A token minting system is coming to the Polkadot blockchain ecosystem, promising to be a leaner, meaner version of Ethereum’s ERC-20 standard, the mechanism that launched a thousand token sales.
Announced Wednesday, Polimec, the token issuance and transfer framework for Polkadot, is being launched by the team behind blockchain identity protocol KILT.
The reasons for creating a community-owned tokenizing system native to Polkadot are manifold, not the least of which are the surging gas costs associated with transactions on Ethereum blockchain, said Ingo Ruebe, CEO of BOTLabs and project lead for KILT Protocol.
Normally a startup project working on Polkadot might attempt to finance their runway by issuing an ERC-20 token on Ethereum that can be listed on exchanges. As well as removing the costs of transferring ERC-20’s around, the bigger picture for the Polkadot ecosystem is the explosive growth that having a standard to build tokens on top of Ethereum brought to the second-largest public blockchain.
“If you look at what ERC-20 actually did to the Ethereum ecosystem, then you can imagine what will possibly happen with Polimec,” Ruebe said. “It’s an absolutely essential part of the ecosystem, I would say.”
Ruebe reckons Polimec will not only drive more people and projects onto Polkadot’s parachains (similar to sidechains but with a greater degree of independence) but will also cater to a large number of dot (DOT) holders who would welcome ways to invest these back into the community.
“If you bought dots at the public Polkadot sale in 2017 you have seen your investment grow by more than 10 times,” said Ruebe. “So there are many dot holders who would like to reinvest in Polkadot and make the whole community more valuable and attract more projects.”
The KILT mainnet, which is slated to go live in around 11 months, will be the first project to mint tokens using Polimec. KILT uses blockchain-based identity and verifiable credentials across various industries including areas like IoT (internet of things). The startup is part of a government scheme in Germany, GAIA-X, exploring blockchain use cases, and is backed by German and Swiss corporates Huber Burda Media and Ringier.
Exchanges can also use Polimec’s transaction-based API to conduct IEOs or provide access to the transferable Polimec-issued currencies. Polimec is dependent on the parachain/parathread functionality for Polkadot, currently under development, and will launch when parachains are available, expected later this year.
“There have been rumors circulating around the developer community about Polimec and the word has reached some exchanges,” said Reube. “We are at the early discussion stage with three exchanges; I can’t name them but they are in the top 10.”