Volume AMA: Paloma GRAIN Token Flying Cross Chain
Overview
All hands on deck as Paloma’s native token, GRAIN, will be flying cross-chain soon! Head of Product, Vera Behr, hosts this week’s AMA episode along with guests, Taariq Lewis @LewisTaariq, CEO of VolumeFi (volume.finance), and DeFi Strategist, Zhibai Zhang @FieldTheory. As the Volume and Paloma teams gear up to near-launch, this episode is all about GRAINS, bridging work, staking, liquidity pools, and rewarding validators for useful work.
Getting the GRAINS from Paloma to other target chains is crucial as it paves the way for the Pigeon Feed relay marketplace that is at the core of the Paloma network. More revenue opportunities open up for validators enabling them to charge their own fees for useful work and get paid in GRAIN.
Published instructions on the mechanics will help users and validators ride the transition with ease. The how-tos on deploying pools, scripts, and sending GRAINS to EVM are also on top of the agenda. ERC 20 contracts will be made public so they are viewable and verifiable.
Apart from staking, the focus now is to add more GRAINS to the pool to further fund validator support and tooling, and increase awareness to get more people to use the Paloma network.
Definitions
AMA – Ask Me Anything
Private Key - a cryptographic key that is used with an asymmetric (public key) cryptographic algorithm. Used to compute a digital signature that may be verified using the corresponding public key, it is uniquely associated with the owner and is not made public.
dApps - short for decentralized applications, are digital applications or programs that run on a decentralized network, rather than a single computer or server. They are built on blockchain technology and use cryptocurrency as a means of exchange.
Validator - or Pigeon in Paloma-speak, a participant on a Proof-of-Stake (PoS) blockchain whose job is to validate transactions on the network for rewards. They are responsible for network security, transaction validation, and consensus building.
GRAIN - also called Pigeon feed, is Paloma’s native token.
Staking - or crypto staking, is when crypto assets are locked for a time to help support the operation of a blockchain. It offers crypto holders a way of putting their digital assets to work and earning passive income without needing to sell them. Staking digital assets locks up the coins to participate in running the blockchain and maintaining its security. In exchange, the stake earns rewards calculated in percentage yields.
Cross-chain – refers to the ability to transfer data and tokens between different blockchains. The Web3 landscape is increasingly becoming multi-chain, with the dApp ecosystem existing across hundreds of blockchains, Layer-2 networks, and appchains.
Gravity Bridge - a trustless, neutral bridge between the Ethereum and Cosmos ecosystems built by the Althea team. Built using the Cosmos SDK, it uses the validator set to sign transactions instead of a multi-sig or permissioned set of actors.
Atomic swap - the process that uses peer-to-peer technology to interchange the cryptocurrencies between two traders. There is no intermediary involved and is executed through smart contracts that are self-executing and the conditions of the atomic swap smart contract are directly written in the code.
EVM (Ethereum Virtual Machine) - the computation engine for Ethereum that manages the state of the blockchain and enables smart contract functionality.
Locking - When liquidity is locked, it means that the tokens or cryptocurrency are kept in a smart contract or liquidity pool, where they cannot be moved or traded for a certain period.
Compass EVM - a smart contract written in Vyper that allows the user to run any other smart contract with arbitrary transaction data.
DEXs - short for decentralized exchange is a peer-to-peer marketplace where users can trade cryptocurrencies in a non-custodial manner without the need for an intermediary to facilitate the transfer and custody of funds.
Friend.Tech - a new Web3 social app that allows users to tokenize their social network. It also allows users to trade tokenized shares (known as “keys”) with social media influencers, with each key recorded as a token on the Base blockchain.
Bridging – or crypto bridging is a portal connecting several distinct blockchains, enabling users to transfer data and assets across different blockchains. It facilitates the conversion of one native asset from one blockchain to its equivalent on another blockchain.
ERC 20 - stands for Ethereum Request for Comment 20, a technical standard used for smart contracts on the Ethereum Blockchain. It defines a set of rules that developers can follow to create their own tokens on the Ethereum Blockchain.
Permissionless - open to anyone to use and typically transparent and decentralized. Bitcoin, Ethereum, and BNB Chain are all examples of permissionless blockchains.
Liquidity pools – a smart contract that contains a reserve of two or more cryptocurrency tokens in a decentralized exchange (DEX). Liquidity pools encourage investors to earn passive income on cryptocurrencies that would otherwise be idle.
CLI - short for Command Line Interface, refers to a software tool that empowers users to interact with blockchain networks through a command line or terminal interface.
Pip - stands for a point in percentage. This is how traders measure the change of any asset or currency pair. A smaller movement than the pip is the point.
Intro
Vera and FieldTheory extend a warm welcome to Volume’s AMA Twitter spaces. Vera shares a brief about Volume.
“We're all about private key security and private key management. We want to get all these keys across multiple chains. That's why we're here. That's what we live for. If you want to get your keys anywhere, we want to make sure that you can get them there through Paloma.”
She also mentions that Volume writes software to ship to the Paloma network and builds dApps on top of that adding more value to the chain and increasing validator happiness. Paloma is open source and Vera welcomes everyone’s contributions to expand on it, fork it, and build further.
What is GRAIN?
FieldTheory gives an overview of GRAIN:
“GRAIN is the native token of the Paloma blockchain. It is the currency everyone will be using when they run transactions. They will be used for paying validators, securing the network, and verifying transactions.”
He states that there are currently 5 billion GRAIN tokens in total supply with a flat inflation rate of about 5%. This means that GRAINS will gradually lose some value as more are produced. To counter inflation, and sustain the value of GRAINS, FieldTheory recommends staking.
Vera chimes in on staking:
“We encourage you to stake in a way that keeps the network distribution even. So we don't want to have just one very fat Pigeon because that can cause problems down the line and is not in the sense of the community.”
While GRAINS only exist on the Paloma blockchain at the moment, they will be used as a token to pay validators for sending messages across different blockchains, on top of other functions. FieldTheory shares that GRAINS will be required as payment for the use of Paloma bots in the future.
Bridging Across Chains via Gravity Bridge
Vera states the Volume and Paloma teams have chosen the Gravity Bridge to get the GRAINS from Paloma to any other chains. She explains how it works:
“You may have seen the sneak peek of what's coming from the Pigeon logs. But essentially it is an extension of the Gravity Bridge, which is a cross-chain Atomic Swap bridge. So the way it works is that on either side - either on the Paloma side or if you're coming from the EVM side, once the GRAINS are available there, the tokens are being locked.”
She cites an example:
“If you want to send a hundred GRAINS from Paloma to Ethereum, then they would be locked on the Paloma side. This is done by locking in the Compass EVM contract. Since all the tokens are locked by Compass, they are also locked by the validator set that is on Compass.”
She assures that all transactions done cross-chain are secured by the whole validator set because validators sign every message. The security system has undergone rigorous stress tests to ensure that all messages are secure. She adds:
“Once those are locked, the token balances are managed by Paloma. The Gravity module that has been released on Paloma tracks the number of tokens on either side of the chains and then also sends a message.”
FieldTheory asks how Paloma ensures that there is no duplication of tokens on the EVM side which would devalue the original GRAIN tokens. Vera replies:
“Let's say if you're going from Paloma to Ethereum, that same function that locks those tokens on the Paloma side. There is also an event that defines how many tokens should be minted on the other side. That way, we never have a random increase or decrease of tokens.”
Pigeon Feed Relay Marketplace
Pigeon Feed is coming soon, Vera announces. The transition will open the doors to a relay marketplace where validators can charge fees and get paid in GRAIN from users requesting jobs.
At the moment, validators are being reimbursed for jobs, which is a stepping stone towards building a Pigeon Feed relay marketplace. Users who want to send a job will have to pay the validator for that job. This set-up will ensure that Pigeons are rewarded for doing a good job and will be able to set their own price.
Validators and Useful Work
Taariq joins in the conversation and talks about rewarding validators for useful work:
“I think the philosophy of Volume and Paloma is validators do useful work. We want to give them more work and we want them to be able to charge for their services. The more GRAIN tokens exist on the native chains in which that useful work is done, the more we will be able to discover the true price for that work.”
Taariq shares that following the recent launch of the hottest social networking app Friend.tech on Base boasting over 100,000 users to date, validators will be able to do useful work on the site as well. Opening up to more chains will pave the way for more useful work for validators and price discovery.
Users will want to be able to pay for that work and discover the value of getting the job done. Having GRAINS available on Base and other target chains, users can buy and then pay for that work which translates to more revenue opportunities for validators.
The Value of Securing the Network and Bridged Funds
Taariq talks about the value of the network for securing transactions and bridged funds. While a lot of the bridging action is mainly for trading in many companies with more advanced, well-developed, and well-tested alternatives, he begs the question:
“If work then leads to locking or more bridging, will that drive more value to the bridge? Will the Paloma bridge increase in value because it has a unique approach to creating these cross-chain jobs which must secure cross-chain tokens?
He envisions that the GRAIN is going to be the first cross-chain token.
“The more GRAIN that is bridged to more chains and used for that action of paying for work, the more valuable we hope it will become.”
He believes that if the network is reliable, more people will continue to use it. He maintains that the Paloma chain has a defensible approach that is unique and becomes harder to copy and replicate because the validator set is diverse, fast, and continues to do more work.
Bridge Work Technicalities
As the team goes full-on with bridging work, GRAINS will be able to cross to other EVM chains soon. FieldTheory proceeds to discuss the technicalities of the GRAIN token on the EVM:
“On a technical level, there are ERC 20 contracts created from a blueprint contract. The specific details of the token can be viewed on the Paloma forum. This is done in a permissionless way where anyone can create GRAINS on the target chain that Paloma currently supports.”
After the contracts are deployed, one can take the GRAINS to Ethereum, BNB, Polygon, Optimism, and Base. These GRAINS are locked by the Compass EVM contract when sent to an EVM chain. This mechanism ensures that the total supply is conserved.
FieldTheory states that the community vote will signal the launch of the GRAIN token. He adds that while the token is deployed to one chain, it does not necessarily mean that you can use it to get other tokens. This can be done in a decentralized way via DEX and a liquidity pool. Instructions will be published on how to deploy liquidity pools on all the target chains that Paloma currently supports.
Once ready, he invites all community members to deploy pools so the tokens can start trading. He also welcomes the community to take their liquidity to other chains and add liquidity in these pools to become a passive market maker.
Publishing Instructions
Taariq announces that Paloma will be publishing the instructions for anybody to deploy a pool. He assures that the contracts will be made public before they are launched. The ERC 20 contract is on the forum and is fully publicly viewable and verifiable.
Scripts will also be published so anyone can run them, create, and deploy the GRAIN tokens to the pools.
The process of sending GRAIN tokens to the EVM will also be published, specifically, how it is done from the SDK and the command line. He explains:
“Using CLI to send tokens to Paloma is also something we want to make sure everybody has available and anybody can just fire off on news. That makes it very easy and low barrier for folks to participate in the pools and get them going.”
Taariq shares that he will be asking directors of the Paloma Foundation to add GRAINS to the pool. The GRAINS will go to the ecosystem fund which will be used for further validator support, validator tooling, user acquisition, and usage into the system.
He cautions that there will be low expectations on the kind of liquidity that will be available in the pools given the bear market. It will not be a race to get people to pump the token, he muses. It will be all organic, useful, and valuable, Taariq emphasizes.
“The focus is to get more people to use the network and take full advantage of the work that the validators do to get the job done. The pool launches will be very subdued and the goal is really to drive awareness to this amazing resource called the Paloma Network.”
Closing
Taariq announces that Paloma will be publishing governance on the Pips and that more research will be available in the R&D section. New features will be discussed in the Paloma Forum so that validators are aware of what’s coming before they go straight to development. More discussions will take place about the bridge and how Paloma will make sure that validators get rewarded for cross-chain transactions.
He thanks Vera, Zhibai, the validators, and everyone who joined in today’s AMA. He shares his excitement about the continued success of the Paloma bots and hopes that more people will use them across chains.
Stay tuned for the next AMA!
To find out more about Volume, check out Volume Finance (https://volume.finance/), join the Discord (https://discord.com/invite/Ebh6YjMShu), and follow us on Twitter (@Volumefi). Check out Paloma Chain on palomachain.com (https://www.palomachain.com/), follow them on Twitter (@palomachain), and join the flock on Discord (https://discord.com/invite/tNqkNHvVNc). Coo!
