Polymesh is a Substrate-based blockchain designed for security tokens and regulated markets. Explore how Substrate's flexibility shapes Polymesh, its applications, and future scalability.
Despite the industry being fairly young, blockchain has been increasingly evolving. New ecosystems are popping up based on various protocols, and with developments in cross-chain communication and chain interoperability, they’re able to connect with each other more and more. Today, there are tons of frameworks and platforms driving innovation on general-purpose blockchains like Ethereum, and purpose-built networks like Polymesh.
Polymesh is a Substrate based blockchain designed for security tokens and regulated markets. Substrate is a Rust language framework for building blockchains in a modular and extensible way, and also the main engine behind the growing Polkadot ecosystem. It’s one of the reasons we predicted Substrate to be the next biggest thing in 2023.
Polymesh is a prime example of how Substrate empowers tailored blockchain protocols. Polymesh takes advantage of Substrate’s modularity and flexibility to provide core functionality for every element of the asset lifecycle, and it’s easy to integrate the network with other Substrate-based ecosystems. As Substrate is built by Parity, projects on Polymesh can also leverage Parity and Web3 Foundation’s tooling, developer resources, and grant programs when driving expansion into other Substrate ecosystems. (Note that Polymesh also has its own developer resources and grants program!).
In this blog post, we’ll explore the pivotal role of Substrate in the development of Polymesh and how its modular and flexible characteristics contribute to customization, optimization, scalability, and interoperability.
Substrate’s modular framework is the architectural foundation for Polymesh. At its core, modularity allows developers to build a blockchain by blending together existing reusable components targeting various protocol elements. Pre-built modules (sometimes known as pallets) exist for many common blockchain functionalities, such as consensus mechanisms, transaction processing, and smart contract execution. Developers can mix and match modules with customization to create a blockchain tailored to their particular needs.
In the case of Polymesh, Substrate’s modularity enabled the construction of a blockchain tailored specifically for regulated assets. By selecting and configuring various appropriate modules, the team was able to incorporate features like identity, compliance, and governance, making it ideal for capital markets.
Of course, there was more to it than just mixing and matching pallets – Polymesh’s architecture is the result of discussions with regulators and institutions, learned observations about issuer needs from developing ERC-1400, experience in capital markets and the securities industry, and deep technical engineering work including patented cryptography protocols such as MERCAT.
Substrate’s flexibility is a game-changer for blockchain customization. Its design allows developers to not only choose from existing modules but also create entirely new ones. This flexibility is what empowered Polymesh to adapt and optimize its features and functionalities for the unique requirements of security tokens.
For example, Polymesh has custom modules that handle the complex logic of security token transfers and compliance checks at the protocol layer, without smart contracts. This level of customization ensures Polymesh isn’t bound by the limitations of its original build and reduces the development requirements of its participants. Should participants require new features, such as new compliance criteria as a result of changed regulations, the blockchain can evolve to meet their precise needs. Participants can also leverage Polymesh’s protocol-layer functionality to reduce reliance on smart contracts or complex layer-2 solutions, unlike other chains.
Several key technical components within the Substrate framework have played a vital role in shaping Polymesh.
Runtime is the heart of a blockchain, where the changes of state that comprise the ledger are recorded. Essentially, it contains the core business logic and rules of the blockchain.
Whilst Substrate is technically language agnostic as the runtime is compiled down to a WebAssembly blob, in practice most of the core components are written in Rust — a language which is optimized for memory safety guarantees, low runtime size, and performance. Polymesh and many decentralized technologies adopt Rust as the compiler provides strong compile-time guarantees and checks. These are extremely valuable in providing confidence in mission-critical software, especially for industries such as securities built on large volumes of transactions and requiring high levels of security.
Another great thing about Substrate runtime is that it features forkless runtime upgrades to mitigate against the risk of hard forks.
Substrate offers various consensus mechanisms, including Proof of Stake (Pos). Polymesh uses the PoS consensus mechanism with customization to include staker nomination on operator nodes. You’ll find it referred to as Nominated Proof of Stake.
More technically, Polymesh’s Nominated Proof of Stake relies on Substrate’s default block authoring algorithm BABE. BABE provides slot-based block authoring with a known set of validators. Polymesh combines this with the default finality mechanism GRANDPA, which allows a set of validator nodes to vote and come to a consensus on the canonical chain to provide provable finality.
Together, Polymesh’s block authoring and finality mechanisms offer high throughput and rapid non-probabilistic finalization. In conjunction with Polymesh’s settlement engine, this allows near-instant deterministic finality and provable T+0 settlement required for a true representation of ownership. It also eliminates the risk of hard forks, which pose a significant legal and tax challenge for tokenized real-world assets.
Substrate provides a robust system for handling transactions. This has helped to inform Polymesh’s complex settlement engine, which enables instant transfers and atomic execution without unwanted airdrops. It’s key to processing and validating security token transactions effectively and at scale for the scope of capital markets.
Since Polymesh was built for regulated assets, many of the core functionalities for security tokens are incorporated at the protocol level, meaning participants don’t need to rely on smart contracts. See how Polymesh functionality compares here.
That said, ink! smart contracts are available on Polymesh if developers need them to execute complex logic and automate other processes. Substrate supports WebAssembly smart contracts right out of the box, and developers can use ink! to compile them to WebAssembly on Polymesh.
While Polymesh doesn’t yet support EVM and Solidity smart contracts, these Ethereum smart contracts are supported by Substrate and functionality for them can be added to the chain should the ecosystem request it.
Choosing Substrate as the foundational framework was strategic for Polymesh’s long-term scalability and sustainability. Substrate’s modularity and flexibility are what enable Polymesh to adapt to changing market demands and evolving regulatory requirements without requiring major overhauls, forks, or headaches in consensus.
Another reason Polymesh chose to use Substrate is its thriving developer community. The Substrate framework is actively maintained and improved by an ever-increasing, vibrant group of global developers who take a collaborative approach to blockchain innovation. In fact, the Substrate community is recorded to be one of the fastest-growing blockchain ecosystems in the world as per developer contributions. As part of the Substrate ecosystem, Polymesh – and the projects on top of it – can take advantage of ongoing advancements in blockchain technology and stay ahead of the curve.
Now you know! Substrate’s modularity and flexibility are what allow Polymesh to offer a customizable, optimized, and scalable solution for security tokens.
As the Polymesh ecosystem continues to expand (especially with enterprise-level projects coming on-chain), the network’s utilization of Substrate will ensure it remains agile, responsive, and well-positioned to meet the industry’s dynamic needs. This foundation is only made stronger by collaboration with the broader Substrate community and the wider world of Web3.
Thanks to the underlying Substrate framework, using Polymesh is setting the stage for a future where security tokens thrive.