Moonbeam

What is Moonbeam (GLMR)?

Moonbeam is a parachain on Polkadot that allows developers to build or redeploy Ethereum-based projects onto Polkadot’s Substrate environment.

Parachains are independent networks with their own design, purpose, function, governance, and economy. However, they do rely on the Polkadot relay chain for consensus and security.

It is this architecture that Moonbeam takes advantage of, relying on Polkadot’s consensus while offering cross-chain compatibility with Ethereum. Unfortunately, it isn’t easy to become a parachain since Polkadot offers only 100 of these spots.

Therefore, projects like Moonbeam have to participate in parachain auctions, in which they bid for the right to become parachain for a year at a time. This is similar to a lease, and they can extend it if they wish to at the end of the year.

Polkadot has a “canary” network called Kusama, and Moonbeam also runs an experimental testnet on Kusama called Moonriver with the MOVR token.

Who are the Founders of Moonbeam?

Moonbeam was founded by PureStake, a blockchain infrastructure, and services provider led by CEO Derek Yoo.

PureStake delivers reliable platforms for blockchain services and abstracts as much operational and security complexity away from its clients as possible. The company also provides validator services for emerging proof-of-stake networks.

PureStake runs Polkadot and Kusama validator nodes and provides infrastructure consulting for the Polkadot ecosystem. The company also focuses on Algorand, with the AlgoSigner wallet extension, GoalSeeker Block Explorer, and API-as-a-Service and Infrastructure-as-a-Service offerings.

How Does Moonbeam Work?

Moonbeam is a fully Ethereum-compatible smart contract platform that uses the Substrate framework on Polkadot.

It uses a unified accounts system to achieve Ethereum compatibility, replacing Substrate’s accounts and keys with those of Ethereum. Therefore, Moonbeam is compatible with Ethereum-based applications and commonly used wallets like Metamask and Ledger.

Developers can build decentralized applications (dApps) and smart contracts using Ethereum’s libraries and development environments.

What Makes Moonbeam Unique?

Moonbeam follows Polkadot’s vision of interoperability but with a unique twist. To migrate Ethereum-based dApps to Polkadot, developers would normally have a lot of work to do. With Moonbeam, however, they can port their dApps right across with minimal fuss and still take advantage of Polkadot’s security.

How is the Moonbeam Network Secured?

Moonbeam is secured by Polkadot’s nominated proof-of-stake (NPoS) consensus mechanism.

Here, any DOT staker can elect to become a validator or nominator on the network. Validators are responsible for the validation of data on parachain blocks. They also take part in consensus and vote on any changes to the DOT network that may be proposed.

They’re also crucial to cross-chain transactions within the Polkadot network as a whole. For example, they move transactions from the output queue of one parachain to the input queue of the target parachain in a secure and trustless manner based on Merkle trees.

The nominators secure the Polkadot relay chain by selecting trustworthy validators. They delegated staked DOT tokens to specific validators, granting these validators greater voting power.

What is the Use of GLMR?

GLMR is the native token of the Moonbeam network. It is used for staking on Moonbeam and the governance of the protocol, as well as for gas when making transactions on the network.

It’s important to note that GLMR is not an ERC-20 token. Rather, Moonbeam provides a pre-compile that allows developers to interact with the native protocol token via an ERC-20 interface.

Who Controls Moonbeam?

Moonbeam is a product of the PureStake firm but is stewarded by the Moonbeam Foundation and governed in a decentralized manner by its community.

The Moonbeam governance framework unites the network, its community, and the ecosystem to discuss and vote on proposals submitted by any member of these groups. The GLMR token is needed to vote on referendums, but comments can be submitted for discussion without needing to hold GLMR.

Moonbeam’s governance is carried out via the open-source platform Polkassembly, which you’ll find a tutorial for here.

How Much GLMR is In Circulation?

GLMR had a supply of 1 billion tokens at its genesis and featured a 5% annual inflation rate with an uncapped maximum. Of this inflation, around 1% is aimed at incentivizing Polkadot collators, and 1.5% is earmarked for the parachain bond reserve. The remaining 2.5% goes to GLMR stakers.

A portion of the network tokens minted at genesis were reserved for long-term protocol and ecosystem development, and a fund remains to ensure that Moonbeam retains a parachain slot.

140 million GLMR tokens were sold in the project’s seed round, while 120 million went to strategic investors. Over 180 million GLMR tokens combined went to key partners and advisors, the founding team, early PureStake backers, and employees.

How Do You Buy GLMR?

You can buy GLMR on various exchange platforms using stablecoins like USDT and BUSD. It’s also possible to use fiat currencies to buy GLMR, but that depends on your exchange of choice.

How Do You Store GLMR?

You can store GLMR in a non-custodial wallet of your own. Hot wallets are quite common because they can easily connect to different decentralized applications, and staking tokens with them is a simple process. For example, Metamask, one of the most popular crypto wallets, can be configured to store GLMR.

For extra safety, you can also elect to store GLMR using a hardware wallet. Some hardware wallets, like Ledger, are compatible with Moonbeam and can safely store GLMR tokens.

Moonbeam Energy Consumption

As a parachain, Moonbeam relies on Polkadot for its security and, therefore, can lay claim to part of the energy demands of the Polkadot network as a whole.

However, Polkadot is an extremely energy-efficient network. In fact, according to the Crypto Carbon Ratings Institute, Polkadot is the least electricity-intensive network among the top cryptocurrencies.

According to the Institute's research, Polkadot consumes just 70,000 kWh. A neighborhood of just 7 average US households consumes more.

Is GLMR a Good Investment?

Interoperability and cross-chain compatibility are often considered blockchain buzzwords, and for good reason. However, the industry remains in its relative infancy, and a lot of time and resources tend to get put into very similar projects on different chains.

One of the Polkadot network’s central themes is bringing different blockchain networks into a unified system where they can work together, thus eliminating harmful tribalism and redundancy.

Ethereum remains the dominant blockchain when it comes to dApps and smart contracts, but it has shown weakness when it comes to throughput. If costs and congestion continue to stand in the way of progress, then Moonbeam could certainly be an easy way forward for plenty of frustrated developers.