The Elephant in the Room: How This Project Addresses Human Reliance in Token Economy Models
Blockchain and DeFi protocols are only as strong as their weakest link
With today’s ever-growing blockchain landscape, token economies are bigger and more active than ever. When it comes to DeFi (decentralized finance) in particular, there is nearly $44 billion locked in decentralized finance protocols, with users around the globe forming part of various innovative decentralized economies that are disrupting traditional finance.
The countless thousands of ecosystem participants that support these protocols and platforms, although kept safe by blockchain’s inherently secure infrastructure, also rely on what are mostly very capable project teams and treasury managers to efficiently manage token unlocks and distributions that take place after token sales, airdrops and other events. But this highlights an important issue, one that is often not spoken about alongside blockchain’s otherwise decentralized mechanics: human reliance within token economies is often a bomb waiting to go off and, as long as this human component exists within cryptocurrency and DeFi ecosystems, the space will not be fully decentralized.
Polkalokr, a new and highly customisable escrow platform built on the Polkadot blockchain, looks to offer a solution to this problem with governance-as-a-service and a model that takes token distribution out of the hands of projects teams. The team behind the protocol recently announced the closing of a successful private sale round, one that included prominent funds such as Moonrock Capital, AU21 Capital and LD Capital.
Bad actors and human error: Current token economies
The rapid evolution of blockchain technology and DeFi has seen some truly amazing solutions emerge in recent years that can tackle and replace wholly outdated frameworks across a plethora of industries in a decentralized manner. This being said, the complex token economies that underpin these projects can still arguably be viewed as centralized; project teams are more often than not the responsible party when it comes to token management and, with millions of dollars pouring into token sales at the height of crypto mania, this can lead to some troubling results.
Simply searching for the keywords “crypto scam” will net plenty of results that serve to illustrate the pitfalls accompanying centralized token holding models. Almost $2 billion in user funds from across the cryptocurrency landscape was reportedly stolen in 2020 alone, with incidents ranging from poor private key management by project teams, to full-on exit scams by the founders themselves. These incidents all highlight the change in approach and overall token economy redesign that is required if blockchain’s promise of true decentralization is to be fulfilled.
Even when taking bad actors out of the equation, token treasuries are still not fully safe in the hands of project teams, as poor security practices or simply a lapse in judgment can result in millions of dollars of user funds being lost, locked or burned forever. The processes that run within smart contracts are complicated and unforgiving, with even the smartest of minds able to make a costly mistake at the touch of a button.
Putting the power back into participation
Headed up by a UK-based team with a strong background in computer programming and infrastructure project management, Polkalokr offers project developers a suite of modular building blocks enabling them to create trustless escrow payout options for a wide variety of use cases. The protocol’s versatile, multi-chain solution suits any token locking requirement and presents both projects and users with a myriad of new opportunities, including fully-customizable event-based token unlocks and monetization of locked tokens.
Polkalokr consists of Lokr and Swapr, with the latter product offering users cross-chain atomic swaps of any tokenized digital asset with privacy & multi-sig options. Functionality and useability is at the forefront of the protocol’s design and implementation; Polkalokr aims to give both projects and their participants access to a one-stop-shop with comprehensive locking, distribution, monetization, swapping and even insuring of the tokens that glue today’s blockchain ecosystems together.
Building natively on Polkadot, the Polkalokr team boasts a dedicated Rust developer that will deliver beyond the promises of many Polkadot-based projects, many of which have had to rely on Ethereum bridges alone so far due to a lack of qualified Rust and Solidity programmers in the blockchain space. Plans for a public token sale are to be announced in the coming weeks.
Image by Buffik from Pixabay
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OhNoCrypto
via https://www.ohnocrypto.com
, Khareem Sudlow
