Astar Network, formerly known as the Plasm Network, is the multi-chain Polkadot dApp hub which acts as the gateway for connectivity between Polkadot and multiple Layer 1 blockchains. The project’s aim is to build the premier multi-chain smart contract hub supporting DeFi, NFTs and DAOs. With 150K+ ETH in total value locked (TVL) through lockdrops, 30K community members, and over 40 ecosystem projects integrated with the network, Astar Network is well on its way to achieving that goal. Kickstarting the protocol’s growth, Astar Network raised 2.4M in a funding round led by Binance Labs. This also marked Binance’s first investment from their $10M Polkadot ecosystem fund.
How Astar works
Astar Network is a critical component for increasing the scalability and interoperability of the Polkadot Relay Chain, which by design does not support smart contracts. The protocol acts as a Substrate blockchain providing the methods for developing scalable dApps and supporting various Layer 2 solutions. And as a permissionless public blockchain, anyone can join and build innovative applications based on the Astar Network.
Blockchains do not scale by design because of the decentralized consensus mechanism. Transactions Per Second are much lower compared to centralized databases, and you may know this from the experience of waiting for an unconfirmed transaction – which take quite a long time depending on network congestion. Astar aims to raise the scalability of Polkadot.
Developers are central to community growth for any blockchain, which is why Astar has taken a slightly different approach when it comes to distributing block rewards. Whereas blockchains such as Bitcoin and Ethereum only allocate transaction rewards to miners, the Astar protocol divides the rewards right down the middle, allocating 50% to block validators and 50% to the developers – who after all make valuable contributions to the ecosystem and increase the value of the network.
Smart contract administrators are chosen by other dApp nominators, who take 20% of total rewards going to developers. This mechanism creates an incentive for the nominator to stake on smart contracts to increase the value of the ASTR token. Operators can also receive semi-permanent rewards through stakes they themselves manage on smart contracts.
If you’re looking into Astar, you will soon see the name Shiden Network come up. It is the parallel chain to Astar and it is deployed to the Kusama Relay Chain – a public pre-production environment for Polkadot that allows any developer to experiment and test new blockchains or applications before going live on Polkadot.
The ASTR token
Currently, the protocol’s native ASTR token has four main use cases: rewards given to dApp operators, transaction fees paid by users, governance features such as voting, and staking for network validators. There is a total supply of 7,000,000,000 ASTR tokens, of which about 2 billion are currently in circulation. The token ranks 239 on CoinMarketCap. Its market capitalization is $211 million at the time of writing. The token has only been trading on the open crypto markets for a short period of time, and most of its price action has seen a downward trend. During the bull market, ASTR reached its current all-time high of $0.2781, but it currently trades at about 60% below that, at $0.106.
However, there is a lot of potential upside for Astar Network, as it is a relatively new player and it has only recently started riding the Polkadot wave.
In January 2022, Astar received $22 million in strategic funding from crypto venture capital firms Polychain, Alameda Research, Alchemy Ventures, Animal Ventures, Crypto.com Capital, Digital Finance Group, GSR, Injective Protocol, and Scytale Ventures, among others. In February, the project launched the $100 million Astar Boost Program fund to provide liquidity and to offer financial support and incentive programs to smart contract developers. The new Astar Boost Program has already supported liquidity and incentives for decentralized finance applications on the protocol, including decentralized exchanges ArthSwap and PolkaEx and multichain asset bridge Celer cBridge.