed by Gavin Wood (co-founder of Ethereum), Robert Habermeier, and Peter Czaban in 2017. The project raised nearly $150 million in its initial coin offering (ICO) in fall of that year. The project was founded on the principles of security and cross-chain interoperability. The Polkadot relay chain is its central chain, with user-created parallel chains called parachains. The relay chain provides shared security to the parachains, and Polkadot’s Cross-Chain Messaging (XCM) format enables cross-chain communications and operations between parachains as well as with the relay chain. -
Describe the paths (such as the specific bridges and IBC denoms) that allow users to bring the token to the Agoric chain.
- DOT has only recently been made available to the Cosmos ecosystem, using Composable’s IBC-based bridge Centauri, trustlessly connecting Polkadot <> Kusama (collectively referred to as “DotSama”), as well as DotSama <> Cosmos for the first time. Centauri exists as an intermediary chain within the Cosmos ecosystem and sits within the path of moving assets from Polkadot/Kusama → Cosmos.
IBC denom: ibc/6B2B19D874851F631FF0AF82C38A20D4B82F438C7A22F41EDA33568345397244
Token Cryptoeconomics
- Describe the uses of the token (does it have governance rights, cash-flow rights, is it staked to provide security, etc)
- DOT is used as a utility token to secure the Polkadot network via staking. The token holds governance voting power, and is able to be locked to secure new parachain slots via parachain slot auctions.
- Links to the whitepaper and documentation portals for the core system(s) that interact with the proposed collateral.
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Have there been any significant cryptoeconomic changes to the proposed collateral token since launch or since the creation of the whitepaper?
DOT was redenominated in Aug, 2020. All functionality of the token remained the same. -
List any possible oracle data sources for the proposed collateral type.
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Chainlink
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Band
Financial Characteristics:
- Is the supply of the token fixed or does it have an issuance rate?
- DOT is an inflationary token that increased at a fixed issuance of 10% annually. New DOT enters the ecosystem every ‘era’ (24 hour period). The current circulating supply is 471.456 million DOT, and the max supply is uncapped.
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Current: 471.46 million
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Year 1: 518.6 million
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Year 2: 570.46 million
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Year 3: 627.51 million
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Year 4: 690.26 million
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Year 5: 759.28 million
- What % of the supply is current available in public markets (as opposed to locked up in vesting or reward, or controlled by a shared treasury)
- The total DOT issuance is 1.341 billion. The circulating supply of 471.456 million DOT is 35.1% of this total issuance. Staked DOT makes up 616.486 million (45.9% of the total issuance). Other DOT (in democracy, vesting, treasury) totals 253.256 million tokens (18.8% of the total issuance).
- How concentrated is ownership over the token? To the best of your knowledge, how many unique users hold more than 2% of total supply (regardless of locking, staking or vesting arrangements). How many addresses hold more than hold more than 2% of total supply?
- Ownership of DOT is not very concentrated. 2% of the total token supply would be 26,820,000 DOT. 6 accounts hold greater than this 2% (out of 1,137,095 total accounts). The account with the most DOT holds 58,672,527 DOT, which is 4.38% of the total issuance. Reference: Subscan | Aggregate Substrate ecological network high-precision Web3 explorer
- How many different markets is it traded on?
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DOT is available on 96 exchanges (as per Coincodex), encompassing most of the major exchanges in the industry, such as Binance, KuCoin, OKX, Huobi Global, and Kraken. Given the vast number and range of exchanges, users can access these markets by creating an account with the designated exchange. DOT is highly liquid on these exchanges, and is frequently ranked in the top 15-20 tokens in total volume (currently 13 at the time of writing).
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Notably, thanks to Composable’s Centauri bridge, DOT can now be exchanged for Cosmos-native assets on both Osmosis and Composable’s Pablo DEX. DOT can also be moved over IBC transfers to and from the Agoric chain, to exchanges such as these. This makes DOT optimally positioned as an asset for addition to Inter’s vaults, subsequently positioning these vaults as an early adopter of and potential leader in the use of DOT in the interchain.
- Provide pricing history of the asset
Legal Characteristics:
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Does the project or the DAO have a legal identity in a specific legal jurisdiction? If so please provide details.
N/A -
Please provide any legal documentation that the project may have commissioned.
N/A
Portfolio Characteristics:
- Set out the business case for Inter Protocol accepting the asset:
- With DOT now available in the Cosmos, DOT can be added to the Inter Protocol to mint IST; this will allow users to take advantage of DOT’s new capacity to function on Cosmos chains. Listing DOT increases use cases and provides users with additional functionality to bring their funds over into the interchain, specifically into the Inter Protocol’s vaults. DOT currently holds a fully diluted marketcap of $6,278,324,006, creating the potential to bring massive value to Agoric’s Inter-Protocol Vaults.
- Are there any new expected use cases of the IST that would be generated by onboarding the collateral asset?
- IST will be mintable by holders of DotSama assets for the first time, appealing to new users. Additionally, IST collateralization will be diversified with assets outside of Cosmos for the first time. IST itself can also be bridged out of the Cosmos to DotSama, though that is not dependent upon the present proposal and instead simply requires the use of the Centauri bridge.
- What is the expected demand for the vaults using the proposed collateral?
- Based on the fact that there has been significant demand for stablecoins minted off DOT and KSM in the past, we expect a significant demand for these vaults. For example, on February 9, 2022, Acala USD launched (aUSD), mintable using DOT and LCDOT as collateral on Acala, or using KSM on Karura. There was significant demand for aUSD; for example, approximately 4 months after launch, total locked collateral value for aUSD was more than $277 million.**
- How correlated is the asset with other assets already accepted as collateral?
- DOT is generally correlated with broader trends across the crypto market. As such, it shows close correlation with other major L1 assets such as BTC, ETH, and ATOM.
- What economic/business risks would Agoric be exposed to if this asset were accepted as collateral?
- Risks would be relatively low for accepting DOT as collateral as it maintains a top 20 marketcap and secures one of the largest base layer networks (Polkadot). As such, volatility in this asset follows most major assets in the space, and is typically less than that of mid, or small-cap tokens.
- Proposed parameters for collateral type
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Debt limits: 100,000 IST
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Minimum collateralization ratio: 250%
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Liquidation ratio: 230%
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Stability fee / interest rate for borrowing: 2.50%
- Provide any audits that have been conducted of the proposed collateral
- Public Audits: Polkadot Blog | Updates, News & Releases | Polkadot
- Provide any details of any ongoing security programs, bug bounties or similar programs
- Polkadot offers an ongoing bug bounty program: Bug Bounty Programme · Polkadot Wiki
- It does not report the size of the program, but additional details on how to report bugs are here: https://www.parity.io/bug-bounty/
- Does the collateral have a whitelist or blacklist function? If so, detail the process by which this function is exercised.
- DOT does not have these functions.
- Can the collateral or any contracts associated with the collateral be upgraded? If so detail the process by which the upgrade can occur.
N/A
