How does Picasso fit in a world of rapidly growing L1 & L2s?
Last year the dominant narrative was faster and sexier L1s, with the rise of Terra, Solana, Avalanche, and Fantom all seeing significant gains in value, users, and network activity. As Kusama slowly comes to life and Polkadot wakes up with it’s first on-chain activity, it’s a good time to explore how Picasso fits into the current L1/L2 landscape as a substrate native parachain.
By being a parachain, Picasso is effectively a custom-built substrate layer 1. What does this actually mean? It means that we have the tech and infrastructure to build an entire ecosystem of innovative protocols and primitives on our own chain, with each one being another DeFi lego-block for other builders to use (pallets). Most importantly, being a parachain means we can leverage the interoperability and security of the Dotsama ecosystem whilst still having the sovereignty to build and implement what we want.
Picasso defines a new generation of layer 1.
This post starts with a quick summary of the more interesting L1s like AVAX and FTM, to then give context on what actually makes Picasso different. However, if you want to get straight to the Picasso alpha then jump to the bottom.
A high level intro to the most popular L1s
New Layer 1’s gained traction quickly last year because they presented a cheaper and fresher alternative to DeFi on ETH, where activity was continuing to pick up and gas wasn’t getting any cheaper. Avalanche quickly gained TVL as they rolled out a $180m liquidity incentive programme focused on AAVE and Curve… a pretty effective way to kickstart a DeFi ecosystem. The additional growth of native protocols like Trader Joe and Wonderland continued to bring hype alongside the 3AC memes, with AVAX’s bridge being one of the key drivers for a user-friendly experience — I feel like the Bridgoooor meme sums up observing AVAX over last summer.
Fantom is my personal favourite L1 to be a degen on right now. There is strong TVL with deep liquidity across the big DeFi players of Curve/Yearn/Sushi, but most importantly the native protocols are relatively high quality and bring something new. For the DEX’s, Spookyswap has strong liquidity and relatively attractive yields, with the Scream lending market having close to $1bn in TVL with healthy lending/borrowing rates across the main tokens. The list can go on with auto-compounders like Reaper, and with isolated lending LP leverage protocols like Tarot, but the point is that I think Fantom will continue to be one of the fastest growing chains as it has strong liquidity, relatively good bridging options, and several interesting native protocols that don’t feel like copypasta forks. It’s worthy of a whole post itself, but the Andre & ve(3, 3) effect will likely continue to be bullish for Fantom.
Solana offers a sleek new ecosystem of SPEED, with liquidity bootstrapped by the pockets of SBF et al. Fast and cheap trading, FTX exchange on/off ramp, way too many VCs, and the wormhole bridge helped TVL rally from $1bn in August to $12bn a month later. An additional push for cheap NFTs on Solana helped continue the hype, but the curse of VC coins with ridiculously high FDV has now haunted the network as technical difficulties (how many times has Solana been turned off now?) and the recent worm-hole also damaged trust.
Moonriver as the gateway drug to Kusama and the world of substrate
Moonriver has a spot close to my heart because I think it’s one of the key factors for Kusama’s overall success. Moonriver launched last year and whilst taking a relatively gradual approach to growth, we’re continuing to see more native builders show up — the most bullish indicator of all. A new chain is ultimately defined by the protocols built there, most notably the unique native ones, with the most obvious example being how DeFi Kingdoms is carrying the entire Harmony ecosystem. In my opinion, Rome is the most bullish protocol that Moonriver could have to lead the network as an EVM L1 competitor. I have kept an eye on Rome from the beginning, and genuinely find what they’re building to be one of the most bullish gaming projects in the space. On face value it’s a themed OHM fork, but the underlying game has the potential to be one of the first proper crypto projects to do it right, with a +30,000 degen community behind it already organised into houses and sub-factions.
Rome is one of the examples for how the “OHM token model” actually provides significant value when used properly and purposefully. In the background is a team of +20 devs & game designers building a chain-based mash-up of Runescape and Age of Empires. The game and NFT item economy itself is the bullish factor, but now that the treasury totals +$30m with over $12m in protocol-owned-liquidity, I think it’s fair to say Rome is one of the most successful applications of the “OHM model” so far. Other notable projects like The Damned Pirates Society also make me bullish that MOVR will find its narrative as a “gaming” chain, with the pirate NFTs already now used in the first version of the voyages game-play. RMRK 2.0 EVM NFTs will be a big boost for MOVR too, hopefully we see it emerge this summer. In my opinion, it’s inevitable that DeFi will grow on MOVR as lending markets and further incentives are put into place, but the gaming and NFT side will be what sets it apart. MOVR is ultimately a more advanced version of ETH that is completely community owned, and will still see the latest tech before it’s big brother Moonbeam. Whilst DeFi will probably play a strong role in the network’s growth, the gaming and NFT community will likely lead to a much stickier and loyal user-base than comparative ecosystems that see a higher ratio of short-term mercenary capital. It’s parachain design will likely also allow it to outperform relative EVM L1 competitors over the longer term too.
Ok, so where does Picasso fit into this?
The goal for Picasso is to create a unique L1 ecosystem that leverages substrate to build protocols that are fundamentally unique, whilst laying the infrastructure that furthers genuine interoperability. The concept of having 100 parachains connected to the relay-chain leads the way for application specific chains, however, Picasso takes a slightly different approach. Unlike other L1s, Picasso will mostly focus on building the core protocols itself. For example, Pablo is our DEX and will provide core DeFi primitives like Uniswap & stableswap AMMs, whilst adding more unique ideas like AMM-owned-liquidity, LBPs, and bonding functionality. Our Apollo oracle and Cubic vaults are other strong examples of the types of tools we will create as pallets, which will allow the creation of further applications. Compared to other L1s, you won’t find 10 different Uniswap forks to choose from, and instead you’ll find concentrated and deep liquidity within our flagship protocols. Building the protocols ourselves provides the obvious advantages, as it allows us to bootstrap our own ecosystem and ensure liquidity is not fragmented, whilst also significantly improving the user experience. The fact that we’re also building protocols like Pablo and Angular ourselves means that interests are aligned across multiple levels. As mentioned in the design of our CHAOS treasury token, the Picasso network as a whole will have a stake in it’s incubated protocols, and therefore the success of the overall network is intertwined with the core applications built on it. This is naturally the case, but now there is the direct value relationship to anchor it too, which also allows us to ensure incentives are placed where they need to be. You can have the best tech, but as shown by other ecosystems, the initial incentives are almost just as important. (A point to take into consideration considering the wider adoption of .JS too etc).
Having our Mosaic liquidity layer as a pallet is a significant advantage for Picasso as it allows us to bridge EVM liquidity from launch. Whilst being a degen across various L1s can feel the same, using Picasso will feel different. Using the .JS wallet doesn’t have to be a punishment though, and we’re considering the full user experience as we finish the designs of our apps. Using Picasso should be easy, allowing users to quickly move between their network portfolio overview to the DEX, money market, DeFi privacy, and eventually perps & options etc. Using applications on Picasso should feel consistent and within a cohesive ecosystem.
By the end of Q1 we hope to see strong liquidity across the core trading pairs on Pablo, most importantly liquidity on stables, and sufficient TVL on our Angular lending market. Once we have achieved initial liquidity, we will continue to expand whitelisted assets for both the DEX and lending market. Establishing these as initial goals for Picasso will create a foundation of permanent liquidity and stable core infrastructure. This strong foundation will further allow us to increase and expand the shipping of other products. For example, the liquidation engines within Angular will power further leverage related use-cases like perp futures. Most importantly Picasso will also become increasingly cross-chain, with XCM allowing interoperability between other parachains, Mosaic bringing liquidity from L1/L2s, and Centauri connecting IBC chains to substrate. Having these bridges is valuable in itself, but it’s significantly more valuable when combined with an ecosystem of deep liquidity and high quality protocols built around it. Our protocols like Angular will demonstrate the full power of what “cross-chain” actually means, by allowing users to perform actions like using their LP token on Osmosis as collateral to borrow stables on Kusama. This is just the beginning for true interoperability for users.
As with most things on substrate, Picasso will be trying many concepts for the first time, so there is some honesty in saying no one knows how it will turn out. But, the vision is clear and there’s a detailed plan of execution. Pablo and Angular will create the initial foundation for DeFi on Picasso, with Mosaic providing significant liquidity through bridging EVM L1/L2s. Whilst the power of substrate and XCM will likely not be fully realised for some time, by focusing on Picasso’s initial launch we ensure we have the self-sufficiency to become one of the leading parachains for the ecosystem as a whole. The CHAOS treasury will allow us to compound the value of protocols built in the Picasso ecosystem whilst providing incentives and liquidity to effectively bootstrap activity. Unlike other ecosystems, the treasury will be actively managed to ensure assets are being allocated as efficiently as possible within Picasso protocols. The longer-term goal for Picasso is to become the entry-point for other protocols wanting to build as pallets and access the Dotsama ecosystem. There will come a point where pallets and substrate become more mainstream because of the functionality they bring, and Composable will be perfectly positioned. Therefore, not only are we creating the infrastructure and tools that other developers will be able to leverage, but we are most importantly creating the liquidity and TVL they need too. Liquidity is ultimately the most valuable commodity, and with this in mind from day 1 it seems clear that Picasso has the vision to truly become a new breed of chain.
On top of all this, Composable has it’s labs division to research and incubate other protocols and projects. Whilst we are building our own protocols, it’s just as important that we support other teams coming to use our infrastructure and build on Picasso. Therefore, labs will provide grants and technical help to allow Picasso to become the most accessible way for new builders to enter Dotsama. This not only adds new utility for users within the Picasso ecosystem, but it additionally brings value and builders to Kusama as a whole. Combining this with the above mentioned POL to bootstrap initial liquidity is a very bullish combination.
Different layer 1/2s all provide a slightly different experience but ultimately feel quite similar. By being a substrate parachain, Picasso breaks out on a new path to introduce innovative tech to the broader crypto audience. Picasso offers cross-chain interoperability from launch with layer 1 owned protocols, protocol owned liquidity, and an active treasury to ensure TVL and liquidity is incentivised from outside the Dotsama ecosystem. Picasso has longevity in mind by being built on a framework that includes ink! smart contracts, pallets, fork-less upgrades, XCM transfers, on-chain governance and tiny gas fees.. Once the initial objectives for Picasso are met, the network quickly becomes the connecting layer for the rest of the Composable ecosystem. Bribe, Instrumental, and other incubated projects will end up as pallets within our Dotsama chains, thereby leveraging our substrate liquidity and the IBC and EVM ecosystems bridged to it too. With the XCVM and routing layer we’re able to take another step closer to a chain-agnostic world, where the Composable tech stack becomes the Web3 API that powers cross-chain interoperability and liquidity at an institutional scale.
Picasso becomes the torch-bearer for the broader cross-chain vision. Not just another parachain. Not just another layer 1.
