Both models are weak in the long-run, since interoperability and validators as a service aren't a moat and extracting value from them doesn't work.

I'll unroll my thoughts on both models:

1/18 https://twitter.com/RyanWatkins_/status/1384289142863892486

Polkadot has a very clear technical offering for parachains. It provides a validator set and the ability to communicate with other parachains. And for those two benefits it charges them rent.

2/18

Cosmos will have effectively the same offering. It allows chains to communicate with each other and it seems that starport allows renting a validator set.
https://twitter.com/zcpeng/status/1384292606876680198

3/18

The two things both chains are selling (or want to sell in the future) are:
1. Validator set
2. Communication with other chains

These two things are both commodities which are trivial for competent teams to create themselves.

Let's start with interoperability.

4/18

Interoperability isn't a moat. A lot of chains are positioning themselves like AOL did in the early days of the internet. Come to my interop solution and you'll be interoperable within my walled garden, and only my walled garden.

But ...

5/18

a protocol like IBC doesn't require a hub. Modern BFT chains will do p2p routing because it's the model that requires the least amount of trust. In it you trust the source zone of the asset, and the chain you have the asset on. With a hub you also have to trust the hub.

6/18

Of course this only applies to modern chains with efficient light-clients. For legacy chains (Ethereum1, Bitcoin, ZCash, Cardano, ...) a hub makes sense to translate legacy tech to modern BFT. This is probably a good place for the Cosmos/Polkadot hub to add a ton of value.

7/18

Fundamentally it is important to understand that IBC which is by far the best interoperability protocol isn't a value capturing protocol. It's like TCP and doesn't special case any specific chain. The reality is going to be that Near will connect to Solana via IBC directly.

8/18

As a side note, because even prominent VCs that I talked to didn't understand / know this. IBC isn't specific to the cosmos-sdk. Any chain can implement IBC in any language as long as it's efficient light-clients on either side.

9/18

Now coming to Polkadot interoperability. It's a slightly less general model than IBC, because it makes the assumption that all connected chains are secured by the same validators (it's effectively the same as Eth2).

10/18

It may have some lower latency, as in transaction can cross between chains on the same block, but even with IBC that latency is at most 1-2 blocks (~10 seconds).

11/18

In concl. on interop. It isn't a moat except for bridges to legacy chains. All modern chains will connect to each other point to point because it's the model with the least points of failure. Interop protocols don't capture value; they're like TCP or UDP (just a standard).

12/18

Now let's quickly tackle purchasing a validator set. A competent validator set is a commodity. There are 100s of excellent organizations that will secure any chain as long as they can make money.

13/18

There isn't going to be a single best validator set, because all chains are at this point secured by the same validators without any cross-chain validation. It adds complexity where there is no need for it.

14/18

In conclusion on the whole thread. Interoperability and Validator Set are both commodities. Chains for which these are the only features aren't going to capture large value to the underlying asset (outside of course speculation by the unknowing).

15/18

Generally chains will need to offer useful things to assets on top of them. State machines will compete on things like:
- private transfer of value
- computational speed and efficiency
- cost of execution

16/18

- locality of the chain (Berlin chain and Shanghai chain)
- ability to trade complex objects
- ability to trade privately
- providing access to legacy assets
- and lots of other things

17/18

I'm writing a blog post to go in-depth how interoperability between chains and ecosystems (hint: there aren't going to be multi-chain ecosystem) will look like in a world of modern BFT chains. It should be ready sometime next week.

18/18