Foreign trade

The value proposition of domestic trade of cyberspace economies was established in the smart contract era. Each of the sub-economies that exist within any EVM-instance is perhaps characterized by their respective sub-economy’s token. The smart contract era showed that sub-economies can specialize and benefit by trading with other sub-economies within the larger cyberspace economy. A prime example is the DAI stable coin sub-economy and its role in its larger cyberspace economy.

Such token-economies however are only scratching the surface of the design space that economic trade in cyberspace economies may have. Many examples of value propositions exist within the Ethereum cyberspace economy that go beyond the utility of a mere token. Examples that spring to mind are DEXs, DAOs, NFTs, or any other smart contract-based economic agents that gain traction without a necessity for a primary role of the sub-economy’s (fungible) token in itself.

Interoperability leads to the emergence of foreign trade between cyberspace economies. If the smart contract era explored the value proposition of domestic trade of economic agents within cyberspace economies, the interoperability era will explore the value proposition of foreign trade between economic agents in different cyberspace economies.

One of the areas where Polkadot presents a clear advantage in design over existing systems is Polkadot’s ability to express foreign trade as arbitrary messages between cyberspace economies. While competing systems’ messaging is constrained to token-swaps as foreign trade mechanism, the Polkadot relay chain can send arbitrary messages, trust-free, between chains. Interchain messaging provides the most utility with the lowest friction when you want to have one chain autonomously affect a change of state on another chain. Arbitrary messaging is a prime example of a mechanism that truly opens up the design space for foreign trade between cyberspace economies.