## Parachain Questions received from a team ### Question 1 *1. about "transferring functions from the relay chain to the System Parachains, thus minimising the use of the relay chain for administration" which functions are moved to asset hub, and how will the relay chain change?* ### Answer **Main Functions of Asset Hub Parachains** The main function of the Asset Hub (Polkadot and Kusama) chains is the creation and management (transact, mint and burn) of assets (including non fungible assets). You can read this also in the [Asset Hub section of the Polkadot wiki](https://wiki.polkadot.network/docs/learn-system-chains#asset-hub). **System Parachains Links** In the same page it is mentioned that you can find more context and articles on `System Parachains` if you search for it as `Common Good Parachains` since that is how they used to be called in the past. Some examples of these articles are the following : - [Common Good Parachains: An Introduction to Governance-Allocated Parachain Slots](https://medium.com/polkadot-network/common-good-parachains-an-introduction-to-governance-allocated-parachain-slots-88e01812160d) - [Proposal for Common Good Parachains](https://www.polkadot.network/blog/proposal-for-common-good-parachains) - [Relay Chain fm - Polkadot Common Good Parachains Update: Blockchains to Benefit the Polkadot Community](https://relaychain.fm/polkadot-common-good-parachains-update) - [Polkadot Forum - Polkadot Protocol and Common Good Parachains](https://forum.polkadot.network/t/polkadot-protocol-and-common-good-parachains/866) **How will the Relay Chain change** The goal is to progressively move as much functionality as possible from the Relay Chains to Parachains : > *allowing more Relay Chain blockspace to be used for Polkadot's primary purpose: validating parachains.* > *Eventually, the Relay Chain could become transactionless, as in, it would only validate parachain state transitions and all of its current transactional functionality would exist within parachains.* **Important Note** ⚠️ Be aware that there is no timeline defined for the plan of moving functionality from the Relay chain to System Chains. ### Question 2 *2. the System Parachains does not have its own native tokens, what are the differences between the System Parachains and the parallel chain, and is there a picture to show this?* ### Answer **System Parachains VS Parachains** **1. Parachain Slot Acquisition** One difference between System Parachains and Parachains is how they acquire their parachain slot. - Blockchain projects that would like to become Parachains can get a parachains slot if they win an auction. - System Parachains are granted a parachain slot from governance. [Parachain Slot Acquisition on polakdot wiki](https://wiki.polkadot.network/docs/learn-parachains#parachain-slot-acquisition) **2. Goal** - The goal of a system parachain is to provide some core functionality that any other parachain and the **whole** community can benefit from. For example, the fact that a system parachain removes transactions from the Relay Chain benefits the functionality of the whole network. The aspect of its function is more neutral and more of a core utility compared to the functionality of a parachain. - The goal of a parachain is to provide a specific functionality, they implement a specific use case. It is **not** necessarily useful/beneficial **for the whole** community and that is not its intentions. It is interesting for just part of the community that would like to use this functionality. So for example there are parachains focused on DeFi so they will attract users interested in this type of functionality, or parachains focused on smart contracts, etc. **3. Profit** - System Parachains provide some core functionality on a not-for-profit basis. - On the other hand, to utilize a parachain's services and features, a user must own the parachain token and with that they pay the corresponding fees. **4. Token** - System Parachains do not have their own native token (they use DOT or KSM). - Parachains have their own native token, e.g. Moonbeam has `GLMR`, Acala has `ACA`, Astar has `ASTR`, etc. ### Question 3 *3. about the function of System Parachains, is there any picture to show it?* ### Answer I could not find a *"one picture says it all"* and actually this is a good idea for an infographic. For now, what I can share is some additional (to the ones shared earlier) resources that explain the concepts very well : - [System Parachains | Polkadot Decoded 2023](https://youtu.be/CSO-ERHK2gY?si=-xsMvXYJnTZcuRZE) - [A Year in Parachains, Part 2: System Chains, Smart Contracts, & Social Media](https://www.polkadot.network/blog/a-year-in-parachains-part-2-system-chains-smart-contracts-social-media) ### Question 4 *4. Is USDT on the parallel chain the same value as USDT on Tether?* ### Answer USDT is a stablecoin so its value is/should be the same in any polkadot parachain, system parachain and any other blockchain inside/ouside the dotsama ecosystem. Be mindful that Tether is a central entity, a company that makes sure that : > *All Tether tokens are pegged at 1-to-1 with a matching fiat currency (e.g., 1 USD₮ = 1 USD) and are backed 100% by Tether’s reserves.* [tether link](https://tether.to/en/how-it-works/) So it is up to Tether to make sure that the value of each USDT is tied to the corresponding external reference. It is not up to the decentralized network where USDT is issued to keep track of its "real" value. **Important Note** ⚠️ USDT on parachains is a derivative asset and it is subject to the chain sovereignty. USDT is transferred through the ecosystem using Reserve-backed transfers. The process is explained in the [polkadot wiki](https://wiki.polkadot.network/docs/learn/xcm/journey/transfers-reserve). ### Question 5 *5. can System Parachains support all the coins of parallel chain to transfer? Why I don't see parallel chain asset ID https://polkadot.js.org/apps/?rpc=wss%3A%2F%2Fstatemint.api.onfinality.io%2Fpublic-ws#/assets here?* ### Answer Yes, system parachains can support the creation of any fungible or non fungible asset. However, for parachains to represent their assets in Asset Hub they will use a different pallet which is called `Foreign Assets` pallet and this was introduced in [polkadot v0.9.42]((https://forum.polkadot.network/t/polkadot-release-analysis-v0-9-41-v0-9-42/2828#add-support-for-foreign-assets-20)). So for you to see the parachain assets you have to access a different storage, the foreign assets storage. You can check these different pallets/storage yourself, for example if you go to [pjs > Chain State > Storage (Kusama AH)](https://polkadot.js.org/apps/?rpc=wss%3A%2F%2Fkusama-asset-hub-rpc.polkadot.io#/chainstate) and in the query you can see that you can select (among other options) : - `assets` or - `foreignAssets` As you check this, you might notice that when you choose `assets` - `asset` you can give the ID of the asset (a `u32` number) to select one specific asset. However, when you choose `foreignAssets` - `asset` you do not see any `u32` number but something called `XcmV3MultiLocation`. This is another important feature of Foreign Assets that you have to keep in mind. The Foreign Asset ID is a not a `u32` but a `Multilocation`. Multilocation basically is a description of where this asset lives (in which parachain it lives) compared to your current location (in this example, the Kusama Asset Hub) > *MultiLocation always expresses a location relative to the current location* To learn more about Multilocations a nice reference with diagrams is in this [section](https://wiki.polkadot.network/docs/learn/xcm/fundamentals/multilocation) of the polkadot wiki. ### Question 6 *6. What is the format of the user's address in the Parallel Chain? How to create it?* ### Answer **Account Format** The format of your account/address in a parachain (which is a Substrate based chain) is `SS58`. > *SS58 is a modification of Base-58-check from Bitcoin with some minor changes. Notably, the format contains an address type prefix that identifies an address belonging to a specific network.* More details on the account format you can find in the [polkadot wiki](https://wiki.polkadot.network/docs/learn-account-advanced). Another thing to keep in mind is that the same address/account can look different depending on the chain that you use it. It is still the same address but with a different visual representation depending on the network you are connected to. You can see the visual differences/different representations of the same account by using the [the subscan converter](https://polkadot.subscan.io/tools/format_transform?input=14gAowz3LaAqYkRjqUZkjZUxKFUzLtN2oZJSfr3ziHBRhwgc&type=All). **Account Creation** You can create a polkadot account and you can use it on most Substrate chains which means relay chains and parachains (but not all, since there are exceptions). Please check this [polkadot support page](https://support.polkadot.network/support/solutions/articles/65000103707) for more details and the video to learn about the exceptions. So based on the above, the process of creating an account is the same and it is described in the [polkadot support page](https://support.polkadot.network/support/solutions/articles/65000098878-how-to-create-a-dot-account). ### Question 7 *7. How does System Parachains Chain communicate with Relay Chain? Is there a picture that shows this?* ### Answer System parachains communicate with the Relay Chain through XCM. Some resources to learn more about XCM are the following : - [Polkadot wiki - XCM Documentation](https://wiki.polkadot.network/docs/learn/xcm) - [Gav Medium Posts - # XCM: The Cross-Consensus Message Format](https://medium.com/polkadot-network/xcm-the-cross-consensus-message-format-3b77b1373392) - [polkadot forum post on XCM resources](https://forum.polkadot.network/t/best-resources-to-learn-xcm-tech-high-level/192) ### Question 8 *8. System Parachains can transfer assets DOT, USDT, cross-chain transfers, how are these processes implemented? What is the role of the verifier and collator, relay chain in this process?* ### Answer There is a lot of documentation on how to transfer assets and how these processes are implemented. Apart the links shared in the previous question, here are some additional ones : - You can check ["Messaging Overview : UMP, DMP, XCMP (with diagrams)"](https://paritytech.github.io/polkadot-sdk/book/messaging.html) to get a general understanding of how messages are passed based on the direction/path : - Between a Relay and a Parachain (UMP / DMP) - Between Parachains (XCMP) - You can check this Substrate Stack exchange question/answer [How can I transfer assets using XCM?](https://substrate.stackexchange.com/questions/37/how-can-i-transfer-assets-using-xcm) where it is explained the different ways/instructions that can be used. The factor that differentiates them is the level of trust between the consensus systems. - Regarding the role of the collator, it is worth checking this [polkadot wiki page](https://wiki.polkadot.network/docs/learn-collator). - Adding also the corresponding [wiki page about Validators](https://wiki.polkadot.network/docs/learn-validator). - Last, I am sharing this talk ["Parity Technologies: Divorcing the Relay and Parachain Node in the Collator | Sub0 2022"](https://www.youtube.com/watch?v=KkhF97Ud3lQ) which goes into more technical details but it highlights some general concepts also which I think might be interesting for you.